Taxes in sports – how to report taxable income and tax-deductible costs
Your sports income and deductible expenses are taxed as related to a recreational leisure activity, as related to an operation aiming to produce income, or as related to a business operation. It is not important from the perspective of taxes what your level of practised sports is, or what sports-related objectives or personal goals you have.
- Leisure activity: If you receive a sum of money as a prize for winning a sports event, it is classified as earned income, subject to tax. You are entitled to deduct any directly related expenses from the amount you receive, on the condition that these expenses have an immediate connection to the event where you attended and where you either received a prize – or could have received a prize. The tax-deductible expenses in this category include the fee you had to pay in order to compete, and the travel expenses you paid for travelling to the event, tournament, competition, etc. If your expenses are higher than your received prize or other revenue, the result is a “loss”. However, the tax authority does not confirm it as an allowable loss that would be deductible against future profits.
- Sports as an operation for the production of income: In most cases, when you practise sports and it is regarded as an income-producing operation, you need to have a tax card. You have to enter your revenues and expenditure on the pre-completed tax return, which you submit as an individual taxpayer. See instructions.
- Sports as a business operation: The characteristics and legal markers of business may be present in the way you practise sports. Athletes and sportspersons can set up a company, start keeping accounting records, and the company’s taxes will then be based on the company’s books and accounts. Your company must also make income-tax prepayments and submit tax returns at regular intervals. The formats of the tax return vary by company type.
Further information:
How to establish a new company
How to submit an income tax return
If there is a contract between you and the payor organisation, the remuneration paid for this employment – your athletic training work – is regarded as wages. The “wages” category of income also includes any fringe benefits that you may receive.
Example: You are part of a team that plays e-sports. You have signed a player’s contract where you agree, in exchange for the wages you receive, to participate in competitions and practice sessions. For tax purposes, this kind of remuneration for sports is treated as wages.
Example: You are paid for your activity as a race driver (or for riding a horse in competitive horse racing). The remuneration is wages if the payor is the motorsport racing team (or the horse-racing stable) where you work.
You need a tax card for wages
Read instructions about the tax card
Check your pre-completed tax return
The employer or other payor must submit reports to the Incomes Register on all the wages it pays out. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform your employer or payor of the errors so that they can submit the necessary corrections to the Incomes Register.
The income category of sports prizes and participant’s remuneration may be wages subject to tax, fee income subject to tax, or non-wage compensation subject to tax. To receive a prize connected to performance – such as placement or record time in a competition, event, tournament – is your income as a sportsperson. All these categories of income are regarded as earned income.
You receive tangible goods as your prize or remuneration
In this case, the goods, products, items, etc. are valued at their current fair market value.
You receive an in-kind benefit as your remuneration
For example, if you receive the right to live in an apartment or the right to drive a motor vehicle on a permanent basis, and you have no employment contract with the party who has given you these benefits, the Tax Administration will collect tax on this fee that you receive as a sportsperson. The euro value of that fee, and the taxes, are based on the Tax Administration’s official decision on fringe benefits.
The prize is tax-exempt income if
- the total combined value of all your prizes stays below €100 for the entire year, or if
- the prize falls under the category of trophies, medals, etc. that mostly only have a sentimental value.
You need a tax card
If you have entered into an employment contract and you get paid, you need a tax card.
If there is no employer-employee relationship with the party that gives you a benefit worth some money, you need a tax card for income in the form of a sportsperson’s earnings. Instructions for requesting a tax card
If you have signed a contract to fulfil an assignment, you need a tax card designed for income in the form of “trade income” i.e. non-wage compensation.
No tax card is necessary
If the payor sends the payments directly to a training fund. Note: No payments of wages can be sent to a training fund.
The tax card is not necessary if the prize you receive is a tangible item, such as a product or a similar item.
Check your pre-completed tax return
Your employer or other payor is under the obligation to send reports to the Incomes Register on all wages that it pays out, all fees paid to a sportsperson, and all nonwage compensation. Prizes that are products, goods, and other tangible items are valued at their fair market value. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform your employer or payor of the errors so that they can submit the necessary corrections to the Incomes Register.
