A new set of tax rules governing the copyright income of artists and authors has been recently introduced in Belgium. Copyright income means any income received for the assignment or license of copyrights and related or neighbouring rights, as well as any statutory or compulsory licences, referred to in the Belgian Copyright Act of 30 June 1994 or any similar foreign statute.
Generally speaking, copyright income amounting to less than €50,000 will be treated as financial investment income and be subject to a 15% withholding tax levied by a Belgian resident payer or the permanent establishment or fixed base of a non-Belgian payer. Individuals will no longer be obliged to report such income in their annual tax return. The withholding tax will not apply to the gross amount of income however. For the first bracket of income up to €10,000, 50% may be deducted as a lump sum cost, for the second bracket of income up to €20,000, 25% may be deducted. No further deductions may be applied to any amount in excess of €20,000.
As the measure is general in nature and it was only intended to be introduced for individuals, an exemption from withholding tax on copyright income will be introduced for Belgian companies, companies managing the collection and payment of copyright income on behalf of beneficiaries, and other legal entities subject to the legal entities tax provided they are acting as an intermediary in the payment of copyright income.
This new rule creates some additional obligations for those paying such income: the Belgian payer of copyright income will be obliged to file a withholding tax return (and pay such tax) within 15 days following the payment of the copyright income. The legislative history indicates that a royal decree (yet to be published) will also prescribe the completion of a special form to be attached to the withholding tax return in which the beneficiaries of the copyright income must be identified.
The law applies retrospectively from 1 January 2008. However, since it is impossible for a payer of copyright income to levy withholding tax retrospectively, the Ministry of Finance has informally confirmed that the retrospective effect will be annulled by the year-end omnibus law and the withholding obligation would then enter into force as of January 2009 instead.