Tax authorities increasingly appear to be focusing on copyrights

New obligation since 2022

The current regime for copyrights has been part of the tax code since 2008. The legislator recently added an additional obligation pertaining to income derived from copyrights. On 1 January 2022 an individual obligation to declare was introduced using an individual 281.45 sheet and a 325.45 summary declaration. From now on, you must declare any royalties that constitute income from movable assets on the individual sheet.

Tax authorities checking more frequently

Whether or not this is a coincidence, besides this recent change in the law we have also observed a more intense focus by the tax administration itself. For example, the number of requests for information concerning dossiers that involve copyright transfer fees is on the rise.

Important considerations

Forewarned is forearmed. In addition to the new obligation to submit a declaration, a number of other elements should also be taken into consideration, particularly now that the tax authorities are paying close attention to the distribution of royalties. It is advisable to comply correctly with at least the necessary basic formalities.

Withholding tax

Up to the limit of 64,070 euro (financial year 2022), royalties from cession or concession of copyright movable assets income is subject to 15% withholding tax. Above this limit, the rate is 30%. Moreover, the withholding tax does not lead to an exemption as you must always declare any income from copyrights in your personal income tax return.

VAT

If you are liable for VAT, then the transfer of copyrights is exempt if it concerns a publishing contract that meets certain conditions. If these conditions are met, the exemption applies anyway, and you can consequently not voluntarily opt for the right to deduction.
If you do not meet the exemption conditions you can apply the reduced rate of 6%, except for copyrights relating to computer programmes or advertising, which are excluded from the reduced VAT rate and consequently subject to 21% VAT.
If the exemption for publishing contracts does not apply, the exemption scheme for small businesses could potentially offer a solution.

Ruling

Do you, as a manager, receive royalties from your company? The Ruling Commission has repeatedly decreed that this does not entail any obligation to register for VAT.

Compile a well-founded dossier from the outset

In addition to taking into account the above-mentioned considerations, it is essential to properly substantiate the copyright dossier. During a potential audit, the tax administration will often inquire about matters such as:

• The underlying written agreement;
• A detailed underlying calculation relating to the copyright income obtained;
• Substantiation that you have created a copyrighted oeuvre and that this is actually being exploited.

Even though these are not legal obligations, it is advisable to compile a dossier of this nature as soon as you implement copyright remuneration. Once the tax authorities come knocking on your door, you as a taxpayer only have a limited period of one month to respond to any queries submitted by the tax administration.

We are happy to assist

If you would like further information on how to put together a properly substantiated copyright dossier, please do not hesitate to contact us. We can, for example, help you draw up an explanatory note. If you require certainty concerning the extent of your copyright remuneration, you can always request a ruling in advance. Again, we would be happy to assist with this process.