Journalists: the ISI defeated by jurisprudence

For the past few years, the Special Inspection of Taxes (ISI) challenged the classification as royalties of income paid by a newspaper publisher to independent journalists with whom it works. The Court of Namur made two judgements on 2 November 2016 confirming the arbitrary nature of the classification as operated by the ISI. As a reminder, sure of its position, the ISI had reclassified the entire amount of the royalties received by the independent journalists of a French-speaking newspaper, believing that these amounts did not constitute an exchange for the transfer of their copyright but was remuneration for their work. The Inspection also chose to charge the journalists with fraudulent intention and so applied a penalty increase of 50%. Reading these judgements, one finds that the entire case centred upon one essential question: who is responsible for the burden of proof? Is it up to the taxpayer to prove that income has the classification that s/he has assigned in when making the tax declaration or is it up to the tax authorities to demonstrate that the classification given by the taxpayer is incorrect? The judge considered, rightly, that it is up to the authorities to demonstrate that the disputed revenue constitutes professional income. Having found that the press articles and photographs carried out by the taxpayer constituted works that were eligible for copyright protection, the judge went on to consider the agreement made between the publisher and the journalists. This agreement provided for the transfer of all the rights to use the works to the editor. This transfer was not exclusive. Rates were provided by the parties. The agreement stated, in addition, that no other compensation would be due. The court then considered the account statements established by the parties. According to the court, there was sufficiency within the agreement and the other items presented that the consideration paid by the publisher to the journalists covered in particular the transfer of copyright. Therefore, by taxing the whole of the sums as fees, the tax authorities had proceeded in an arbitrary fashion.