Belgian tax benefits for freelance reporters & writers
If you make a living from selling your words to websites and publishers, the Belgian tax authorities will qualify those earnings as business income. This type of self-employment income is normally subject to the standard progressive tax rates (25% up to 50%), plus municipal taxes and social security. For writers it is quite common to earn royalty income in addition to service fees. A royalty is the amount a publisher pays an author for the rights to publish their book or article.
In Belgium, there is a favourable tax regime for personal income resulting from the transfer or assignment of copyrights, under certain conditions. Such royalty income is classified as ‘movable’ income up to €64,070 (tax year 2023), which is taxed at a flat rate of only 15% instead of the hefty progressive tax rates. In practice, the effective tax rate can drop even below 15%, as you automatically benefit from a lump sum expense deduction.
Initially, the intention was to limit this favourable tax regime to income generated within a more ‘artistic’ context. However, its scope quickly became much wider than that and can potentially apply to any type of creation that can benefit from copyright protection. While the tax authorities are in general more reluctant in allowing the latter category to claim tax-friendly royalty payments, those who create works of literature or art easily qualify for this.
Initially no distinction was made between service fees on one hand, and fees for the transfer or assignment of copyrights on the other. The income classification, as such, has not changed, but a difference in tax treatment that was introduced created a lot of confusion with Belgian taxpayers. Because of the legal uncertainty resulting from this, the media sector seized the opportunity to conclude a protocol agreement in 2017, which was submitted for approval to the tax authorities.
The Ruling Commission accepted that 50% of the fees paid to “freelance journalists and press photographers […] for creating journalistic contributions and photos” can qualify as a fee for the transfer or assignment of copyrights that benefit from a favourable tax treatment (Decision Nr. 2017.154 of 4 April 2017). The tax authorities recognized that the creative contribution of independent press correspondents, journalists and photographers is crucial for the performance of the sector’s activities in view of its publication in the media, including (digital) newspapers, (digital) magazines, (mobile) websites, digital newsletters, social media, and so on.
The transfer of copyrights by the journalist to their publisher is essential from an economic viewpoint due to the increased competition from new (digital) international players. It is essential that the works created by independent journalists can be put to maximum use on the different information platforms available. The granting of a license to publish the work (simultaneously) in various media is therefore paramount.
As tax rulings are in general only valid for 5 years, the Ruling Commission was recently requested to extend the above decision of 2017 to which it has agreed (Decision Nr. 2022.0222 of 17 May 2022).
While more journalists nowadays have their own management company, the Commission added this time that “maximum 50% of the royalty amount invoiced to the publishing company can pass on to the journalist-company manager (i.e. 50% of 50% = 25%)”.
In other words, the latter category of journalists who work via their own Belgian company can only claim 25% as a royalty of their total fee earned, while it is generally accepted that individual freelance writers (sole proprietors) can claim up to 50% of their total income as a tax-friendly royalty.
Considering this rather significant difference, it is certainly recommended to check if it even makes sense to work via a (Belgian) management company if you are freelance writer.