The taxation of image rights: A comparative analysis
Die belasting van die reg op die openbare beeld: 'n Vergelykende ontleding
BLC, LLB (UP), LLD (Unisa) Professor and Head of the Department of Procedural Law, University of Pretoria
Sport het vandag 'n industrie geword en dit het gelei tot die kommersialisering van regte op die openbare beeld wat binne die konsep van persoonlikheidsregte en in die konteks van die actio iniuriarum erkenning geniet en as regtens beskermbare belang beskou word. Die daaropvolgende toename in sportlui se waarde en inkomste het onvermydelik die belasting-gaarder se belangstelling gewek. Dit het sportlui genoodsaak om belasting-advies te bekom en het 'n aantal belastingbeperkingskemas tot gevolg gehad. Een van hierdie skemas is om 'n sportman se verskaffing van promosiedienste van sy lewering van spelersdienste te skei. Talle sportlui het met die oog op hul regte op die openbare beeld persoonlike maatskappye gestig wat bepaal hoe hierdie regte oorgedra of gelisensieer kan word en sodoende absolute beheer uitoefen oor die kommersiele ontginning van die sportman se regte op sy beeld. Die doel van sodanige skeiding is om die sportman se belastinglas te verlig deur belastingaanspreeklikheid op grond van vergoeding vir promosiedienste te vermy. Die inkomste wat verkry word uit die ontginning van regte op die openbare beeld sal deel van die maatskappy se winste vorm. Die maatskappy sal dan op sodanige winste belas word en die sportman sal 'n dividend van die maatskappy ontvang. Die regsvraag is egter of die belastinggaarder so 'n skema sal toelaat. Daar moet ook vasgestel word of die inkomste verkry uit die gebruik van 'n sportman se regte op die openbare beeld as van 'n kapitale aard beskou kan word wat as 'n kapitaalwins aan minder belasting onderhewig is en of dit as bruto inkomste ingevolge die Inkomstebelastingwet geklassifiseer moet word. Hierdie belastingkwessies is nog nie omvattend in Suid-Afrika aangespreek nie. Ten einde 'n beter begrip te verkry van die verwikkeldhede wat met die belasting van inkomste uit die gebruik van regte op die openbare beeld gepaardgaan, word die benadering in die Verenigde Koninkryk geevalueer weens die ooreenkomste tussen ons regstelsels in hierdie verband.
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1 Blackshaw "Protecting sports image rights in Europe" May 2005 Bus L Int 270 270-273; [ Links ] Gardiner et al Sports Law(2006) 53-54; Blackshaw "Protecting and exploiting Sports Image Rights" 2005 3-4 ISLJ 42 42-43; [ Links ] Blackshaw Sports Marketing Agreements: Legal, Fiscal and Practical Aspects (2012) 379-384.
2 Wentworth "Salary and image rights payments to football players" 2010 4 WSLR 3; Gardiner et al 443.
3 Cloete et al Introduction to Sports Law in South Africa (2005) 176.
4 See Barton, Le Mintier & Tattersall "Player's wages: Can football control the 'prune juice' effect?" in International Studies in Sport: Selected Essays 2000/ 2001 (eds Lanfranchi & Probst) (2003) 73-79; [ Links ] Gelder "Image is everything: an analysis of the legal protection of the image of sports athletes" 2005 ISLJ 25 25-37; [ Links ] Bray "Image rights: Understanding the matrix of rights" 2003 4 WSLR2. [ Links ]
5 Cloete et al 177.
6 For a comprehensive discussion of the protection of image rights see Louw "South Africa" in International Encyclopaedia of Laws (ed Hendrickx) (2009) 433-455.
7 See Louw "Suggestions for the Protection of Star Athletes and Other Famous Persons against Unauthorised Celebrity Merchandising in South Africa" 2007 SA Merc LJ 272; [ Links ] Blackshaw 2005 Bus L Int 270 274; Blackshaw 2005 3-4 ISLJ 42 43.
8 See "Looking after their image" 2003 (July) Sport Business Int 17.
9 Blackshaw "The importance of IP rights in sport" 2008 3-4 ISLJ 146 148; [ Links ] Boyd "Does English law recognise the concept of an image or personality right?" 2002 Ent LR 1. [ Links ]
10  RPC 543 548. The recognition of a "character right" was also rejected by the Court of Appeal in Elvis Presley Enterprises Inc v Sid Shaw Elvisly Yours  RPC 567.
11 See Douglas v Hello Limited  2 WLR 992; Irvine v Talksport Ltd  EWCA Civ 423. See also Blackshaw 2005 Bus L Int 270 279, 282; Blackshaw 2005 3-4 ISLJ 42 45; Baldwin "Image rights and offshore tax planning" 2003 3 WSLR 1; Wentworth 2010 4 WS LR 3.
12 See the matter of Kahn v Electronic Arts GmbH, unreported 25 April 2003. See also Blackshaw 2005 Bus L Int 270 281; Blackshaw 2005 3-4 ISLJ42 47.
13 1954 3 SA 244 (C).
14 See also Cornelius "Image Rights" in Handbook on International Sports Law (eds Nafziger & Ross) (2011) 507; [ Links ] Louw International Encyclopaedia of Laws 435.
15 2007 4 SA 89 (SCA). See Cornelius 508; Louw International Encyclopaedia of Laws 435-437.
