Guernsey: The Taxation Of Guernsey Image Rights

Last Updated: 16 December 2013
Article by Mark Savage and David Mitchell

Most Read Contributor in Guernsey, September 2016

There is a growing recognition of the importance of the rights attaching to personality, and the characteristics of a personality – commonly known as image rights. Mark Savage and David Mitchell of BDO explore further.

Recently, in the UK, this has most famously arisen when Rhianna successfully sued Top Shop for using her image on tee-shirts without consent. However, in English law, there is no definition of an image right and this can make it difficult and costly to take legal action in situations, like Rhianna's, where the right is infringed.

In this context one recent legal innovation has been the establishment, in the Channel Island of Guernsey, of the World's first register of Image Rights. This enables personalities to register their "image" (which extends to the use of their name, voice, likeness etc) in the same way as businesses can register, for example, a trademark. Although Guernsey is a British Crown Dependency and has many familiar aspects, such as the use of the British pound as its currency, it is not part of the United Kingdom and has its own system of laws, and therefore has the authority to create this register. In truth, the existence of image rights as a valuable right has long been recognised, especially in the professional football industry, where it is considered that only part of the income generation of players can be attributed to their on-field activities.

Clubs and other commercial enterprises frequently make money by utilising the "brand" of a player. This can be simply through a player endorsing, or acting as brand ambassador, for a product or service, or it can be where the player is more intrinsic to the product. Examples in this latter category would be club merchandise or avatars of a player featuring in video games. Where clubs, or other organisations, are making money this way there is a recognition that they are obliged to obtain the player's consent, for which the player is generally paid a fee. In many countries, such fees may be taxed more beneficially than employment income, and in others (such as the UK) it can be possible to take advantage of the relative flexibility of image rights, by transferring them to a company, to achieve a lower overall rate of taxation.

This has been particularly true in the UK where many foreign footballers have come to play in both the Premiership and other leagues. Many of these players have image rights that are more valuable in their home country than the UK and which can be exploited regardless of the level at which the player's English (or Scottish) club is playing.

These non-UK players have often been able to take advantage of their status as resident "non-doms" and pay little or no UK tax on payments made to non-UK image rights companies provided that the money remains outside the UK. Perhaps unsurprisingly, many tax authorities – including HMRC in the UK – have sought to challenge the validity of image rights payments, arguing that they really form part of a player's employment income.

The tax authorities have generally been unsuccessful, and the Courts in the UK, USA and many other countries have supported the view that payments for image rights – whether from a football club or third party – can form a legitimate part of a sportsman's total earnings in addition to employment income.

However, the tax authorities have had more success in arguing that footballers and other sportsmen have been claiming that too much of their earnings came from image rights. The result of this is that some of those players (or sometimes their clubs) have faced substantial additional tax bills, where a valuation of rights has been inappropriately high.

Despite being established in a traditionally low tax jurisdiction, the Guernsey image rights register does not fundamentally change the tax landscape. The risks and opportunities that were available to players, their clubs and their sponsors remain unaffected by the introduction of the register.

However, the Law introducing the register does provide a comprehensive definition of image rights. Whilst this definition is not strictly binding outside Guernsey, it is likely to prove helpful to lawyers and agents acting for players and other personalities. It may help them define which rights can (and cannot) be exploited in commercial contracts and may also help to defend players whose rights have been infringed without permission. The opportunity to actively register a right (albeit outside the UK) may also help players who are trying to assert their rights, and may also help prove ownership of those rights. The greater legal certainty that the new law offers provides greater comfort for players looking to exploit their rights and potentially makes those rights easier to value.

As explained above, valuing those rights is key to maximising the revenue that can be obtained from them, in both commercial negotiations and in the face of any future enquiry from a tax authority. As part of the world's fifth largest accounting network, BDO can help advise players, their agents, clubs and sponsors who are planning on entering into image rights contracts, both on the value of their associated rights and on the tax consequences of the proposed arrangements. We pride ourselves on our ability to provide exceptional client service and our award-winning UK private client team can advise on a multitude of areas, working to your objectives and within your risk comfort zone to reach the best solution for you.

Our bespoke high quality tax advice and support is clearly explained and will help to protect wealth and limit the risk of non-compliance. We work with a variety of high net worth individuals, including many high profile sportsmen and entertainers, many of whom may be tax resident in a range of jurisdictions. We also help advisers to our private clients, working with agents, trust companies, private banks and lawyers and have a deep understanding of the issues faced across the full range of taxes.

Our team of senior tax specialists guarantee a discreet, personal service that will help you solve tax issues fast, delivering accurate, authoritative advice and guidance on all tax-related matters. As the UK Member Firm of BDO International, with over 1,200 offices operating in 139 countries (including Guernsey) we are particularly well placed to assist with cross-border issues.

Originally published in FC Business, November 2013.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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