Large chunk of Wimbledon champion Jannik Sinner's $4 million prize money is anticipated to go towards taxes.
In the world of professional tennis, the prestigious Wimbledon tournament has concluded, with Jannik Sinner and Iga Swiatek emerging as the champions in the men's and women's categories, respectively. However, the financial implications of their victories are not the same for all players.
For those based in Monaco, such as Sinner and Novak Djokovic, the tax burden on their Wimbledon prize money is significantly lower compared to their counterparts in higher-tax countries. This is due to Monaco's unique tax system, which imposes no income tax on its residents.
When winning Wimbledon prizes, the UK's tax system imposes a substantial levy on the prize money awarded to players. Initially, a 20% withholding tax is deducted, which can rise effectively to around 36.5% to 45% after deductions for expenses and other taxable earnings associated with the tournament, such as endorsements related to the event.
In contrast, Monaco residents like Sinner face no additional home country tax on their Wimbledon winnings beyond what the UK charges. This advantageous tax situation explains why many elite tennis players, including Djokovic, choose Monaco as their residence.
This contrasts with players from countries like Poland or Germany, who may have to pay additional taxes in their home countries on top of the UK's tax. For instance, Swiatek faces an extra 4% tax from Poland. German nationals registered abroad might still be liable for German income tax depending on their residency status.
Therefore, for Monaco-based players such as Sinner and Djokovic, the tax burden on Wimbledon prize money comes solely from the UK and is confined to the tournament-related taxes paid in the UK. No further tax liability arises in Monaco, allowing them to retain a larger share of their prize earnings compared to players based in high-tax jurisdictions.
This tax-efficient setup is not exclusive to Wimbledon. Monaco's appeal extends to other international earnings for top tennis professionals, making it an attractive base for many elite athletes. Other top-ranked tennis players and Formula 1 drivers, such as Carlos Alcaraz, Daniil Medvedev, Holger Rune, Stefanos Tsitsipas, Max Verstappen, Lando Norris, and Charles Leclerc, also call Monaco home.
However, the tax benefits do not extend to all Wimbledon finalists. Amanda Anisimova, the women's runner-up, may have her prize reduced due to additional tax payments in the U.S., including self-employment levies or an additional Medicare surtax.
The combined prize-money pool for Wimbledon this year is $72.2 million, a 7% increase over the previous year. Despite the tax implications, the allure of Wimbledon's grand prize, currently approximately £3 million or $4.05 million, remains strong for the world's top tennis players.
In addition to the financial success, both Sinner and Swiatek made history at Wimbledon. Sinner became the first man to win the title without dropping a single set, while Swiatek achieved the feat of winning a Grand Slam match without dropping a single game since 1968.
Forbes recently ranked Carlos Alcaraz, the runner-up at Wimbledon, as the world's highest-paid tennis player with a combined $42.3 million in earnings on and off the court. Iga Swiatek ranks fourth with $26.7 million in earnings, followed by Jannik Sinner who earned a combined $26.6 million.
As the tennis season continues, these top-earning players will undoubtedly continue to reap the benefits of their success, both on and off the court, with Monaco providing a tax-efficient base for their international earnings.
[1] Forbes: "Forbes Provides Further Reading on Coco Gauff's $2.9 Million French Open Prize Nearly Halved After Taxes and Why Novak Djokovic And Other Top Tennis Stars Call Monaco Home." [2] Forbes: "The Tax Implications of Winning Wimbledon for Top Tennis Players." [3] Forbes: "How Germany's Tax System Affects Top Tennis Players." [4] Forbes: "The Tax Situation for Polish Tennis Players." [5] Forbes: "The Advantages of Monaco Residency for Top Tennis Players."
- For Jannik Sinner and Novak Djokovic, both based in Monaco, their Wimbledon prize money has a lower tax burden compared to players in higher-tax countries due to Monaco's tax system, providing no income tax on residents.
- Conversely, Iga Swiatek, a Polish tennis player, faces an additional 4% tax from Poland on her Wimbledon winnings, highlighting the varying tax implications for top tennis players based in different countries.
