Argentina set to lose £10.4m of World Cup prize money after Falklands sign fury

Argentina’s football federation is facing a staggering multi-million pound financial hit if they win the World Cup Final on Sunday (July 19). Furious fans and officials have slammed the South American side after players sparked controversy by displaying a highly provocative banner about the Falkland Islands at the close of the semi-final match against England earlier this week.

But while football fans await to see if any official sporting penalties ever materialise from the stunt, a brutal, unyielding reality awaits the Argentine camp the moment the final whistle blows. Even if Lionel Messi’s squad goes on to defeat Spain and lift the trophy, a ruthless tax trap waiting in the US means Argentina is set to watch a massive £10.4million of their grand prize vanish. Here is exactly how the ultimate champion’s purse splits apart under US tax law.

By winning the tournament, the Argentine Football Association (AFA) secures FIFA’s maximum $50million (£37.15 million) winner’s prize. However, the IRS doesn’t double-tax the same pool, meaning the federation is taxed only on the portion of money it actually keeps.

Assuming the AFA sets aside $10million for player bonuses, the federation keeps the remaining $ 40 million (£29.72million).

Because they lack a tax treaty, the US government treats the federation like a standard corporation and slaps it with a flat 21% US Federal Corporate Tax. On top of that, teams must pay local state taxes based on where they actually played. Because Argentina’s critical knockout games took place in Atlanta, Georgia, they are forced to fork over an extra 4.99% in state tax penalties on that income.

When combined, the US taxman automatically claws back 25.99% of the federation’s share:

The financial bleeding now moves to the players’ direct slice. Under US tax law, individual international athletes are classified as “non-resident aliens” who earn income while performing services on American soil.

The $10million (£7.43million) bonus pool split evenly among the 26 squad players amounts to £285,770 ($384,615) gross per player.

Without a DTA treaty – designed to stop foreign workers being taxed twice on the same income – Argentina’s players cannot claim deductions and are hit with the highest US tax bracket for foreign workers – a flat 37% withholding tax straight off the top.

When you add the corporate tax forced onto the football association and the income tax stripped directly from the players’ personal bonuses, the total amount taken by the US government is inescapable:

Federation Tax Penalty (£7.72million) + Squad Player Tax Penalty (£2.75million) = £10,473,000

Before accounting for a single penny of a disciplinary fine FIFA could deliver for the Falklands banner incident, the US taxman will automatically shave just over £10.4million off Argentina’s potential ultimate moment of glory.

With the UK Government heavily lobbying world football’s top brass over the Atlanta incident, and the IRS aggressively enforcing its non-treaty rules, Argentina’s controversial World Cup run is rapidly becoming the most expensive political stunt in sporting history.