Royalties remain royalties even above the ceiling referred to in Article 37 of the CIR

The Court of Cassation, in a ruling dated 10 November 2017, has put an end to the tax administration practice consisting of automatically taxing copyright income in excess of the ceiling of EUR 37 500.00 (indexed amount – 59 970 EUR for the fiscal year 2018) under the heading of professional income. In the case of audit by the tax administration, the amount of royalties received by a taxpayer that exceeds 37 500.00 EUR is automatically reclassified as professional income. According to the tax administration, it is sufficient that the copyright royalties come from a professional activity to be able to classify them in the category of professional income¹ and for them to be taxed as such.

The Court of Cassation is not of this opinion and reminds the tax administration that income from movable property, such as copyright royalties, may not be automatically considered to be assigned to the exercise of a professional activity based on the sole fact that the revenue was produced by this activity. Accordingly, it will now be up to the tax administration to demonstrate that income from copyright that is in excess of 37 500.00 EUR (to index) is professional income from the taxpayer’s professional activity.

[1] J. Van Dyck, « Droits voisins : revenus mobiliers ou professionnels ? », Fiscologue, 19 June 2009, n° 1165, p. 12.