Copyright for creatives = Tax-friendly

When a software developer, designer, marketer, consultant or other 'creative' employee creates copyrighted works, the copyrights in principle belong to the employee (and not to the employer!).

This is why the majority of employment contracts stipulate that an employee waives 'all property rights to the creations he/she makes in the course of employment', without compensation.

However, both parties can agree to consider part of the gross salary as remuneration for the transfer of the copyrights on these creations. This remuneration is in principle taxable as chattel income, instead of professional income.

Conditions?

Firstly, the works must be protected by copyright, i.e. original works that have a concrete form. Thus, a mere idea is not accepted, whereas the creation of software, brochures and presentations is. In addition, the transfer and the associated payment must be agreed in writing.

Advantage?

The employee enjoys a very favourable tax rate of barely 15% on this moveable income (with flat-rate cost deduction even 7.5%!). A social security contribution of 13,07% remains applicable. Thus, the employee equally builds up social rights on this part of the salary. All this while the costs for the employer remain the same.

Administration?

The employer must indicate the remuneration for copyrights on sheet 281.45. In addition, he will also have to submit a withholding tax return. The employee will have to indicate this income from movable property in the personal income tax return (this will increase the favourable tax rate with the municipal tax).  

Ruling?

A so-called 'ruling' (agreement) concluded between the employer and the tax authorities offers absolute legal certainty regarding the correct application of the copyright regime. For example, a binding agreement is made on the percentage of the employee's gross salary that can be paid out in royalties in a tax-friendly manner.

Wondering what the impact of this reward technique can be on your wage policy? Try a free simulation at www.payflip.be/auteursrechten!

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