Social security exemption on compensation for surrendering authors’ rights: Regularisation required before 30 June 2023

A royal decree was published in Belgium’s official gazette on 14 April 2023, confirming the employer and employee social security exemption on compensation paid for the surrender of authors’ rights (Dutch | French). The National Social Security Office (NSSO) subsequently on 26 April 2023 published its interim instructions covering the new exemption (Dutch | French). This follows the reform of the tax regime applicable to authors’ rights income as from 1 January 2023 enacted by the program law (1) of 26 December 2022. The reform prescribes more strictly the scope of application of the regime and provides a one-year transitional period for taxpayers who used to benefit from the regime but are no longer eligible following the reform.

The royal decree provides for an evaluation of the new exemption after two years of implementation to determine the impact of the exemption on the social security budget, and any improper use of the exemption.

This alert summarises the key provisions of the exemption.

Conditions for exemption

As of the first quarter of 2023, compensation for the surrender of authors’ rights will be excluded from the definition of “wages” for social security purposes provided that the following cumulative conditions are met (these are in line with the definition introduced as from 1 January 2023 within the new fiscal regime for authors’ rights):

• The authors’ rights compensation is granted:

1. For the transfer or licensing of authors’ rights or associated rights regulated under book XI, title 5 of the Belgian Code of Economic Law (“the Code”) or similar provisions of foreign law, related to original literary or artistic works as referred to in article XI.165 of the Code, or to performances of performing artists as referred to in article XI.205 of the Code; and
2. For the purpose of exploitation or actual use of these rights, except in the case of an event caused beyond the will of the contracting parties, in accordance with fair professional practice, by the beneficiary, the licensee, or a third party, provided that the beneficiary disposes over an artwork certificate, or in the absence of such a certificate, transfers or licenses those rights to a third party for the purpose of communication to the public, public performance, or reproduction;

• The authors’ rights compensation received does not exceed 30% of the total remuneration (i.e., the sum of the employee remuneration subject to social security and the authors’ rights compensation granted by the employer to the employee concerned). If the 30% threshold is exceeded, only the excess will be subject to employer and employee social security contributions;
• The employer must be able to prove that both the regular salary and the authors’ rights compensation are determined in accordance with market practice; and
• The amount of the authors’ rights compensation must be disclosed in the DmfA declaration.

In addition, the royal decree prohibits the conversion of existing remuneration to authors’ rights compensation, subject to the transitional provisions discussed below.

Transitional measures

Exemption to the prohibition on conversion

An exemption to the conversion prohibition is provided for authors’ rights compensation that was declared as movable income in 2022, if the amount of the compensation is limited to the lower of:

• The amount declared as movable income; or
• The difference between the compensation declared to the tax authorities and to the NSSO as salary.

In this case, the employer will need to declare the amount to be converted to the NSSO by 31 December 2023. If nothing was reported in 2022, the amount for 2021, 2020, 2019, or 2018 can be declared.

Social security regularisation

An additional transitional measure is provided for authors’ rights compensation that was correctly reported to the tax authorities but not for social security purposes. In this case, a social security regularisation can be requested for the years 2018, 2019, 2020, 2021, or 2022. The request should include all amounts of compensation for authors’ rights that were not reported to the NSSO and needs to be submitted to the NSSO before 30 June 2023. The regularisation will not lead to retroactive payment of social security contributions, interest, or fines, but employers need to act promptly. 

Action points for employers

• Assess whether the authors’ rights protected work fulfils the conditions of the new law (a tax ruling can be filed to obtain legal certainty on that point). If that is the case, adjust the 2023 payroll to exempt the compensation for authors’ rights from employer and employee social security contributions;
• Declare the compensation for authors’ rights that was not reported for social security purposes in 2018 to 2022 to the NSSO before 30 June 2023; and
• Declare the amounts from 2022 (or previous years) to be converted for social security purposes to the NSSO by 31 December 2023.