20 Feb Compensation for the transfer of copyright: for you as well?
The remuneration paid by a company to its employees or company managers is generally taxed at progressive personal income tax rates. In practice one quickly reaches a tax rate of 50% (excluding municipal surcharges).
For those active in the creative sector, the taxation regime applicable to the compensation of the cession (i.e. the transfer) or concession of copyright constitutes an interesting alternative. Such income is indeed taxed at a rate of only 15%.
Employees as well as company managers active in the creative sector can claim a compensation for the transfer of their copyright to their company and/or employer. This regime is open to, amongst others, actors, photographers, journalist, editors, camera people, authors of books and music, architects, designers, and even software developers and people active in the advertisement sector.
Up to an amount of EUR 58.720 (for assessment year 2018) the income from the cession or concession of copyright qualifies, for personal income tax purposes, as moveable income. This moveable income is taxed at a rate of 15%. Combined with a substantial lump sum deduction for expenses, the effective tax rate is even lower. Furthermore, the compensation paid constitutes, in principle, a tax deductible business expense in the hands of the payor.
The amount of the compensation for the transfer of the copyright can in principle be freely determined between the relevant parties.
From both a tax perspective as well as the perspective of legal certainty, it is strongly recommended to capture the transfer of the copyright, as well as the corresponding remuneration, in a written agreement.
In order to avoid discussions with the tax authorities, it is also recommendable to consult with them upfront. This can be done via a ruling. Through such ruling both the qualification as copyright as well as the amount of the remuneration is determined upfront in consultation with the tax authorities in a binding manner, which avoids discussions during later tax audits.
Mythra has a broad experience with respect to the application for such rulings. Should you wish further information, do not hesitate to contact us.