Sponsorship income and income you receive based on your participation in advertising can be treated as being wages subject to tax, wages paid to a sportsperson, nonwage compensation i.e. “trade income” or other earned income. All these categories of income are regarded as earned income subject to tax.
The remuneration you receive is products of a company that has signed a sponsor agreement
In this case, the goods, products, items, etc. are valued at their current fair market value.
You need a tax card
If you have entered into an employment contract and you get paid, you need a tax card.
If there is no employer-employee relationship with the party that gives you a benefit worth some money, you need a tax card for income in the form of a sportsperson’s earnings.
If you have signed a contract to fulfil an assignment, you need a tax card designed for income in the form of “trade income” i.e. non-wage compensation.
No tax card is necessary
If the payor sends the payments directly to a training fund. Note: No payments of wages can be sent to a training fund.
Check your pre-completed tax return
Your employer or other payor is under the obligation to send reports to the Incomes Register on all wages that it pays out, all fees paid to a sportsperson, and all nonwage compensation. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform your employer or payor of the errors so that they can submit the necessary corrections to the Incomes Register.
If you have been paid some other earned income on an occasional basis, go to Other earned income in MyTax under the Other income stage.
Note: For more information on how amounts paid to a training fund are taxed, see I use training fund income below.
Grants and scholarships are treated as earned income subject to tax. An exception to this rule is constituted by the list of athletes maintained by the Ministry of Education. These athletes can receive tax-exempt grants for financing their training and coaching expenses.
No tax card is necessary
Although you do not need a tax card, you have the option to make tax-prepayments, on your initiative, during the year when you receive the money.
Read the instructions on prepayments.
Check your pre-completed tax return
Your grants are pre-completed on your tax return as reported by the payor. The pre-completed grant information concerns both tax-exempt and taxable amounts. The tax year of assessing income tax on your scholarships, grants and awards for merit is the tax year when the payors pay them to you. Check the amounts and information, and make corrections if necessary.
Using MyTax to make corrections or to add information
The Pre-completed income and deductions stage contains the information that has been available to the Tax Administration on your receipts of grants. The party that paid you the grant or scholarship must send information to the Tax Administration about it, if the amount goes over the threshold of €1,000. To make any corrections in MyTax, select the payor's name to edit the entries. If just a part of the grant income you received appears, select Add a new grant to fill in the amounts that are missing. In the same way, fill in the expenses that relate to the grants.
If no income in the form of grants is pre-completed, fill in the details in the Other income stage. Taxable grants must be separated from tax-exempt grants. Fill in the expenses relating to the grants accordingly.
Further information
- See which grants are taxable and which are tax-exempt
- Tax-deductible expenses include equipment costs and travel expenses relating to the grants. Itemise the expenses based on whether they relate to taxable or tax-exempt grants.
Income can be paid to you if you are a sportsman for copyrights and industrial rights, for user rights or for the selling of user rights. Your copyrights may be related to a book, to a stream or to a photograph. The received income is taxed in the same way as compensation for use is taxed, i.e., it is taxable earned income.
You need a tax card for receipts of compensation for use
Read the instructions for requesting a tax card for receiving royalties and compensation for use.
Check your pre-completed tax return
Your payor is under obligation to send reports to the Incomes Register on all compensation or royalties it pays out. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform the payor of the errors so that they can submit the necessary corrections to the Incomes Register.
The fee is taxed in the same way as your wage income is taxed.
You need a tax card for wages
Read instructions about the tax card.
Check your pre-completed tax return
The employer or other payor must submit reports to the Incomes Register on all the wages it pays out. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform your employer or payor of the errors so that they can submit the necessary corrections to the Incomes Register.
The fee is taxed either in the same way as wages, or in the same way as trade income. Both these categories of income are regarded as earned income subject to tax.
You need a tax card
- If you have entered into an employment contract and you get paid the fee, you need a tax card.
- If you have signed a contract to fulfil a sports coach assignment, you need a tax card designed for income in the form of “trade income” i.e. non-wage compensation.
Check your pre-completed tax return
The employer or other payor must submit reports to the Incomes Register on all the wages and trade income that it pays out. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform your employer or payor of the errors so that they can submit the necessary corrections to the Incomes Register.
