Copyright is the new company car
FISCALITY INFLUENCES our behaviour. People avoid highly taxed transactions or income, preferring tax exemption and low tax solutions. The government has planned for that. But if the taxpayer is the one taking initiatives to pay as few taxes as possible, this is called tax avoidance or evasion. This is perceived as undesirable behaviour. The company car, the star in the firmament of any attractive remuneration policy, is feeling the brunt of this shift in perception. Although under pressure, abolishing it is difficult since it is a form of pay. In some sectors, the war for talent is such that employers don’t stand a chance in attracting new employees if the company car is not part of the remuneration package.
Good legislation simply has to be simple and objectively applicable.
Over the past ten years, a new star has risen in that firmament: copyright income. The tax rate for copyrights is only 15 percent up to 61,200 euros (2019 income year). Beyond that, the normal tax rate applies, up to 50 percent. As with costs deductible from income, an attractive cost lump sum deduction applies to copyright. Half of the first tranche of 16,320 euros is exempt as costs. The cost deduction on the next tranche of 16,320 euros is still a quarter. Depending on the size of the remuneration, the professional income from copyright is therefore taxed at a rate ranging between 7.5 and 12 percent.
COPYRIGHT PAYMENTS, just like company cars, are leveraged as advantages during the recruitment and selection of staff. This is already causing pressure on the labour market. Offering such remuneration gives employers an edge. Unlike a company car, which the employer can offer in practically all circumstances and in virtually any sector, copyright remuneration may only be paid if copyrights are transferred in the working relationship. Moreover, the rules are less objective.
When devising the tax regime, the legislator undoubtedly envisaged a collaboration involving artistic aspects, such as books, magazine articles, paintings, sculptures, plays, films, scripts, music recordings and choreographies. Chances are the legislator would be shocked by today’s broader scope of copyright, such as building plans, illustrations, photographs, brochures, certain lectures and software. With a bit of creativity, a lot can be placed under that heading. What is and what is not covered is therefore not always clear. Correctly valuing the transfer of copyright is another issue. If we could already have a discussion as to the scope covered by copyright, then we could expect a much larger debate to determine fair copyright fees.
Whenever faced with UNCERTAINTY, the safe things to do is to approach the ruling committee. It issues rulings on whether something is covered by copyright and what is an appropriate remuneration. But not everyone will make the trip to Brussels. Regardless of the fact that the ruling committee receives more and more applications and is perhaps already overburdened on some points, good legislation should simply and objectively be applicable. This would also make controls simple. Unfortunately, this is by no means the case when it comes to copyright remuneration.
THE LEGISLATION IS paradoxical. It was created to influence behaviour: the taxpayer must become more involved with creative aspects and creating. Yet, as the taxpayer is finally steered in the right direction, a new danger is looming. The application of copyright could in certain cases be qualified as tax avoidance or evasion. Employers can expect a fair amount of reproach in those debates. Let’s not forget, however, that the legislator wanted and encouraged those rules, yet failed to create clear legislation.