Copyright tax optimisation for software developers
Software developers in Belgium frequently use a copyright tax optimisation scheme to receive tax-friendly payments from their own company (bvba/sarl or gcv/scs) or from their employer. The tax rate for these copyright payments is 7,5% for the first 16K euros received as copyright compensation.
Software and copyright tax optimisation
In practice, this copyright tax regime works as follows:
Copyright payments for independent software developers
For independent software developers (freelancers with their own company): The software developer enters into a contract with his own company (e.g., B.V. or G.C.V.) whereby the developer transfers the copyright on the software to the company. In return, the company awards a specific copyright compensation to the software developer.
The copyright compensation for independent software developers is often calculated as a percentage of the relevant turnover of the company. In general, a fee of 12,5% of the relevant turnover of the company is accepted as a reasonable and realistic compensation for the transfer of copyrights. The copyright compensation can also be calculated as a percentage of the remuneration that the developer receives from his own company (maximum 25% of the remuneration). We recommend that developers who are also manager of their company and receive copyright payments from this company, should receive a minimum 45.000 euros’ remuneration (including benefits) when applying this copyright tax optimisation scheme. We also recommend limiting the copyright compensation payouts to maximum half of the result of the financial year of the company.
Copyright payments for software developers who are employees
For software developers who are employees (or freelancers without their own company): The software developer enters into a contract with the client or agency whereby he transfers the copyright on the software to the client or agency, in return for a specific copyright compensation.
The copyright compensations for employees are frequently calculated as a percentage of the remuneration of the software developer. The maximum copyright compensation that the software developer can receive is 25% of his remuneration, provided that he spends his entire working day at creative work (software development). In case the developer also spends time on management or other non-creative work, the copyright compensation should be lowered (e.g. if the developer spends 90% of his time on creative work, the developer will be entitled to a copyright compensation equal to 22,5% of his remuneration).
Tax rates for copyright compensations in Belgium
The tax rate for copyright compensations in Belgium is in principle 15% (instead of the progressive tax rate of up to 50%). In practice, this tax rate drops to 7,5% for the first scale of 16.680 euros.
Below is an overview of the fiscal thresholds for copyright payments in Belgium (for income year 2021):
|Copyright royalties||Expense deductions||Taxable||Tax rate|
|0 € – 16.680 €||50% (8.340 €)||8.340 €||1.251 € (7,5%)|
|16.680 € – 33.360 €||25% (4.170€)||12.510 €||1.876,5 € (11,25%)|
|33.360 € – 62.550 €||0% (0 €)||29.190 €||4.378,5 € (15%)|
|> 62.550 €||Progressive income tax between 25% and 50%|
Other conditions for copyright payments
Software and copyright protection
This copyright tax regime is only valid for the transfer of copyright. Not all creations will be protected by copyright. Note also that the software developer has to ensure that he owned the copyright in the first place. If a software developer claims copyright on software, he must have made some creative choices in the development of the software. If the software developer merely executes what somebody else (e.g. software architect or analyst) has developed without making any free choices by himself, it will be difficult to apply this copyright tax regime. This copyright tax optimisation scheme is relevant for software developers and software architects who made creative choices in the development of software. Preparatory works for software can also qualify for the copyright tax regime (e.g. the work of certain software consultants, if this results in future developments).
Contract for copyright payments
We recommend that the software developer enters into a written contract (with his own company or with his employer) that describes the transfer or licence of copyrights and the copyright royalties that will be paid. We can help you with drafting this contract.
Rulings for copyright payments
You can always ask for a preliminary decision by the Ruling Commission. We can help you with preparing your application and defending your case before the Belgian tax authorities (Ruling Commission).
Do not hesitate to contact us for more information about copyright tax optimisation in Belgium.
Bart Van Besien