The new Belgian tax regime for copyrights

In 2023, the tax regime for the transfer or license of copyright protected works underwent a significant overhaul. The change was inspired by the federal government’s concern that the previous system had been “abused” by mainly IT developers, as these were not considered “artists”.

The main characteristics have remained the same:  

• revenues derived from the licensing or transfer of copyright protected works will be considered, under certain circumstances, as (“roerend inkomen” / “revenu mobilier”), and not professional income;

• this movable income will be taxed at a rate of maximum 15%, instead of the progressive professional income tax rates that can be as high as 50%.

Below, we will provide an overview of the general principles, key characteristics, requirements, changes under the new regime, as well as the transitory measures taken for those who have declared movable income under the old regime, and may or may not do the same under the new regime.  

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1. General principles

1.1. What are copyright protected works?

There is no formal definition of what are considered works protected by copyright.

Belgian copyright law refers to an open list of “literary and artistic works” that is part of the Berne Convention. This list refers to:  

“[…] every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings; lectures, addresses, sermons and other works of the same nature; dramatic or dramatico-musical works; choreographic works and entertainments in dumb show; musical compositions with or without words; cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works of drawing, painting, architecture, sculpture, engraving and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.”

The arcane wording stems from the fact that the Berne Convention dates back from 1886; since it is an open-ended text (“every production”; “such as”), this means that other types of works can be added to the list. For instance, in Europe, computer programs and their preparatory works have been considered protectable under copyright since 1991, as well as database structures (since 1996).

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1.2. Conditions for obtaining copyright protection

There are two conditions that need to be met for a work to qualify for protection under copyright:

• The work must be expressed in a tangible form: this distinguishes mere ideas as such, which are not protected by copyright. There must be some kind of form or expression, like words put on paper, in a digital file, a presentation, a speech, etc.;

• The work must be original: copyright does not protect mundane works, so the work – in order to qualify for copyright protection – must be the author’s own intellectual creation. Depending on the nature of the work, the author may express his creativity through the choice, sequence and combination of various elements, such as words, images, etc., in an original manner and achieve a result which is an intellectual creation. This does not in any way imply that the work must be “new”, though. See below for more specific examples in this respect.

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1.3. Examples of copyright protected works

It is generally up to judges to determine whether the requirements for a work to be protected under copyright are met. The following works have, in specific cases, been considered protected under copyright by the Belgian courts:

• Portrait photographs where the creative choices can be derived from the pose, lighting, camera setting, camera angle, the created atmosphere, etc., even if such photographs always start from the same idea;

• Reports and manuals where originality can be derived from the choice, arrangement and combination of words, even though they are predominantly informative;

• Brochures where originality is demonstrated by a combination of creativity regarding layout, the use of a top and bottom band, an info column and a uniform use of colour, as well as the use of labels and eye-catchers;

• Lectures, books, films and drawings concerning science when there is personal arrangement of facts, findings and information;

• Drawings where the combination of elements shows intellectual effort. The same applies to plans by an architect that reflect his personal character;

• Concrete developments of projects;

• The aesthetics and design of a vehicle, as well as the design of bodywork details, especially when they contribute to the success of the launch;

• Documents involving a simplification of instructions for use of devices, very often translated, to make them directly intelligible to laymen. In this particular case, these representations were supplemented by explanatory diagrams with references to the various functionalities of the devices, so that the whole forms a graphic composition that attests to the personality of the author even though they are technical in nature;

• The concrete wording, deregistration and structure of general terms and conditions (except those prescribed by law);

• A choice of particular colors or a range of colors put together by an interior designer to create a particular decorative effect although colors in themselves are not subject to protection;

• Websites combining text and images so that they cannot be considered as a mere technical creation;

• Formats of television programs, especially a set of guidelines that allow the creation of a series of programs with certain or determinable characteristics;

• Development plans that reflect creative choices of the author even though certain functional limitations may be available.

As mentioned above, it is key to carefully review and document which works are considered protected by copyright, and provide for a narrative on why and how the conditions for obtaining copyright protection are met.

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1.4. Exploitation: transfer or license

To qualify under the tax regime, the work protected under copyright must be licensed or transferred to a third party. So at least one of the following rights must be licensed or transferred by the author to a third party:

• Right to reproduce the copyright protected work. This includes the right to adapt or translate the copyright protected work, and to rent or lend such work;

• The right to communicate the copyright protected work to the public;

• The right to distribute the copyright protected work.

Ideally, such license or transfer should be laid down in a specific agreement that contains adequate wording, this to ensure that the transaction falls within the scope of the tax regime.

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1.5. Remuneration

If the author receives a remuneration for licensing or transferring, such income will under certain conditions qualify as “movable income”, and not as a professional income.