If you are an individual athlete practising sports, it is possible that the payors pay your income to a training fund. Examples of income that can be paid this way include various prizes from sports competitions, and if there is an agreement in force that involves 3 different parties, fees from your appearing in an advertisement can also be paid this way. You can spend the money that accumulates in the training fund on your sports-related expenses, which are caused by your sports activity and your training sessions.
Please note:
No payments of wages can be sent to a training fund.
The party that pays the above amounts does not have to withhold tax on the sportsperson’s income that is sent to the training fund. This requires that the transfer of money is routed to the training fund directly. In other words, it is not allowed that the transfer of money would arrive from the sports manager who represents you, or from some other third party.
When the year ends, part of the training fund’s balance can be reassigned to another fund. This fund is called an athlete’s special fund. Under the law, the following amounts of money can go to the athlete’s special fund:
- Max. 50% of the gross income for sports, and
- Max. €200,000 per year
Additionally, for every year, you can leave a tax-exempt deposit of max. €20,000 in the training fund, because this is an amount designed to be spent during your future training sessions. This is called “coverage” (valmennuskate; träningstäckning).
After the reassignments to your athlete’s special fund and to the coverage for your future training expenses, your tax base is the amount of income that remains in the fund. The income is fees paid to a sportsperson and it is subject to tax, and classified as earned income.
If less than €800 per year is paid to the training fund as sports income for 2 consecutive years, the fund’s remaining balance is treated as taxable earned income, and will be assessed accordingly during the tax year that follows these 2 years.
When you terminate your activity as an athlete or sportsperson, the balance in your training fund will be treated as earned income subject to tax, and will be assessed during the tax year when you have notified the training fund that your activities are terminated.
See a specific example: Taxable income is calculated like this.
You need a tax card for the fee paid to an athlete
You need a tax card designed for the fee paid to an athlete for withdrawals from the training fund.
No tax card is necessary
- The purpose of your withdrawing money from the training fund is exclusively for training-session expenses or competition expenses.
Check your pre-completed tax return
Your payor is under obligation to submit reports to the Incomes Register on the amounts paid to you as taxable sportperson’s or athlete’s fees. The Tax Administration, in turn, receives the information on how much was paid to you from the Incomes Register, and transfers the amounts to your pre-completed tax return.
If there are errors in the amounts or if something is missing, make the necessary corrections and inform the payor of the errors so that they can submit the necessary corrections to the Incomes Register.
If you pay expenses, tax deductions are allowed
If the markers are present that indicate that your engagement in sports is an operation for the production of income, you can deduct the expenses that you have paid that have been directly connected to your receipts of income from sports, and to your efforts to maintain and safeguard that income. You can deduct expenses from this income under the same principle as from any other income. However, you can only deduct the part of an expense that is directly connected to your athletic or sporting activity. Tax-deductible athletic expenses include the expenses linked to training in your sport and to competitions, events, tournaments in your sport.
See a guide on tax-deductions for a computer and a phone.
To be entitled to deductions, you must have paid the expenses from your own pocket.
Note: The above principle means that you cannot enter any claim for tax-deduction relating to an expense that your training fund has already covered or relating to an expense that your team or club has paid for.
Fees to the manager who represents you are tax-deductible
If you have a contract with a sports manager, the fees you pay are a tax-deductible expense. Enter the paid fees under Expenses for the production of income in MyTax. See the instructions.
Example: The sponsor company that supports a sportsman’s activity pays €1,000 to his manager. Then, the manager sends €800 to the sportsman, keeping €200 as the fee (20%). In tax assessment, the sportsman’s gross taxable income is €1,000 and the sportsman’s tax-deductible expense is €200, the fee that the manager charged.
Please note:
- Your bookkeeping must not indicate the income amounts that belong to you as taxable in the manager’s tax assessment. For example, if a payment is received based on your attending a sports tournament, it is your personal income from sports.
- If your sponsor company pays the manager’s fees on your behalf, the amount paid is still treated as your taxable income. In tax assessment, the fee amount will be taxed as part of your income.
- In this situation, you can no longer transfer the income to your training fund because it has already been paid to the bank account of your manager.
Attending events in other countries
If you participate in sports events in other countries, it is normal that the country hosting the event will withhold foreign tax on the fees paid to you for the sports or athletics. Report your foreign-source income when you complete your Finnish tax return.