In Fragsters, we have helped our audit firm, PWC, draw up a eSport and tax publication – which gives eSports practitioners and their employers an overview, inspiration and knowledge about the current rules for taxation of income and the possibility of deductions when exercising eSport.
eSport (electronic sport) centers on a number of computer games where there are more competitive games, such as CS: GO (Counter Strike), DOTA, LOL (League of Legends) and FIFA. Denmark has several world-class eSports teams within CS: GO, including the teams Astralis and North.
eSport is developing both in Denmark and abroad.
eSport has grown significantly in recent years, and you can track eSport either by physically monitoring tournaments or by following websites such as YouTube and Twitch, where the games are streamed. During the fourth quarter of 2017 two major and sold out tournaments in Denmark have been held in Royal Arena and the Odense Congress Center, where several international teams have competed in CS: GO. The total prize pool for the two events was about 1.5 million. DKK 6.1 million. kr.
In matches between some of the biggest teams, the number of players can reach 5 million. viewers, and the teams therefore also attract attention from sponsors and investors. Also several of the Danish professional sports clubs such as FC Copenhagen, FC Midtjylland and Vejle Boldkub have invested in eSport.
Big prize sum – but what about taxation?
There are often huge cash prizes, and in addition, professional eSports practitioners earn salaries at the level of a Superliga player. Several eSports participate in tournaments around the world, and they receive different revenues in this regard. In our eSport and Tax Guide, focus is on taxation when receiving revenue from several countries, as well as the general rules for avoiding double taxation. The revenue, an eSports typical recipient, is described in the folder as well as information about who is obliged to report individual income, such as free car, clothing, expensive equipment and sponsorship – and if revenue is to be reported at all. Also the rules on tax-free travel and travel allowance are described.
Since there are also foreign eSports practitioners employed in some of the Danish teams, we have described the rules of the special tax scheme which allow certain high-paid opportunities for low taxation. Finally in the brochure we have set the rules regarding. social security and insurance when working abroad.
You can download the eSport folder and the relevant tax issues below (in Danish).