Olympic Games have sparked great enthusiasm in antiquity. Just as today, victories were considered prestigious. But only the victors, the Olympians, were given fame and honor. This glory radiated from them to their homeland. In gratitude for this public glory, some city-states lifted taxes on their victorious heroes returning home from the Olympic Games. However, this also applies to some modern Olympians. For example, US athletes who bring a medal from the Olympic Games do not need to pay taxes on the value of the medal, as well as on any winning bonuses of national sports federations. There are also certain exceptions in Germany.

1st Olympic Games and Taxes – Introduction

Taxation of profits is widespread worldwide. Only in one country are there officially no taxes, namely in North Korea. That being said, the term profit is linguistically interesting. Because winning always goes hand in hand with an argument, a fight. It is a term we are also familiar with from sport. Two or more parties compete to perform best, observing general rules. It is a simple principle: the best triumphs.

But this kind of profit certainly has no significance for tax aspects, you may now object. So why do we bring this topic up in such a blog? In short, because there is a link between sport and taxation, especially when it comes to the Olympic Games.

2nd Olympic Games: Tax exemption already in antiquity

2.1 History of the Olympic Games in Ancient Greece

The Olympic Games are generally known to have their origins in ancient times at Olympia on the Greek peninsula of Peleponnese. At that time, the beginnings are probably in the eighth pre-Christian century, the competitions were connected as an accompanying event with religious celebrations. The Olympic Games held every four years were only part of a cycle known throughout the Greek-speaking world: they were part of the Panhellenic Games.

Over the centuries, this cycle began to be used as a measure of time. The start of the Olympic Games each marked an Olympics. What has been largely forgotten today are the other sporting events in Delphi, Nemea and Argos and Corinth, which are also among the Panhellenic Games. The Olympic Games were outstanding because they ushered in the cycle of an Olympics and were dedicated to Zeus.

Much has been handed down to us about the Olympic Games in antiquity. For example, it is known that this was an event in which only men were allowed to participate as athletes. Among the spectators, only unmarried women and free, blameless men were allowed.

The competitions themselves were often inexorable, sometimes even cruel. Each participant had prepared for this dispute for a long time and wanted to win the victory. It must be understood that at that time no one could compare his own performances with those of the competition in advance. You had to rely on your own strengths. Accordingly, they also valued a victory. Compared to today, this may have been a much greater triumph even on an emotional level. In any case, one was miles, pardons, far from the modern spirit of “being there is everything”.

2.2 Political significance of victories at the Olympics

Indirectly, however, the home of the respective Olympians also benefited from their successes. For if the son of a city-state had succeeded in defeating his opponents from the other states, then in the frequent war and other conflicts of that time this was always a sign of his own superiority and defensiveness as well as the favor of the gods. A victory at the Olympics was therefore both an identity-creating and a political issue. In any case, the Olympians received a palm branch, a headband and a wreath from the branches of a sacred olive tree consecrated because of Zeus, which stood at the temple consecrated to him in Olympia.

2.3 Olympic Games: Honoring the Olympians through exemption from taxes

Since the victory of the hero returning from Olympia also increased the glory of his own city, Athens, among others, fell into the task of granting them special privileges. In addition to stately monetary bonuses and other gifts, these included publicly displayed statues as monuments to the Olympians, for example, the performance of hymns of praise for the winner and the prospect of a solemn burial, which is equivalent to our modern state funeral. Also handed down is the lifelong provision of meals and honor seats in the theater. Quite often a victory at the Olympics also led to the gaining of political influence. In addition, Olympic athletes were sometimes even exempted from taxes in order to recognize their achievements at the Olympic Games. At the same time, it promoted ambition in the offspring.

3rd Olympic Games of modern times

3.1. Olympia is forgotten

After accepting Christianity, the Roman emperors branded the Olympic Games as pagan. They banned them, even though it took some Olympics until they actually ended. Thus, the first major sporting event in the old world was gradually forgotten.

3.2. The rediscovery of Olympia

But as in the 18th and 19th at the latest. In the 19th century, the interest in antiquity became widespread among the upper classes of the population of Central Europe, this led to the first archaeological excavations in the Mediterranean. They looked for traces that would prove the stories of the ancient scriptures with their existence. For example, Heinrich Schliemann, a wealthy German entrepreneur and self-made man, excavated the remains of the ancient city of Troy, believing in finds that once belonged to Priamos and Helena, Ajax, Hector and Agamemnon. Excavations also took place at the ancient site Olympia. They were also under the supervision of German archaeologists. But unlike Schliemann’s Troy, the interest in these investigations was primarily purely scientific aspects (and thus as proof of high culture indirectly the glory of the new German Empire).

3.3 Pierre de Coubertin: New edition of the Olympic Games

The excavations in Olympia in the 1880s also aroused the interest of the French educator Pierre de Frédy, Baron de Coubertin. His enthusiasm for the ancient ideals of physical training, for which the Olympic Games were symbolic, led him to found the International Olympic Committee (IOC) with like-minded people in 1894. Within a short time he managed to organize the first Olympic Games of modern times. They took place in Athens in 1896. Even more amazing: only amateurs actually participated. Most of them were either locals, such as the marathoner Spyridon Louis, or lived in Greece. Some of them just happened to be in Greece.

Although Pierre de Coubertin had in mind a purely peaceful encounter of the peoples in the reintroduction of the Olympic Games, the sporting event was now again accompanied by national prestige. Which country would probably make the most winners at the Olympic Games? By the time Hitler hosted the Olympic Games in Berlin in 1936 at the latest, the peaceful ideal had given way to national and ideological ambitions of all stripes. In this respect, the spirit of the ancient Olympic Games has indeed resonated in modern times.

