Taxation of Artistes and Sportsmen by CA. Harsh Mathur

International Taxation
-Taxation of Artistes and Sportsmen

Article by: CA. Harsh Mathur

In this ever evolving world, an artist usually finds solace in what they do best i.e. they perform!

An individual may act, direct, produce, perform etc. the light behind the tunnel is what they look for. They never think of what may eventually hit them the most as they know nothing about it, yes you guessed it right “taxation”.

International concerts, performances, tournaments etc lead the artist/sportsmen to travel and perform in many countries for which they get consideration. The amount they receive is generally huge and as they say, “with great power comes great responsibility”; the responsibility of artistes/sportsperson to know about their tax liabilities is of prime importance.

In this article I would discuss scope of taxation of artistes and sportsperson w.r.t. International Taxation.

Article 17 of OECD model deals with attributing taxing rights to source state for the generation of income of artistes/sportsmen for the activities they perform( individually or in employment). The article makes it clear that the general rule for business income from article 7 and general rule for income from employment given in article 15 does not apply to artistes/sportsmen. In most of the taxation laws, the resident country has the right to tax the global income of a resident of the state. The wording of article 17 leaves open the question of taxation of income from activities performed in the state of residence, it is an open distributive rule which says that income “may be taxed” in the source state, omitting “only”. Thus the primary right to tax the income is given to source state.

General definition of artiste:

“An artist is a person giving an artistic and entertaining performance directly or indirectly before an audience, regardless of the artistic or entertainment level”

Some of the relevant case laws which are used by Indian courts to interpret the meaning of term artist in relation to erstwhile section 80RR of the Act are as follows



Nature of profession considered as artiste

Harsha Bhogle

86 ITD 714(Mumbai Tribunal)

Income as cricket commentator and show presenter is not an income of artist

Sachin Tendulkar

ITA no. 428 to 430/Mum/2008 and ITA no. 6862/Mum/2008 dated 20 may 2011

Income from modeling and appearing in TV commercials is an income of artist

Amitabh Bachchan

12 SOT 95

Income from anchoring TV show is an income of artist

Shah Rukh Khan

ITA no. 3894/Mum/2000 and Other appeals vide order dated 19.06.2008

Brand endorsement and modeling income is an income of artist.

Important points to know:

1) Any financial reward or remuneration for the actual performance of artist/sportsmen will fall under this article. For example- Man of the Match award received by the star performer will be dealt in this article.

2) Taxing rights will be allocated to the country where the performance takes place.

3) Article-17 applies regardless of who pays the Income. For example- Awards received by a team player from the league or association organizing the event will be covered in this article.

4) Besides fees for their actual performance, entertainers and sportsperson receive income in the form of royalties or advertisement fees. In general, other articles would apply wherever there is no close connection between the income and the performance activities.

Close connection will generally be found to exist where it can be reasonably said that income would have not been accrued in the absence of the performance of these activities. For example- A payment made to a player for using his photograph to promote the tournament in which he will participate will be said to have close connection with the performance activity. On the other hand if any payment is made to the player to inaugurate the tournament in which he is not performing will not be considered to have close connection with the performance activity and would not be considered in this article.

5) If a performer is invited through a management company which received income on behalf of the performer, a look through approach application is recommended for the source country to tax such income. ( Para 2 of article 17 of OECD Model)

6) Source state shall exempt the income derived by the performer from the performance that are substantially supported through public funds (This reservation finds its place in most of the bilateral tax treaties signed by India)

Termination of a contract to perform:

When a performance contract is terminated by the organizer, the compensation received by the artist/sportsmen as cancellation fees will not fall in this article. This opinion of OECD is understandable since activity is not performed. A cancellation fees therefore solely will be taxed in the country of residence.

When a performance contract is terminated by the artist/sportsmen, there is no obligation on the organizer to pay the fees. The artist can cover the risk with an insurance contract. This will have the same effect as a cancellation fee and therefore the source state (performance country) will have no right to tax such fees since no performance has taken place.

While analyzing tax liabilities readers are advised to go through the relevant DTAA applicable to them.

_OECD Model Convention and Commentary 2014

_Reference module on Diploma in International Taxation ICAI

Question and Answers

Q1 Article 17 gives exclusive right to tax the income of artist to which country?

Ans: Taxing right as per article 17 is primarily given to the country in which such performance is made (Source Country)

Q2. Whether any specific definition of the term artist is given in article 17 of OECD Model?

Ans: The word artist is mentioned in the article 17 of the OECD model, it is not defined in the article. The term is interpreted by various court judgments.

Q3. Does umpire and match referee comes within the definition of term artist?

Ans: No, Umpire and match referee renders professional services and cannot be regarded as sports person (including athlete)

Q4. Is OECD model a general guideline for application of DTAA among countries?

Ans: DTAA is a specific tax agreement between two countries. If any person falls in the definition of residence then only DTAA comes into play. OECD on the other hand is a broader guideline.

Q5. Whether brand endorsement fee paid to an athlete for wearing a sponsor’s logo, trade mark on his shirt during a match will fall in article 17?

Ans: Yes, since a close connection with the performance of the activity is established, the country in which such tournament is played can tax such income under article 17.

Q6. Whether in the above case, the fees paid to an athlete to endorse the brand when he is not playing the tournament will fall under article 17?

Ans: No, since a close connection with the performance of the activity could not be established.

Q7. Whether reporting or commenting on an entertainment or sports event in which the reporter does not himself participates is an activity of artist/sportsmen?

Ans: No, since there is no activity being performed as artist/sportsmen.

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