The qualification of copyright income as income from movable property - The Tax Administration sets its conditions

31 Oct 2014

The Tax Administration has just published a new circular which specifies in what circumstances copyright income can be likened to income from movable property and not to professional income.


In our Newsflash of 17 October 2014, we informed you about a Supreme Court decision which qualifies, under certain conditions, copyright income as remuneration subject to social security contributions.

In a Circular dated 4 September 2014, the Tax Administration also examines the qualification which has to be given to revenue earned by a natural person who, in the course of his/her professional activity, confers the transfer of copyright.

Such revenue is either income from movable property taxable at the separate rate of 15%, after deduction of expenses, or professional income taxable at the normal progressive personal income tax rates (up to 50%).

The Tax Administration mentions in particular the condition that the revenue from a transfer of copyright (with respect to a third party) has to be clearly stated in the written contract. Next, the administration refers to the following typology to determine the part of copyright income:

-   if the contract provides a breakdown of the remuneration or a separate remuneration for the professional income and for the transfer of copyright, the Tax Administration will refer to the breakdown contract;
-   if the contract provides only for the transfer of copyright, and not professional services, the entire remuneration is deemed to pertain to the transfer of copyright;
-   if the contract provides for a global remuneration without identifying the part of the income remunerating the transfer of copyright, the transfer of copyright is considered to be unpaid;
-   if the contract does not provide for a copyright transfer, notwithstanding the fact that the service necessarily involves such a transfer, there is no income from movable property.

It remains to be seen whether the recent Supreme Court decision concerning social security contributions on copyright remuneration will also be followed for tax purposes.


> Action point

It is important to check and, if need be, to adapt your contracts in order to clarify exactly what the remuneration relates to: is it remuneration for a copyright transfer or remuneration for work or a combination of both?