Taxation of Foreign Entertainers and Sportsmen (Portfolio 6442-1st)

This Portfolio reviews the regular rules of federal taxation that generally apply to foreign artists, performing artists, entertainers, and athletes. Some special rules of law or application apply, however, for particular situations and as necessary for the peculiar circumstances of works of art, single performances, and the numerous other special instances that arise for individuals and entities working in the areas of the visual and performing arts and sports. In addition, implications of U.S. domestic tax law rules to performers organized in the legal form of corporations are discussed.

Once non-residency is established, the type of income generated by the foreign performer has to be characterized. Such characterization will determine the applicable source of income rule and thus ultimately whether the foreign performer is taxable on the income in question in the United States. In broad terms, performers’ income may be characterized as income from the performance of services, royalties for the right to broadcast the performances, or from the sale of personal property.

Domestic U.S. tax rules are overlaid by provisions under an applicable income tax treaty entered into by the United States with the foreign performer's country of residence that may limit or eliminate the United States’ right of taxation. While treaties typically afford a more favorable array of rules to non-resident persons’ income in the source state, performers are generally subjected to a stricter regime under the Entertainers and Sportsmen article under treaties.