The expanded 2026 World Cup, set to be hosted across the United States, Canada, and Mexico, is already presenting challenges beyond the pitch. More than half of the 48 nations that have qualified for the tournament face potentially significant, and largely unexpected, additional costs due to a failure by FIFA to secure a blanket tax exemption with the U.S. Government. This financial burden threatens to disproportionately impact smaller footballing nations, potentially diverting funds away from crucial development programs and creating an uneven playing field even before a ball is kicked.
While FIFA, as a not-for-profit organization, has enjoyed tax-exempt status in the U.S. Since hosting the 1994 World Cup, that exemption doesn’t automatically extend to the national associations representing each qualifying country. These associations are now facing a complex web of federal, state, and local taxes on earnings generated during the tournament. The situation is further complicated by the varying tax treaties – or lack thereof – between the U.S. And individual nations.
A Disparity in Tax Liabilities
The core of the issue lies in the existence of Double Taxation Agreements (DTAs). Currently, 18 of the 48 World Cup qualifiers have DTAs with the U.S., effectively exempting their delegations from federal taxes. The vast majority of these nations are European. Beyond co-hosts Canada and Mexico, only Australia, Egypt, Morocco, and South Africa have secured similar agreements. This means countries like Curaçao and Cape Verde – both making their World Cup debuts – could face a considerably larger tax burden than footballing powerhouses like England and France.
Oriana Morrison, a tax consultant who has advised both the Portuguese and Brazilian federations, explained the disparity. “The teams that come from more advanced, sophisticated jurisdictions that have a tax treaty with the US, such as England and Spain, will have much lower costs than smaller countries such as Curacao and Haiti, for example,” she said. The financial implications are significant, potentially diverting funds that could be invested in grassroots development within these smaller nations.
Taxation of Personnel and Varying State Laws
It’s essential to note that while players’ earnings are subject to U.S. Tax under federal law – as is standard for athletes and artists performing in the country – the tax burden primarily falls on coaches and backroom staff, whose compensation is typically covered by their national federations. This creates a double taxation issue for countries like Brazil, where head coach Carlo Ancelotti will be liable for taxes in both Brazil and the U.S., while his counterpart managing England, Thomas Tuchel, will only be taxed in the UK. While the Brazilian Football Federation is expected to cover Ancelotti’s additional tax obligations, smaller associations lack those resources.
The U.S. Federal corporate tax rate currently stands at 21 percent, with income tax for high earners, including international footballers and coaches, reaching 37 percent, according to the Internal Revenue Service. Adding to the complexity, state tax rates vary considerably. Florida, hosting seven matches in Miami, has no state tax, while New Jersey, home to the final at MetLife Stadium, levies a rate of 10.75 percent, and California, with games in Los Angeles and San Francisco, imposes a 13.3 percent state tax.
FIFA’s Response and the Impact on Budgets
FIFA has declined to comment directly on the issue, but sources within the organization have indicated they are working with national associations to provide guidance and assistance with navigating the tax landscape. However, the situation highlights a broader concern regarding the financial viability of participation for some nations in the expanded 48-team tournament.
The expansion to 48 teams has already led to a reduction in the daily allowance for living expenses, decreasing from $850 in 2022 to $600, despite rising travel and accommodation costs in the U.S. This, coupled with the unexpected tax liabilities, is creating a challenging financial environment for many participating countries. The Qatari government, in contrast, provided tax exemptions to all 32 national associations during the 2022 World Cup.
“Many of the smaller teams, ones for whom this kind of windfall would have made a huge difference to their football industries, are going to be penalised with massive US tax bills,” Morrison added. “That is money that could have developed their football industries locally a lot better, but it’s going to stay in the US. There’s a huge discrepancy. It’s going to cost most non-European countries a lot of money to go to the World Cup.”
Looking Ahead
The situation underscores the need for greater clarity and proactive financial planning for national associations preparing for the 2026 World Cup. While FIFA is reportedly offering assistance, a more comprehensive solution – potentially involving negotiations with the U.S. Government for broader tax exemptions – may be necessary to ensure a truly equitable competition. The coming months will be crucial as teams assess their financial exposure and navigate the complexities of U.S. Tax law.
The next key development will be FIFA’s communication to national associations regarding specific guidance on tax compliance and potential avenues for mitigation. We will continue to follow this story as it develops and provide updates as they become available. Share your thoughts on this developing situation in the comments below.
