Article 17 | Taxation of Entertainers and Sportspersons


When Angelina Jolie shoots a film in Prague and Italy, where does she pay her income tax, in Prague, Italy, or the USA? Or how your favorite footballer plans taxation of the prize money of the tournament? Entertainers and sportspersons tend to travel locally and globally for performance and events. Gaining the right to tax that income requires diving into Article 17 of the OECD Model Tax Convention. The provisions of Article 17 assists in avoiding the practical difficulties arising in the taxation of entertainers and sportspersons performing in other states.

Article 17 | OECD Model Tax Convention

Who is an ‘entertainer’?

There is no definition provided for the term ‘entertainer’ in the Convention. But Paragraph 1 of Article 17 corroborates the term by giving the list of entertainers such as theatre, motion picture, radio or television artist, or a musician.

The term includes stage performers, film actors, or actors in a television commercial. It may also apply to income received from the activities involving a political, social, religious, or charitable nature if an entertainment character is present. It does not extend to income earned by conference speaker, or a model performing as such(for instance, modeling or photo session) rather than as the entertainer. If the person is not an entertainer or is part of administrative and support staff (for instance, a cameraperson for a film, producers, film directors, choreographers, technical staff, roadcrew for a  pop group), then Article 17 will not be applicable.

When the person takes a dual role? As an actor and a producer?

In such a case, it is necessary to look at what the individual does in the Contracting State, where the performance takes place. If his activities are predominantly performing in nature, the Article will apply to all the resulting income he derives in that State. If the performing element is a negligible part of what he does in that State, the whole of the income falls outside the purview of Article 17.  

Who is a ‘sportsperson’?

The Article does not define the term, but we interpret in a broader sense, by including participants in athletic events, golfers, jockeys, footballers, cricketers, race drivers, and tennis players. The Article is also applicable for income from other activities that have more entertainment characters, for instance, billiards, snooker, chess, and bridge tournaments.

Income earned by the impresario is not taxable under Article 17. If he receives the revenue on behalf of the entertainer or the sportsperson, then the income is taxable.


When the income is not received by the entertainer or his impresario or agent, concerning the specific performance, but one lumpsum amount for multiple performances. In that case, according to Article 17(1), the contracting State, where the performance takes place, has the right to tax the proportion of the entertainer’s income, which corresponds to that performance.

Source State right to tax income of entertainers and sportsperson

Paragraph 1 of Article17 of the OECD model tax convention states the income received by the entertainers and the sportspersons for performance in other State, will be taxable in the Other State, i.e., State of Source. It applies to the income received by the person as an employee as well as a business. Article 17(1) is an exception to Article 7 and Article 15(2).

Principles for identifying the tax jurisdiction

Entertainers and sportspersons perform their activities in different States, making it essential to determine which income is taxable in which State. Along with the facts and circumstances, the following principles will be relevant for identifying the taxing jurisdiction:

  1. Income linked to specific activities of the entertainer or sportsperson in a State is also the income derived from the activities exercised in that State.
  2. When an entertainer or sportsperson performs as an employee, his or her remuneration is taxable, where he is physically present when performing the activities.
  3. When an entertainer or sportsperson is an employee of a team, troupe, or orchestra, and the salary covers various activities performed during a period; the payment will be taxable based upon the number of days spent in each State to perform.
  4. If the facts and circumstances provide a better link between the income received and the State of performance, then it will be precedent.

Paragraph 1 of Article 17 is applicable regardless of who pays the income.

Royalties, Sponsorship or Advertising Fees received by entertainers and sportspersons:

When entertainers or sportsperson receive other than fees for performance in the form of royalties, or sponsorship or advertising fees, other Articles will apply whenever there is no close connection between the income and the performance of activities in the country concerned.  Article 17 will apply to advertise or sponsorship income, which has a close relationship with a performance in a given State.

Principles to help identify whether the entertainer or sportspersons personal activities derive the income:

  1. Article 17 can apply to an amateur sportsperson or a one time actor too.
  2. The activities of an entertainer or sportsperson include activities conducted in the  State that links with performance.
  3. Merely reporting or commenting on an entertainment or sports event in which the reporter does not himself participate is not an activity of an entertainer or sportsperson acting as such.
  4. Preparation, such as rehearsal and training, is considered part of the normal activities of entertainers and sportspersons. If an entertainer or sportsperson is remunerated for time spent on rehearsal, exercise, or similar preparation in a State the relevant remuneration, as well as remuneration for time, spent traveling in that State for performances, rehearsal and training (or similar development), would be covered by the Article. This would apply regardless of whether or not such rehearsal, exercise, or similar preparation is related to specific public performances taking place in that State.

When the income of entertainers or sportspersons accrues to other persons?

Article 17(2) is applicable when:

  1. The income of an entertainer or sportsperson accrues to another person
  2. The State of Source does not have the right to ‘look through’ the person receiving the income

When the above conditions are satisfied, the non-taxed part of the income will is taxable in the hands of the person receiving the income. If the recipient of income carries on business activities, the tax may be applied by the State of the source even if the income is not attributable to a permanent establishment there. But it will not always be so.

There are three main situations when Article 17(2) is applicable:

  • When no legal entity is involved:

When a management company receives income for the appearance or performance of a group of entertainers or a sportspersons

  • When a legal entity receives income:

When the team, troupe, or the orchestra, legal entity in nature, receives income for performances, the tax burden will be on individual members of the group as per Article 17(1). The profit element accruing from production to the legal entity would be liable to tax under Article 17(2).

  • Tax avoidance measures

When creative tax planning for tax avoidance causes transferring the entertainer’s remuneration to another person or entity, then Article 17(2) permits the imposition of tax on the profits diverted from the income of the entertainer or sportsperson to the enterprise.

Article 17(2) allows the State of performance of activities of an entertainer or sportsperson to tax the income derived from such activities even if it accrues to another person. This is regardless of other provisions of the Convention that may otherwise be applicable.

Will Article 17(2) apply to the prize money received by the owner of the race car?

When the owner of the race car or the horse received the prize money, it is not the consideration received for the personal activities of the jockey or race car driver. In such a case, the rewards are for the activities related to the ownership, design or training, construction, and maintenance of the race car or the horse, which is not the subject matter of Article 17.

But if the money received for the personal activities of the racer or the jockey, then Article 17(1) will be applicable.

Leave a Reply