I am organising a festival or a performance with foreign artists? What are my tax obligations?
Chip obligations if the income has not been paid to the artist him/herself but to another natural or legal person.
Importantly, the income of foreign artists in Belgium is subject to a final withholding tax of 18%. For net agreements with artists, it is important for the organisers to factor in the withholding tax.
For some foreign artists, an organiser can obtain an exemption from this withholding tax; for example, this is the case for Germany and the United States. To be sure, the specific rules of the applicable double taxation treaty should be looked at in detail on this point.
As explained in a previous newsletter, the double taxation treaty with France concerning the allocation of taxing powers for artists will change drastically. However, currently there has been no parliamentary progress, which makes it unlikely that the new treaty will enter into force on 1 January 2024. The procedure to obtain withholding tax exemption for French performers under the new treaty is expected to be similar to the current regime for the United States.
Please note that a payment to an artist agency is not initially subject to the withholding obligation, which could then be important for avoiding unnecessary withholding tax.
On what amount is withholding tax due?
The 18% withholding tax is due on the gross amount after deduction of a (limited) lump sum for expenses. The gross amount includes the actual remuneration but also other granted allowances. So travel and accommodation expenses are also included here.
Flat-rate costs are estimated at the following amounts: EUR 300.00 for travel expenses; EUR 37.50 per day for food and other minor expenses and EUR 62.50 per day for accommodation costs.
This flat-rate amount for expenses is determined for each taxpayer according to the number of days performed in Belgium, taking into account an amount of EUR 400 for the first day and an amount of EUR 100 for each subsequent day performed with an annual maximum of 10 days per artist per organiser.
An organiser may also seek prior agreement from the tax authorities to reduce the basis on which the 18% must be withheld (e.g. for production costs).
What happens if I have not prepared a tax fiche?
If, as an organiser, you do not draw up a slip, then the tax authorities may consider the payments as secret commissions and establish a 'separate assessment on secret commissions'. This means that a 100% tax may be imposed on the disbursing legal entity, which would be in addition to possible administrative penalties. The cost deduction of the fees paid would also be compromised.
If you would like more information about this subject, then please contact the authors.
In a future newsletter, we will explain artists’ tax obligations in more detail.