The main repercussion of such qualification is the way how such income is treated from a tax perspective: in this case, movable income is – in principle – taxed at 15%, whereas professional income is taxed progressively, and this to a rate of up to 50%.

This significant difference has inspired many to qualify certain revenues as a remuneration for copyright, and the Belgian government to start a campaign against individuals (and companies) who have been making use of this system. First of all, it is apparent that tax auditors were given the instruction to carefully review tax returns and identify so-called “abuses” of the old system. Secondly, a new regime was introduced with new conditions that will apply as of 2023.

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2. What does the new regime say?

2.1. Scope

The new regime applies under the following conditions:

• revenues must have been generated from the transfer or license by the initial rightsholder, its heirs or legatees of copyrights, neighboring rights or compulsory licenses defined by law;

• concerning original literary or artistic works referred to in Article XI.165 of the Belgian Code of Economic Law or performances of performing artists as referred to in Article XI.205 of the same Code;

• in view of the exploitation or actual use of these rights, unless external circumstances would make such exploitation impossible.

These three conditions must be cumulatively met.

What is also new, is that the tax code expressly extends the regime to two types of individuals:

• “artists”, being individuals who have applied for and obtained an “artist attestation”. To obtain such a certificate, artists will be required to file an application with the “Artwork Commission” (“Kunstwerkcommissie”, “la Commission du travail des arts”).

It is important to note that this Artwork Commission will only be established as of January 1^st, 2024. The conditions that will apply to obtain such a certificate are not clear for the time being, which means that – in the interim period – these “artists” must defer to the second category of “authors”;

• those who do not have an “artist attestation”: also rightsholders who have provided a license or has transferred in accordance with the three baseline conditions set out above can use the regime, if such transfer or license relates to the communication of the copyright protected work to the public, the public performance of such work, or the reproduction thereof.

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2.2. What about computer programs?

The former regime applied for the income derived from a transfer or license of any copyright protected work in the sense of the Book XI of the Belgian Code of Economic Law. Consequently, “literary and artistic works”, as well as specific categories like computer programs, their preparatory works and database structures qualified under the old regime.  

Following the change in the tax regime, the scope of the tax regime was narrowed down to “literary and artistic works in the sense of article XI.165 of the Belgian Code of Economic Law or performances of performing artists”. Since this article refers to copyright protected works in general, the preparatory works state that works that are assimilated to copyright protected works should not be included in the scope of the tax regime.  

And, according to Belgian copyright law, computer programs and their preparatory works are “assimilated” to copyright protected works.

It goes without saying that such an approach raises a few fundamental questions:

• first of all, notwithstanding the fact that Belgian copyright law expressly contains such wording, European law does not allow for any “assimilation”: according to the Computer Program Directive, computer programs and their preparatory works are protected by copyright. Full stop;

• since there can be no such thing as an assimilation if Belgian copyright law is interpreted in line with the Computer Program Directive, this opens the door towards a potential discriminatory treatment;

• the preparatory works to the new regime expressly state that the new regime does not discriminate on the basis of the occupation of the author, this in an apparent attempt to avoid discrimination;

• these preparatory works also contain a statement that it needs to be determined on a case-by-case basis whether a work qualifies under the new regime, however without providing precise indications or instructions which elements are to be considered and by whom. According to our reading, the only conditions that are relevant here are the ones set out in copyright law (as highlighted above), and no other conditions can be imposed.

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Please note, however, that the European Court of Justice has ruled that a "user interface" is not a form of expression of a computer program within the meaning of the Computer Program Directive. Nevertheless, such an interface can be protected by copyright as such if that interface is its author’s own intellectual creation. Therefore, website developers, UX / front-end designers, etc. could still benefit from the new regime if the conditions for copyright protection are met.

In any event: those authors whose works are no longer considered within the scope of the new regime, a transition period applies, as set out below. For all other literary and artistic works in the sense of article XI.165 of the Belgian Code of Economic Law, please refer to the list of copyright protected works in the Berne Convention and the additional examples set out above.  

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2.3. Exploitation

The new tax regime imposes an additional condition with regard to the transfer or license of the copyright works. As of 2023, the transfer or license must envisage the communication of the copyright protected work to the public, the reproduction or public performance thereof. A transfer or licence aimed at one of these methods of exploitation is sufficient for the purposes of the regime.

Any transmission, irrespective of the technical means or process, will be considered a communication to the public. The “public” referred to is an indeterminate number of individuals, thus excluding specific individuals of a private group. Website and social media content are generally considered to be communicated to a “public”. However, when a copyright protected work is communicated consecutively to several small groups, these recipients will also be considered as a “public”. Think of seminars or workshops held for various groups. The preparatory works state that this exploitation method should be envisaged from the onset for the regime to apply.

