European prize money payment | Trainer Magazine | European Trainer Article Index

Apr 29

Apr 29 European prize money payment

EUROPEAN racing authorities are doing their utmost to unify the prize money payment system and most, such as Weatherbys, Horse Racing Ireland (HRI), and France Galop, work together on a reciprocal payment system to make the transfer of prize money as straightforward as possible. The problems arise when additional costs are imposed, not by the racing authority, but by that country’s government itself. Withholding Tax, which is increasingly catching owners unaware, is totally out of the hands of racing authorities and beyond the scope of unification. If a person is deemed to have earned money, including prize money, in Germany, for example, they are liable for the income tax. Owners winning money in Italy are liable to a 4% Withholding Tax, while recipients of German prize money will find themselves liable for up to 26% Withholding Tax. Both of these countries’ taxes can be simply avoided by completing the necessary forms beforehand, as the EU rules that if you have paid tax in one European country you do not have to pay it in another. Unfortunately, it is not until a month later, when the money itself finally lands in an owner’s account, does the owner discover a large chunk missing. By then, it is difficult, to say the least, to apply for a refund. As Linda Corn of Weatherbys, UK, explains, “We have a Withholding Tax Exempt Form, which can be filled in beforehand. It is very simple to do beforehand, but much harder to claim back the tax stopped afterwards. We would recommend all owners to fill in this form prior to running their horse abroad. Owners should make themselves aware of the conditions before they go abroad. It is often very easy to pick up good prize money abroad, but they forget you take off 20% tax and then have to pay the trainer and yard percentages.” Elaine Simpson, Accounts Department of Mark Johnston Racing Ltd., elaborates further when she says, “In Germany there is a Withholding Tax and our owners were asked to complete a certificate declaring exemption for horse racing prizes under the Double Taxation Convention between Germany and the UK. This certificate had to be stamped by the owner’s local Her Majesty’s Revenue & Customs office, a very time-consuming process, which did deter some owners from wanting to race their horses in Germany. Weatherbys advised us on the procedure and provided us with the certificates, which, once completed, we returned to Weatherbys.” It may sound like a tricky procedure, but once completed it is definitely a very valuable document to have. The absence of large chunks of prize money doesn’t end there, however, and trainers are also finding it difficult to secure their rightful percentages. This is due to the prize money being paid directly to the owner, with the trainer and stable percentages often not deducted at source. The result is that the trainer is left having to invoice the owner for his percentage. “The French don’t pay trainers their percentage and therefore we don’t do it for French-owned winners in the UK,” Corn explains. “We have a reciprocal system, if a country pays the percentages, so do we in return. The only European country we do this for is Ireland, as they pay the owners and the trainers separately. All countries pay the jockeys; only Ireland and Dubai pay the yard.” Corn also suggests a simple solution, much in the same way as the Tax Exemption form. “We have a Foreign Trainer and Stable Mandate for our clients. If a client has a Weatherbys account it gives us authorisation to pay the trainer and yard from the prize money. We calculate the percentage and amount involved so the owner doesn’t have to worry about calculating it. When taking on a new owner in a yard every trainer should have an Agreement Form and it is recommended they include within that agreement an item on how the trainer and yard percentages are to be paid.” One trainer who pays particular care to procedure is Mark Johnston. Simpson explains, “We ask all our owners to sign a mandate, which we register with Weatherbys. The mandate authorises Weatherbys ‘to pay the trainer and stable percentages for horses racing abroad as if the horse had won the prize money in the UK as distributed under Appendix W of the orders and rules of racing, having applied any withholding or similar tax applicable in the country in question.’ Therefore we do not invoice owners for any prize money. Weatherbys allocate the trainer and stable percentages to us from the prize money received from the foreign countries, and ensure we get the correct percentages.” As with many things in life, it all comes down to having the correct paperwork in place and well in advance of the proposed run. Jim Kavanagh, Irish Racehorse Trainers Association and Treasurer of the European Trainers Federation (ETF), calls for a brief to bring everyone under the same rules. “We will have to look into how the different systems are operating,” he pledges. “What I’d like to see in place is a one stop shop, to make it simpler to deal with the various authorities. The example set by Mark Johnston is very professional.” In fairness to the various authorities, the systems in operation are quite uniform and it is important for trainers to establish a suitable Agreement when first taking on owners. What does seem to be an issue is the time it often takes to receive foreign prize money. Italy admits to the longest time span, but in practice some of the more supposedly efficient administrations are still being accused of tardiness. Stefano Meli, President of Pisa racecourse, states, “Owners, trainers, and jockeys running in Italy are paid directly by each racecourse. The total prize money is shared as follows: 85% to the owner, 10% to the trainer, and 5% to the jockey. There is a Withholding Tax of 4% on the prize won.” UNIRE (Unione Nazionale Incremento Razze Equine, or National Horse Breeding Union) is responsible for paying each Italian racecourse, which leads to a delay in the issue of prize money. As Meli points out, “UNIRE pays each racecourse after about two months, so the prize money won in January, for example, is given by UNIRE “What I’d like to see in place is a one stop shop, to make it simpler to deal with the various authorities. The example set by Mark Johnston is very professional” Jim Kavanagh – IRTA approximately at the end of March. This procedure occurs to every Italian racecourse. On behalf of foreign owners, trainers, and jockeys the process is the same. Where they send their bank details they are paid directly by the racecourses, following the same mentioned time. Otherwise the individual racecourse sends the prize money won to the technical body of competence of the foreign owner’s country.” Corn from Weatherbys reports that payments from France are run on a monthly basis. “At the start of each month they process the payments. They deal with their own clients first, then put together the foreign accounts. This means that foreign owners should have their cheque in the second week of the month following the win. This happens all way round the world. There can be delays when the French take a three- or four-week holiday in July/August, which creates a backlog, but they get back on track quite quickly.” Many British and Irish owners and trainers have found that French payments can often take longer, and Tony Clout of the ETF explains why. “It is true that it can take up to three months, because France Galop works with the other Jockey Clubs on a compensation base, checking every three months what it is to get and what is to be paid, with horses running in and out of France, Ireland, England, Germany, etc.” he says. “Of course, if the owner is registered in France, he has an account, and so he is paid like the natives, 12 days after the race. It is impossible to pay trainers and jockeys directly for the same reason, and also b ecause of the differences in percentages (same thing for the staff percentage). It would be great if we had the same percentages (based on the best one, of course...).” Elaine Simpson agrees. “It can take many months,” she says of foreign prize money receipts. “The trainer and stable percentages from prize money our trained horses won in Dubai from January and February 2010 was not received until July 2010, prize money percentages from France won in March was not paid to us until May, and prize money percentages from Ireland won in May was not paid until July.” Brian Kavanagh of HRI gives a very clear example of how prize money is paid from Ireland: “We have our accounting arrangements in place with other international racing authorities, mainly Weatherbys and France Galop,” he says. “We settle with them on a monthly basis, on the 15th and 16th of each month, so at worst there could be a six-week delay, but payment can be made in two weeks, depending on the date of the race involved. Our payment, which is done centrally through HRI, will be credited directly to an owner’s Weatherbys or France Galop account and we’ve never had any issues or complaints. We deduct the normal percentages and there are no taxes on an ow ner’s prize money.” For those tempted further afield than France, Italy, or Germany, Hans Petter Eriksen of the Norsk Jockey Club, says, “Prize money, minus 10%, is paid to the owner the next month and sent to the racing organization in his country. Percentages (10%) to the trainer are sent to his account with the racing organisation in his country. There is no withholding tax in Norway.” On a pleasing note, Eriksen adds, “So far we have had no difficulty receiving money from abroad.” The message here is clearly to be prepared and be patient, but don’t be put off. Prize money is always worth chasing and never anything to complain abo

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(European Trainer - issue 33 - Spring 2011)

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