After three years bouncing between British courts, tennis player Andre Agassi lost a $52,000 tax dispute that will require other sports and entertainments stars from paying U.K. income tax on endorsement deals.
In a 4-1 decision, the House of Lords, Britain's highest court, wrote that, "Foreign entertainers and sportsmen who, or whose controlled companies, receive payments in connection with their commercial activities in the United Kingdom should be subject to [taxes]."
The court ruled that Agassi, 36, must pay taxes on a portion of the income paid to his company, Agassi Enterprises Inc., by Nike Inc. and Head NV because he endorsed their products at Wimbledon and other U.K.-based tournaments. Earlier, Britain's Court of Appeal had ruled Agassi was exempt because neither he nor the companies were based in the U.K.
A lawyer for Agassi noted that of the five law lords, only the one who sided with Agassi in the case had a professional tax background. Agassi brought the case after challenging a $52,000 assessment for the 1998-99 season from Britain's Revenue & Customs agency. An agreement still needs to be made between Agassi and the government on the exact amount to be paid.Accountants in the country have estimated that hundreds of other entertainers will now settle unpaid bills, amounting to upwards of $75 million. If the case had gone the other way, the Revenue agency would have been liable to repay somewhere in the neighborhood of $750 million to entertainers and sports stars who had toured the U.K. since 1988, the year the Income and Corporations Taxes Act, which covers endorsement deal income, went into effect.
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