4th Olympic Games: no taxes for German winners

4.1. No customs duties on the gold medal

Olympic prestige also generally leads to national appreciation in our days. Governments, but even more so media around the world, pay great attention to the medal table. Therefore, it is hardly surprising that today again the old mechanisms are used to motivate top athletes to achieve top performance.

This includes, in particular, winning awards, which are offered by the German Sports Aid Foundation in Germany, for example. Because the gold medal is actually worth little. It is a silver medal with a gold coating that weighs just under 7 g. If a German Olympic champion had to declare the gold medal at customs, the value of the medal would be just above the allowance. The silver and bronze medals can therefore be introduced tax-free anyway. But even the gold medal may introduce a modern Olympian duty-free due to a special regulation. This applies to Article 81 of the Customs Exemption Regulation, which exempts all types of badges of honour. If, on the other hand, the medal were made of pure gold, the situation would be different with a value of just under EUR 20,000, at least with regard to income tax.

4.2. Differentiations in the taxation of premiums in Germany

This is the first example that modern Olympic Games can come with a tax exemption. Another example, also from Germany, where success at the Olympic Games potentially does not cause taxes, applies in terms of winning bonuses. This is even about significantly more taxes. For example, medal winners receive a one-time bonus from Deutsche Sporthilfe for climbing the winner’s podium: EUR 20,000 for gold, EUR 15,000 for silver and EUR 10,000 for bronze, although only the best placement is recognized for several medal wins. In addition, other bonuses go to athletes who were less successful. But even with smaller premiums, it is clear that under normal circumstances these incomes would have to be taxed, but they at least increase the taxable income.

In 2021, the scientific services of the German Bundestag addressed this question and published a report on it. Here, a distinction is made at the level of the tax offices whether premiums are taxable. If the persons concerned are professional athletes, the tax office assesses these revenues either as income from commercial, self-employed or non-self-employed activities – and tax them regularly. In the case of a pure amateur athlete, the financial officers, on the other hand, find this income basically as a hobby. This excludes controllability. Therefore, such income from participation in the Olympic Games can remain exempt from taxes. For this purpose, the premiums must only insignificantly exceed the value of the expenses for Olympic participation. However, if the impression arises that an amateur athlete regularly benefits economically from this event, the Treasury assumes corresponding taxable income.

5th Olympic Games: Tax exemption abroad

Admittedly, the tax relief for German Olympic athletes is at best low. Therefore, we now look at three examples of how successes at the Olympic Games were or will be exempted from taxes beyond our national borders.

5.1. Belgium

Our neighbouring country, Belgium, is aware of the legal requirements with which it has exempted its top athletes in recent years from taxes on bonuses resulting from successes at the Olympic Games. For example, income generated in connection with sporting successes abroad and taxed abroad was kept tax-free at home.

At the Olympic Games, however, the participating states often agree with the IOC that such income in the host country will remain tax-free. Such an agreement also existed for the Olympic Games in Tokyo 2021. This has the curious consequence that, after the DTA with Japan, Belgium retained the right to tax because Japan had not taxed. That is why Belgium was allowed to tax its Olympians in principle. While they did not have to pay taxes at the 2012 Olympic Games in London and 2016 in Brazil, this was ultimately different in 2021. The initial tax rate on income tax in Belgium is 25 % and the top tax rate is 50 %.

This aroused public interest in Belgium, so the government reformed its rules on taxation. In the future, taxes on premiums and other revenues will generally apply, but only to 16.5% and only up to a level of income of EUR 50,040. However, special conditions apply here. This special tax rate applies exclusively to premiums paid by the Belgian Olympic Committee, by the public authorities or by a non-profit organisation. Furthermore, it depends on the type of sporting event. The particularly low tax rate only applies if premiums are either related to Olympic or Paralympic Games or if national or international sports federations organise European or World Championships.

5.2. India

At the Olympic Summer Games 2021 in Tokyo, the athletes from India had achieved some successes. The lucky winners of a gold, silver or bronze medal could also benefit from actual tax exemptions. Because for their state premiums in relation to these honors, indigenous top athletes do not pay taxes under the Indian income tax law since 2014.

And these premiums can be considerable. Similar to the ancient Hellas city states and monarchies, the Indian states boast their athletes. Of course, the state of India is by no means inferior to this. For example, Neeraj Chopra, the gold medalist in the spear throw, has received a premium of about EUR 70,000 from the state of Haryana, from which he comes, for his success, a small part of a total of about EUR 1,700,000 in premiums. He and other Indian athletes also received benefits in kind reminiscent of those in ancient Hellas, such as free flights and lifelong employment in public service. However, the tax exemption under Indian law only applies to athletes who receive a medal at the Olympic Games. In addition, grants from sources other than those mentioned are also subject to regular taxation. On the other hand, various premiums for less successful Indian Olympic participants are still subject to income taxation.

5.3. USA

That the best democracy in the world from its own point of view could be the biggest in terms of preferential tax treatment of its top athletes would be laughed at. In 2016, Democrats and Republicans agreed that both the introduction of medals and the related premiums in the US would remain tax-free. Because in the US, Olympic athletes receive USD 37,500 from the USOC, the national Olympic committee, for gold, USD 22,500 for silver and USD 15,000 for bronze. However, the tax exemption only applies if the athletes earn an adjusted income of less than $1,000,000 per year. Top athletes, who earn a significantly higher income via other sources, remain exempt from the tax exemption.