Under the existing regime, organisers must withhold 18% of the withholding tax on income paid to foreign artists and sportspersons. In principle, this withholding tax is final, which means that the artist or sportsperson does not have to file a non-resident tax return.
The bill provides for a minimum threshold of 15.000 euro. For artists or sportspersons, an organiser would not therefore have to withhold taxes up to an amount of 15.000 euro on an annual basis. If the annual income would be higher than 15.000 euro, then the 18% withholding tax would remain due.
This bill fits a trend among OECD-member states to question the specific Article 17 of the OECD model tax convention concerning artists and sportspeople. This article provides for the taxation of artists and sportspeople in the state of performance, being the state where the show or sports performance takes place. Since it leaves all stakeholders in the sector with different declaration and reporting requirements, this provision has already been under pressure for some time now.
The Belgium – United States double tax treaty already provides for a similar threshold for determining whether taxes are due in the state of performance. The Netherlands has already completely abolished the withholding tax system.
Introducing this threshold in the Belgian internal regulation will in practice generate savings for organisers. Within the sector it is common that artists and sportspersons negotiate a net wage with the organiser, which in reality makes the 18% withholding tax an additional cost.
The purpose of this measure is to support organisers of sports and cultural events after the coronavirus crisis. If the draft bill is adopted, then the Belgian Finance Minister will still have to provide some clarifications. For example, the question arises how the 15.000 euro threshold will be calculated – before or after deduction of (lump-sum) costs? Furthermore, the assessment of the threshold per tax payer and per income year should be centrally monitored.
For questions, please contact the authors of this article.
Daan Buylaert - Partner (firstname.lastname@example.org)
Laurine Vanherck - Associate (email@example.com)