Carlos Alcaraz continues to break records on the court, but his success also has consequences off it, particularly when it comes to tax.
The Murcia-born tennis star, who remains fiscally resident in Spain, has just lifted his seventh Grand Slam title at the Australian Open – becoming the youngest ever play to win the career grand slam at just 22.
The victory earned him 4.15 million Australian dollars, equivalent to €2.44 million, an 18.5% increase on the prize money collected last year by his red-headed Italian rival Jannik Sinner.
But despite the headline figure, Alcaraz will not take home anything close to €2.44 million. In reality, once taxes and allowable expenses are settled, his net gain will be just over half that amount – a figure that has reignited Spain’s familiar debate around high earners, tax pressure and fiscal fairness.
According to an analysis by tax specialists at TaxDown, the Murcian tennis star will end up paying more than €1.2 million in taxes on his Australian Open winnings.
How the tax bill adds up
Because Alcaraz is a Spanish tax resident, his prize money is subject to Spanish income tax, even though it was earned abroad.
Spain and Australia have a double taxation agreement, meaning Australia applies an initial withholding tax – estimated at around 15%, or roughly €366,000 – which is later offset against his Spanish tax bill.
Back in Spain, the remaining income is adjusted through the IRPF system. While the top marginal rate in Murcia can reach 47%, experts stress that the effective tax rate is significantly lower once deductions are applied.
TaxDown estimates that, after accounting for the Australian withholding and allowable deductions, Alcaraz will ultimately receive between €1.1 million and €1.2 million net from the tournament.
Why deductions matter
A key detail often overlooked in discussions about sports prize money is that not all of it is taxed as clean income. Spanish tax law allows professional athletes to deduct expenses directly related to generating that income.
For an elite tennis player, those costs are substantial and include coaching teams, fitness trainers and physiotherapists, international travel and accommodation, medical services and specialist equipment.
In Alcaraz’s case, deductible expenses are estimated at between 10% and 15% of the prize money, or €244,000 to €366,000.
Once these costs are deducted and the Australian tax credit applied, the effective result is that around 50% of the gross prize money ends up going to the tax authorities – a figure that often surprises the public when multimillion-euro prizes are announced.
Where does Alcaraz’s tax money go?
There is no direct earmarking of ‘Alcaraz’s taxes’, but using the current distribution of IRPF revenue under Spain’s still-extended national budget, a theoretical breakdown can be made.
The largest share goes towards state pensions, which absorb around 42% of IRPF revenue. Transfers to other public administrations account for roughly 15%, while significant portions are also allocated to public debt servicing, unemployment benefits and other economic support schemes.
Despite dominating public debate, healthcare and education receive a relatively small share of IRPF funds, at approximately 1.5% and 1% respectively, with the remainder distributed across defence, infrastructure, public security, research and development, social services, agriculture and energy.
A common reality for elite athletes
Alcaraz’s case is far from exceptional. Fiscal experts point out that this is the standard framework for any elite athlete earning large sums internationally.
Proper tax planning, they stress, is not about avoiding tax – which would be illegal – but about ensuring that international agreements and legal deductions are applied correctly.
Still only 22 years old, Alcaraz has already accumulated more than $60 million in career prize money, with an estimated net worth of between $42 million and $50 million, according to figures published by Sport Preferred.
