Weird Indian Laws: MotoGP Riders Forced To Pay Part Of Their Wage

Categories:   MotoGP  |  Moto2  |  Moto3

With MotoGP’s first race weekend in India, riders and teams face a weird tax complication as they will have to set aside a portion of their earnings for income tax.

For the past six months in anticipation of the inaugural MotoGP event in India at the Buddh International Circuit, teams and riders faced several bureaucratic challenges.

In advance of the championship’s first-ever stint in India, even Formula 1 CEO Stefano Domenicali had warned Dorna Chief Carmelo Ezpeleta about the unexpected difficulties that would arise during a venture to India, a country boasting a population of 1.4 billion.

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Conversely, motorcycle manufacturers had been keen on staging an event in this vast nation, which is home to 170 million motorized two-wheelers.

In July the MotoGP factory teams were instructed to submit contracts for their factory riders, spanning from Marc Márquez to Fabio Quartararo and Pecco Bagnaia, to the promoter and local authorities.

The stars of the show were obligated to pay income taxes on 1/20 of their annual earnings in India. This implies that if a rider such as Marc Márquez who earns between 15 and 18 million per season, has to pay roughly 36.000 Euros to the Indian authorities.

As riders were reluctant to pay income taxes outside their home country or tax domicile (e.g., Italy, Spain, Portugal, France, Germany, Japan, or Andorra) for an event held abroad, manufacturers had to take on these financial obligations.

Nevertheless, teams and factories, including those in Moto3 and Moto2, that receive compensation for each GP appearance from Dorna and IRTA, are exempt from contributing a portion of their annual income. This arrangement was reached between Dorna and the relevant authorities.

Private MotoGP teams such as GASGAS Tech3, LCR-Honda (with Bradl and Nakagami in India), and Prima Pramac can breathe a sigh of relief because their riders are directly under contract with the KTM, HRC, and Ducati Corse factories, meaning these companies cover the proportional deposits.

Pierer Mobility AG also pre-paid taxes for India for all riders under contract for Moto3 and Moto2 in Austria with KTM, Husqvarna, or GASGAS.

Subsequently, the motorcycle manufacturers subtract the sums paid in India from the riders’ annual salaries. Indian tax authorities furnish the riders with certificates documenting the tax payments, which they can then reclaim or deduct in their tax returns in their home country, or they are at least safeguarded against double taxation thanks to double taxation agreements.

A substantial number of MotoGP riders have chosen to reside in the tax haven of Andorra, including Pol and Aleix Espargaró, Brad Binder, Alex Rins, Augusto Fernández, Fabio Quartararo, Maverick Viñales, Joan Mir, and Jack Miller.

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In Andorra, athletes and other millionaires are enticed by a modest income tax rate of just 10 percent. The prospect of the GP circus returning to India after contending with these bureaucratic, visa, and tax complications will be revealed in the coming weeks.

The teams and riders will undoubtedly push for many of these one-time bureaucratic barriers to be eliminated by the authorities for the MotoGP event, as such hurdles are not encountered in any other country.

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