16 It was also held in Wells v Atoll Media (Pty) Ltd  ZAWCHC 173 par 49 by Davis J that the unauthorised use of an individual's attributes with a commercial value "constitutes an unjustifiable invasion of the personal rights of the individual, including the person's dignity and privacy".
17 Fichard Ltd v The Friend Newspaper Ltd 1916 AD 1; Bredell v Pienaar 1924 CPD 203; Coxton Ltd v Reeva Forman (Pty) Ltd 1990 3 SA 547 (A). See also Louw International Encyclopaedia of Laws435.
18 See the discussion in Cornelius 509.
19 58 of 1962. See also Benjamin "Image rights: Image rights and offshore tax planning" 2003 3 WSLR 1.
20 See Lewis & Taylor Sport: Law and Practice (2008) 1194; Anderson Modern Sports Law (2010) 302-303; Blackshaw Sports Marketing Agreements 379-380.
21 This arrangement is commonly known as "IR 35" or the "Intermediaries" legislation under the provisions contained in Ch 8 Pt 2 Income Tax (Earnings and Pensions) Act 2003.
22 See Lewis & Taylor 1195.
23  STC (SCD) 443. See Blackshaw Sports Marketing Agreements 266, 380-383; Anderson 303-304; Wentworth 2010 4 WSLR 4; Blackshaw 2005 Bus L Int 270 283; Blackshaw 2005 3-4 ISLJ42 47; Louw International Encyclopaedia of Laws 432.
24 See Blackshaw 2008 3-4 ISLJ 146 147; Gardiner et al 443.
25 Par 87.
26 Par 83.
27 "We note that the promotional agreements and the consultancy agreement were contracts for full consideration and so would be excluded from tax under section 19 for that reason alone. Also, we find that the payments under those agreements were made in return for promotional rights and consultancy services respectively and were not made 'in reference to' the playing of games which was the service rendered by each player by virtue of his player's agreement with [Arsenal]. Neither were the payments under the promotional and consultancy agreements a reward by [Arsenal] for their services of the players; they were paid by [Arsenal] for the promotional rights and the consultancy services respectively."  STC (SCD) 443 par 100.
28  EWHC 2013 (Ch) par 19.
29 See Lewis & Taylor 1200.
30 Ibid 1196.
31 Ibid 1202.
32 Baldwin "Tax: International sport shuns the UK because of Tax" 2012 8 WSLR 1 2; Baldwin "The Budget: impact on sport and athletes earnings" 2009 6 WSLR 11.
33 Agassi v Robinson (Inspector of Taxes)  UKHL 23.
34 Guernsey has recently become the first jurisdiction in the world to introduce specific image rights legislation with very attractive tax provisions. See Blacksha w Sports Marketing Agreements 283.
35  UKHL 23.
36 Baldwin "Tax issues facing sports stars performing in the UK" 2006 5 WSLR 1; Baldwin "The taxation of overseas sports stars performing in the UK" 2004 11 WSLR 5.
37 France and Spain have also begun to impose less favourable tax regimes. France has repealed legislation which allowed clubs to treat 30% of a sportsperson's income as for image rights and the law allowing foreign players in Spain to pay tax at 24% if they earned over £600,000 per annum were amended. See further Sanchez "Changes to taxation: impact on professional sport" 2010 2 WSLR 8.
38 See Agassi v Robinson (Inspector of Taxes) UKHL 23; Wright "Agassi tax case deals potential blow to image rights tax structures" 2004 SLAP6 6-7.
39 See also Louw International Encyclopaedia of Laws 143-144.
40 Date of issue: Nov 2010.
41 It is not issued in accordance with s 76P Income Tax Act 58 of 1962.
42 Revenue Laws Amendment Act 59 of 2000.
43 See for a definition of "residence": Robinson v COT 1917 TPD 542; Cohen v CIR 1946 AD 174; CIR v Kuttel 1992 3 SA 242 (A).
44 See the definition of "gross income" in s 1 Income Tax Act. See further Van Heerden v The State 73 SATC 7 where the definition of "gross income" was explained in detail.
45 64 SATC 455.
47 If it was found to be a royalty payment, it would have been exempted from South African tax as he was subject to tax in the United Kingdom in respect thereof in terms of art 11 DTA United Kingdom/South Africa.
48 In Retief Goosen v Commissioner of Internal Revenue USA Tax Court 136 TC No 27 filed 9 June 20110609 the Tax Court ruled that Goosen could not benefit under either the 1975 or 2001 USA/UK tax treaty because of his Lichtenstein bank account which were used for his non-UK income. His royalty income was allocated as being from a USA source and must be taxed in the USA.
49 See the SARS website http://www.sars.gov.za (accessed 2012-11-12) for a full list of the double tax agreements.
50 See Interpretation Note No 18 (Issue 2) - 31 March 2009 Income Tax: Section 6quat: Rebate or deduction for foreign taxes on income.
51 The relevant provisions of the double taxation agreement between the United Kingdom and South Africa is discussed in detail in ITC 173564 SATC 455.
52 See Cornelius 517.
53 Blackshaw 2005 Bus L Int 270 284; Blackshaw 2005 3-4 ISLJ 42 49.
54 Gardiner et al 443.
55 Wentworth 2010 4 WSLR 7.
56 Baldwin "Time to reform sport's tax structure" 2005 6 WSLR 3.