What happens above the EUR 37 500 indexed ceiling?
One of the attractions of the tax regime applicable to copyright and related rights paid in exchange for the transfer or surrender of the economic rights of the author or artist, is, without a doubt, the existence of a ceiling that neutralises the reclassification of income from movable assets to professional income. As long as the royalties received remain below this ceiling, the profession exercised by the beneficiary of the income has no influence on the tax treatment of paid royalties. For the fiscal year 2017 (2016 income), the ceiling was set at EUR 57 590. Nevertheless, uncertainty remains about the share of the income that exceeds this ceiling. The tax authorities stubbornly insist that all income above this ceiling is taxable under professional income. This is a little short sighted. It is good to remember that reclassification is only possible to the extent that the tax authorities demonstrate that the assets at the origin of the income are declared by the beneficiary as being from the exercise of his/her professional activity. It is not automatic. The Lower Court of Namur did not fail to remind the tax authorities of this in a ruling dated 17 December 2015. In this case, an actor received royalties for an amount higher than the ceiling established by Article 37 of the Income Tax Code. The royalties in question were paid by the SABAM. The court recalls on the one hand, that the royalties constitute a priori income from movable assets and on the other hand that it is incumbent upon the administration to demonstrate that the said royalties are assigned to the exercise of a professional activity. In the present case, the court was of the view that this evidence was not reported.