A reproduction of the copyright protected work relates to each and every identical copy, irrespective of the form or duration of such reproduction. For example, a handwritten text which is digitally reproduced on a website falls within the scope of a reproduction and requires the approval of the author through a transfer or license. In addition, if the copyright protected work is modified but one can still identify the original work, this is considered a reproduction. For instance, if several pages of a website are turned into an e-book or even several social media posts, these e-books and posts are also considered to be (partial) reproductions. The same applies for translations of texts, articles and books, even where this translation might be considered as a derivative work for which the translator obtains copyright protection.  

The public performance of the work concerns any performance or interpretation of a work, regardless of the nature of the copyright protected work. Consequently, performing a song, play or even a presentation based on a particular script before an audience is considered a public performance.  

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2.4. Remuneration

In addition, the method of calculating the remuneration for the exploitation of copyright protected works has changed.  

The first and most significant rule is that if the remuneration relates to both the creation of the copyright work and the transfer or license thereof, a breakdown should be applied so that one part will be treated as professional income and the other as movable income.  

The new regime introduces a maximum ratio between professional income and movable income obtained from the exploitation of copyright protected works. This ratio, which is set at 70% professional income and 30% movable income, will be gradually introduced, to the amount of 50% in 2023, 40% in 2024 and 30% in 2025, as shown in the table below:  

The second takeaway is that when the remuneration exclusively covers the transfer or license of the copyright work such remuneration is fully treated as a movable income. This can be the case if the copyright work was created independently or the author receives additional remunerations over a certain amount of time.  

Another condition to apply the tax regime is that the average gross amount of copyright remunerations received in the four previous taxable years cannot exceed 64.070 EUR per year (subject to indexation). If the average gross amount of copyright remunerations exceeds this amount, as set out in the example below, the entire amount will be entirely treated as a professional income, and not as movable income:  

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If all conditions are fulfilled, the debtor of such remuneration (the licensee or transferee of the copyright protected work) must withhold 15% of the gross amount of such remuneration agreed upon with the author.  

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2.5. Consequences

According to our reading, the new regime may have some detrimental side-effects for some authors:

• ghostwriters generally write an article or book following the instructions of the individual or individuals who have given the instruction to the ghostwriter to do so. The remuneration paid for this endeavor (being both the service of writing and the transfer of the copyrights) will likely be part professional income, part copyright remuneration;

• if a publisher asks one or more authors to write a book on a particular topic – a practice that is commonplace in, for instance, school- or other educational books, the assessment will likely be similar. In those cases, the remuneration to be paid to the author will also, in part, be qualified as professional income and copyright remuneration;

• photographers, videographers and other kinds of artists who are given the instruction to develop certain works in the context of commercial assignments will likely also see their remuneration split up between professional and movable income. If, however, a photographer does a shooting on its own initiative, and sells the rights to the pictures to a publisher, his remuneration will likely be considered movable income in full.

To ensure that the right qualification is given to the remuneration to be paid to the author or artist, it is key to:

• ensure that the right documentation is in place, including pre-existing works that have been created by the author receiving the remuneration; and

• have a contract in place between the author and the licensee / transferee that precisely sets out how, under which circumstances and upon whose initiative the work has been created.

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3. Phasing out the old regime

Anyone who applied the regime in 2022 and is now excluded from the scope following the change in the Belgian Tax Code, can still benefit from a transitory regime in 2023. For them, the following conditions will apply:

• a remuneration for a license or the transfer of copyright protected works has been received in 2022;

• This remuneration is capped at 35.110 EUR;

• The flat-rate deductible costs are lowered to 50% (up to EUR 9.360) and 25% (up to EUR 18.720).

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4. Conclusion

The changes made to the Belgian Tax Code undoubtedly have a significant impact.  

The government – when developing the bill – has created an urgency for itself, which is generally a bad motivator when developing a decent piece of legislation. This is in particular the case if such legislation relates to taxation.  

The changes that have been made were intended to clarify the scope of the law, but – unfortunately – the ultimate outcome did exactly the opposite. This leaves a lot of room for interpretation and, hence, more legal uncertainty than before.

In addition, chances are high that the new regime will not create the beneficial budgetary effects the government anticipated. Indeed, the government assumes that those who are suddenly falling outside of the scope of the new regime will see their remuneration requalified into professional income. However, we anticipate many individuals simply phasing out the regime, and likely using other means to lower their effective professional income tax rate.

For those who would like to implement or transition into the new regime, one not only needs to carefully consider all the conditions and exclusions that are explicitly and implicitly contained in the law, the preparatory works, as well as communications made by various government officials. So, considering adding a decent dose of opportunity and risk management, especially in the next years to come, is a prerequisite in our opinion.

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