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#Tax & Legal #Business & International Tax #Copyrights #Withholding Tax On Income From Moveable Assets

New declaration duty for any copyright income

Tuesday 22/02/2022

A new draft law imposes an additional declaration duty for copyright. The tax authorities already have access to a lot of data via the withhold-ing tax return. From 1 January 2022, an individual 281.45 form will be compulsory for any copyright income.

What is copyright?

Anyone who produces copyrighted work and makes it available to third parties via a cession agreement or concession can receive copyright income subject to the application of a particularly favourable tax scheme.

Not only creative people, but also company directors who, for example, develop software or produce another copyrighted work, can benefit from this. In 2015, the Minister of Finance confirmed that companies can pay a copyright fee to their director. An interesting way to transfer money from your company to your private assets.

Form 281.45 now mandatory

A draft law incorporating various tax provisions voted on 13 January 2022 introduced several amendments concerning the declaration of copyright. The individual 281.45 form became mandatory for any copyright income on 1 January 2022.

The 281.45 form and 325.45 summary declaration have been in use for quite some time, but until recently they were optional for copyright that represents movable income. Copyright income that qualified as professional income was subject to form declaration on the basis of the existing article 57 ITC92.

This has now changed. As of 1 January 2022, the legislator specifically added to Article 57, paragraph 1 WIB92 that income from copyright and related rights must henceforth always be accounted for on an individual form, regardless of their qualification.

Form 281.45 for income year 2021 must be submitted by 30 April 2022 at the latest.

Any copyright income

The Explanatory Memorandum stipulates that copyright income will be considered in a wider sense as greater efficiency is to be introduced in the verification of declared income and the collection of taxes.

The consequence of this extension is that not only the income from the cession or concession of copyright (Article 17, §1, 5° WIB92) shall be subject to the new declaration form duty. Income derived from leasing, letting, use and concession of movable property (Article 17, §1, 3° WIB92), in respect of copyright and related rights, shall also be subject to this new obligation.

Be vigilant

If you do not comply with this new declaration duty, the sanctions are considerable. Be extra vigilant, therefore, when granting copyright.

  • If you do not comply with the new declaration form duty, you will not be able to deduct this income as professional expenses.
  • Moreover, the tax authorities can impose an additional undisclosed commissions levy equal to 100% of the professional costs.
  • In the event of late filing, it will be up to you to prove that the filing, although late, was made in good faith.
  • The tax authorities can also impose an additional levy with respect to income tax on legal persons, which is also equal to 100% (art. 225, paragraph 2, 4° WIB92).

Do you have further questions regarding this topic? If so, feel free to contact us as we would be happy to respond.

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Tom De Clercq

Tom De Clercq

Manager Tax & Legal Services

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