NFL Game in Brazil Sacks California's Tax Haul

Key Takeaways

• U.S. athletes competing internationally, such as NFL players in Brazil, may owe foreign income taxes—even on short-term events.

• States like California lose out on tax revenue when games are hosted internationally, disrupting established nonresident tax routines.

• The shift of income taxation across borders raises complex compliance issues for high-net-worth individuals, entertainers, and business owners with global operations.

• Multi-jurisdictional income tax rules can create overlapping obligations and expose taxpayers to double taxation risks without proper planning.

• Any person or entity earning income outside the U.S.—even temporarily—needs a strategy to handle international tax exposure and maintain compliance in their home state.

What an NFL Game in Brazil Means for U.S. Taxpayers—and Why It Matters to You

On the surface, the Kansas City Chiefs playing the Los Angeles Chargers in São Paulo may seem like just another marketing push for the global NFL brand. But beneath the helmets and fanfare lies a tax story with consequences that reach far beyond the football field—and that should give pause to business owners and high earners in the D.C., Maryland, and Virginia (DMV) region who operate across state lines or international borders.

Here's the core issue: when high-income professionals earn compensation abroad, even for brief gigs, the host country may claim the right to tax a portion of that income. In this case, when the Chiefs and Chargers take the field in Brazil, Brazil will impose a nonresident income tax on their earnings attributable to the game.

Meanwhile, California—home of the nominal "host" team, the Chargers—loses out on income tax revenue it would otherwise collect from nonresident players. Multiply this situation across businesses conducting deals, performances, or services internationally, and the potential for exposure, mistakes, or missed opportunities becomes clear.

Let's break down what's happening and explore what it means for individual taxpayers, LLCs, partnerships, and other entities that operate internationally.

International Income Tax Liability Doesn't Require Residency

One of the most misunderstood concepts in tax law is this: you don't need to live in a country to owe tax there.

In fact, most nations, including Brazil and the United States, exercise what's called source-based taxation. That means if you earn income within that country—by performing services, conducting business, or selling goods—they can tax you on that income, regardless of where you live or where your company is based.

Applied to the NFL example: Chiefs and Chargers players will each earn a share of game-day wages. Brazil's tax authority will view that activity as generating domestic income, and will therefore impose its nonresident income tax.

For athletes, musicians, keynote speakers, and business consultants flying in for a single weekend, this creates a significant—and often overlooked—tax exposure.

The same rule applies to:

• A D.C. architectural firm consulting on a project in Paris

• A Maryland-based LLC that closes a deal in Toronto

• A Virginia entrepreneur giving paid speeches abroad

If you're earning income tied to services rendered overseas, even that brief activity could trigger foreign tax obligations.

When States Lose Tax Revenue to International Events

There's another side to this coin, and it matters for businesses with employees who frequently travel: U.S. states may lose out on what would have been taxable income.

In the NFL's case, this game was technically a Chargers home game, meaning it would have ordinarily occurred in California. NFL players that live in other states and come into California for a game are still subject to California's nonresident income tax for compensation earned there.

But with the game moved to Brazil, the income is now sourced abroad—so California can't tax it. This redirection of income shifts the tax burden internationally and deprives California of revenue it would otherwise have received.

Now consider a real-world application:

• An executive at your Maryland LLC works a few days per month in New York, earning a bonus tied to performance in that market. New York can tax that income—even if your firm and payroll system are based in Maryland

• But if that same employee delivers services abroad, the foreign country may tax the bonus as foreign-source income, and Maryland may have to forgo taxing the same wages, depending on sourcing rules and applicable credits

Without careful tax planning, this seesaw effect can lead to tax leakage (missed deductions or over-taxation) or compliance penalties.

Risks for High Earners and Pass-Through Entities

The implications go beyond athletes. High-net-worth individuals, closely held businesses, and pass-through entities like S Corps and partnerships must understand how cross-border income is treated.

Here are some examples:

• A Virginia-based S Corp sends a founder to pitch a deal in Brazil. The travel is brief, but once revenue begins flowing from that deal, Brazil may consider a share of the income taxable domestically

• A Maryland partnership takes on a European investor and provides services to a European client. Even if the partnership doesn't have a permanent presence offshore, its members may owe foreign tax based on how those services are delivered and sourced

• A U.S. citizen living in D.C. earns income from speaking engagements in Germany. Germany may impose withholding tax, which the individual must claim as a credit on their U.S. return under our tax treaty

These arrangements can easily become tangled—and the IRS (and state tax agencies) are unlikely to show much grace when errors arise from poor planning.

Key Takeaway: Income Source Matters More Than You Think

The real lesson here isn't about an NFL game. It's about how often Americans earn income in places they aren't thinking about from a tax standpoint—and how those places very much expect their cut.

Whether you're issuing K-1s to international partners, collecting consulting fees from abroad, or simply receiving residuals from foreign sales, the same question applies: Where is the income sourced?

IRS regulations, tax treaties, and foreign tax laws all come into play. But so do state rules—many of which are more aggressive than the federal government in taxing out-of-state business activity.

If you misclassify the income, fail to pay or claim proper credits, or ignore secondary withholding requirements, you risk audit, penalty, and overpayment.

We've seen this first-hand with clients in tech, professional services, real estate, and creative industries who assumed a deal signed on a laptop in Bethesda couldn't possibly generate tax exposure in Brazil, Germany, or California. But it can—and it does.

Risk Management and Strategic Tax Planning

If your business operates across borders—or across state lines—it's time to make multijurisdictional tax planning a core part of your strategy.

At a minimum, here's what we recommend:

Understand Your Exposure
Identify all locations where services are performed, income is earned, or parties reside. Get clear on how your income is sourced and whether foreign or out-of-state jurisdictions have a legitimate claim.

Review Treaty Positions
Tax treaties may offer relief, such as reduced withholding or double-taxation protections. But you must affirmatively claim those benefits—often by filing the correct forms with the IRS and foreign tax authorities.

Coordinate With State Rules
Some states, like California and New York, independently assert taxation even when federal rules or treaties suggest otherwise. Strategic planning can prevent inadvertent exposure.

Use Entity Structures Thoughtfully
LLCs, S Corps, and partnerships may pass international tax complexity through to their members or shareholders. Consider whether restructuring or use of blockers is appropriate for your situation.

Document Everything
If you're audited—by the IRS, a state, or a foreign agency—you'll need strong documentation showing where work was performed and how income was sourced. Build that into your recordkeeping now.

Insight: Tax Is No Longer a Domestic Matter

The NFL's Brazil game is a clear example of how activities conducted miles away can trigger complex tax outcomes here at home.

For professionals and business owners across Maryland, Virginia, and Washington D.C., the takeaway is simple: if you're doing business outside your home state—or outside the United States entirely—you can't afford to treat tax planning as an afterthought.

The rules are tightening. The audits are increasing. And compliance only gets harder as revenue shifts across borders, platforms, and currencies.

Tax isn't just a year-end issue. It's a strategic input—and today, it's more global than ever.

Need Guidance with Multistate or International Tax Exposure?

If you're unsure how your income is sourced—or whether international activity could put you at odds with federal or state tax authorities—we're here to help.

At Thienel Law, we advise business owners, executives, and high-net-worth individuals operating across Maryland, Virginia, and D.C. with proactive tax strategies aligned to their goals.

Whether you're expanding abroad, managing pass-through complexities, or reconciling state obligations, you don't have to navigate it alone.

Schedule a consultation with Steve Thienel for personalized guidance tailored to your situation. Let's strengthen your tax position—before it's challenged.