McCarthy Accounts specialise in the application and submission of Artists Tax Exemption Claims to the Revenue Commissioners
Income earned by artists, writers, composers and sculptors from the sale of their works is exempt from tax in Ireland in certain circumstances.
Are you an Artist? Artistic works include the following categories only
- a book or other writing
- a play
- a musical composition
- a painting or other like picture
- a sculpture
Next Step? Just fill in your details below to arrange a FREE Initial Consultation and we will contact you shortly to discuss your Artist Exemption Application
Section 195 Taxes Consolidation Act 1997 empowers the Revenue Commissioners to make a determination that certain artistic works are original and creative works generally recognised as having cultural or artistic merit.
The first €40,000 per annum of profits or gains earned by writers, composers, visual artists and sculptors from the sale of their work is exempt from income tax in Ireland in certain circumstances. The €40,000 limit was introduced in the tax year 2011. Guidelines have been drawn up by the Arts Council and Minister for Arts Sport and Tourism, with the consent of the Minister for Finance, for determining for the purposes of Section 195 whether a work is an original and creative work and whether it has, or is generally recognised has having cultural or artistic merit.
The Revenue Commissioners may consult with a person or body of persons, such as The Arts Council, which may be of assistance to them in reaching decisions in relation to Artists Exemption.The scheme provides that the Revenue Commissioners can make determinations in respect of artistic works in the following categories only:
a book or other writing
a musical composition
a painting or other like picture
Claimants for Artists Exemption must be resident or ordinarily resident and domiciled, in the State and not resident elsewhere. The Revenue Commissioners are prepared to give advance opinions regarding a work of prospective claimant’s resident abroad. In the event that a favourable advance opinion is given, the prospective claimant will be advised to make a formal application for a determination on taking up residence in the State and meeting the necessary residence requirements.
The exemption previously applied to all income earned by an artist from qualifying works. Recent Budgets have sought to realign public finances, and as part of this policy, the use of various tax exemptions, including the artists’ tax exemption, has been significantly curtailed. Budget 2011, has continued this trend and has all but abolished the use of the exemption. With effect from 1 January 2011, the exemption will only apply to income earned up to a limit of 40,000. All income in excess of this threshold can suffer taxation at up to 52% (income tax + PRSI + the newly introduced Universal Social Charge).
As successive Budgets have effected such a dramatic fall in after tax earnings for Irish artists, there is a greater need than ever before for artists to structure their affairs in order to reduce their exposure to punitive personal tax rates.Incorporating a sole trade can realise a number of taxation benefits and should be considered by artists that are currently operating under a sole trade structure. If managed appropriately, incorporation can yield significant cash flow benefits and the opportunity to:
- Utilise the 12.5% corporate tax rate.
- Realise earnings tax efficiently through company funded pension payments and appropriately timed salary payments.
- Limit your liability under the veil of incorporation.
- Facilitate succession planning
We have been advising and working with artists for over 35 years. Please contact us now to arrange your FREE Initial Consultation 014977651