VAT ON COPYRIGHT ROYALTIES?
Does a company director have to pay VAT on the copyright fees he receives from his own company? This has been a point of discussion for a long time. Now the Belgian Ruling Commission has confirmed in recent rulings that, in principle, this is not necessary.
See ruling 2021.0391 of 13.07.2021, ruling 2021.0146 of 15.06.2021, and ruling 2021.0307 of 01.06.2021.
In principle, company directors/managers do not have to pay VAT on remunerations for copyright received from their own company. Of course, this always depends on the concrete factual circumstances.
In a recent ruling (2021.0391 of 13.07.2021), the Ruling Commission formulates this as follows (translated from Dutch):
“The cession or concession of copyrights is considered a service as intended by Article 18, § 1, second paragraph, 7° of the Belgian VAT Code. As a rule, this service is subject to VAT by applying the rate in accordance with heading XXIX, item 1, of table A of the annex to VAT Royal Decree no. 20 of July 1970, if it is performed under the conditions laid down in Article 2 of the VAT Code.
It should be recalled that the VAT authorities assume that directors or managers who, in their capacity as natural persons, act in the ordinary course of their statutory duties and act as an organ of the legal person that they represent, because of the special nature of their duties as agent, do not act independently within the meaning of Article 4, § 1, of the VAT Code. Consequently, the actions carried out by these directors or managers in that capacity in the exercise of their statutory mandate should not be subject to VAT (Decision no. E.T. 79.581 of 27.01.1994, www.fisconetplus.be).
Under these circumstances it can also be assumed that the natural persons who, in addition to exercising their statutory mandate, transfer their copyright to the legal entity of which they are director or manager or to which they grant licence rights relating to their copyrights, in the factual circumstances as described in this previous decision, are not obliged to be identified for VAT as taxable persons for the cession or concession of these copyrights.” (free translation)
For more information on copyright and taxation, see our previous blog post.
Do not hesitate to contact us for more information about copyright tax optimisation in Belgium.
Author: Bart Van Besien