Good news! The Court of Cassation has recently put an end to the practice of the tax administration consisting of automatically taxing income from neighbouring rights and copyright in excess of the ceiling of 59 970 EUR (for 2018) as professional income.
Since 2013 all income deriving from neighbouring rights and copyright must be declared in your tax return, under the heading of movable property. This means the sum of all your income from neighbouring rights and copyright. Not only the amount you receive from PlayRight, but also what you might receive from another CMO or from a producer.
Up to the limit of EUR 59,970 you are entitled to a favorable withholding tax of 15%. Above this ceiling, the general withholding tax for movable property must be applied, in particular 30%.
But, in practice, the tax administration automatically added this income to your professional income, which meant that it was taxed at a progressive rate of 25% to 50%. And this usually was detrimental to the performing artist. And so, the Court of Cassation was asked to take a decision on this.
The Court did not accept the automatic requalification and decided that from now on it is up to the tax administration to prove that income from neighbouring rights is professional income. Failing that, royalties remain royalties, also for the part that exceeds the ceiling of € 59,970.
Request a revision!
And that is good news! If you have recently been personally affected by such an automatic reclassification, be sure to request a revision.