New copyright tax regime - Don't postpone if you want to benefit from an exemption from social security contributions!

Copyright income benefits from a particularly advantageous tax treatment. Up to a certain ceiling these are taxed at a separate rate of 15%.  In practice, this system is used as an attractive form of remuneration for workers. 

However, moving forward, copyright income granted to employees is no longer considered as "remuneration" for the calculation of social security contributions, provided certain conditions are met.

In order to benefit from this exemption from social security contributions, employers are required to file a declaration / regularization before the end of the year!

What benefits are involved?

The exemption from social security contributions applies to indemnities paid by an employer to an employee for the transfer of copyright covered by the tax legislation.

The relevant rights therefore are copyrights, neighboring rights or legal licenses relating to original literary or artistic works covered by Article XI.165 of the Code of Economic Law (CEL) (included in Title 5 of the CEL) or to the activities of performers covered by Article XI.205 of the CEL (also included in Title 5 of the CEL), it being specified that these rights must be transferred with the intention of their actual exploitation or use.

In addition, the employee must either possess an artist certificate, or be paid in connection to the transfer or licensing of a work to a third party for the purposes of communication to the public, public performance or reproduction.

Exemption ceiling

When the aforementioned conditions are met, copyright indemnities received by employees are exempt from social security contributions, provided that:

• The copyright indemnity does not exceed 30% of the sum of the remuneration subject to social security and the copyright indemnity; and
• Copyright compensation and remuneration are determined in a manner consistent with the market; and
• The amount of the copyright indemnity is reported in the quarterly DmfA declaration under a specific code (remuneration code 47).

Prohibition of remuneration conversion

The aforementioned exemption does not apply if copyrights are granted in conversion or replacement of remuneration or other benefits.

However, it is possible to deviate from this prohibition under very specific conditions.

Indeed, the copyrights that the employer has declared for tax matters for the employee in question as movable income for the taxable periods 2022, 2021, 2020, 2019, or 2018 can be exempted from social security contributions starting from 2023, even if these copyrights qualified as remunerations subject to social security contributions until now. To this end, the employer must declare to the National Social Security Office (NSSO) the amount to be converted before the end of 2023.

Furthermore, employers who, mistakenly, have not declared copyright indemnities to the NSSO in the past (and thus have not paid social security contributions on these indemnities) must regularize with the NSSO before December 31, 2023, if they wish to benefit from the exception to the prohibition of remuneration conversion. In this case, the amounts regularized before the end of 2023 will not be subject to the payment of social security contributions, surcharges, lump sum indemnities, or interest to the NSSO.

Action point

Employers wishing to exempt copyright indemnities, granted to their employees, from social security contributions should ensure to submit the appropriate declarations to the NSSO before the end of this year.