Social security contributions: changes for copyright

From 1 January 2023, the social security treatment of the award of compensation for the assignment or licensing of copyright will undergo significant changes. Under certain conditions, this compensation may be exempt from social security contributions.

In our Infoflash of 31 January 2023, we informed you of the changes in the tax treatment of this compensation.

What do we mean by "compensation for copyright"?

The definition of compensation for copyright for social security purposes is the same as the definition in tax legislation.

“Compensation for copyright" is understood to mean compensation:

• Arising from the assignment or licensing by the original owner of copyright and neighbouring rights, as referred to in Book XI, Title 5 of the Code of Economic Law;
• Relating to original literary or artistic works referred to in Article XI.165 of the same Code or to works by performing artists referred to in Article XI.205 of the same Code;
• With a view to the exploitation or actual use of these rights.

The owner of the above copyrights must:

• either hold a "certificate of work in the arts" (as referred to in the Act establishing the Commission for Work in the Arts and improving the social protection of workers in the arts);
• or, failing that, assign or license the rights to his copyrighted work protected by neighbouring rights to a third party for the purpose of communication to the public, for public performance or for reproduction.

What conditions must be met for the exemption from social security contributions?

Compensation for copyright as defined above is not subject to social security contributions if it meets all of the following three conditions:

1. During the four-quarter period of the calendar year, the amount awarded as compensation for the assignment or licensing of copyright or neighbouring rights amounts to no more than 30% of the sum of:
   • The total amount of this employee's remuneration subject to social security contributions
   • AND the total amount of the compensation for the assignment or licensing of copyright and neighbouring rights
2. Both the remuneration and the compensation for copyright and neighbouring rights shall be determined in a manner consistent with the market. The employer shall keep the supporting documents for the various assessment elements at the disposal of the National Social Security Office.
3. The amount of the compensation for copyright and neighbouring rights is reported in the quarterly declaration of the quarter in which the compensation is awarded.

If these three conditions are met, the compensation for the assignment or licensing of copyright and neighbouring rights is not subject to social security contributions.

If these three conditions are not met, the compensation is fully subject to social security contributions.

If only the first condition is not met (i.e., the amount of compensation exceeds 30% of the amount described above), only the amount in excess of this 30% is considered remuneration and will be subject to social security contributions.

Prohibition on conversion of remuneration

The legislation introduces a prohibition on the replacement or conversion of remuneration for the purpose of awarding compensation for copyright.

Principle 

If the copyrights have been or are awarded as a replacement or conversion of remuneration, bonuses, benefits in kind or any other benefit or supplement to any of the above, whether or not subject to social security contributions, even if the three conditions described above are met, these copyrights are subject to social security contributions.

Exception

The legislation directly introduces an exception to this new principle: compensation for copyright may be awarded in conversion or replacement of remuneration as from 1 January 2023 if the following conditions are met:

1. the employer has declared this compensation to the personal income tax as movable income for the taxable period 2022 or 2021, 2020, 2019 or 2018 in the event of regularisation (see below)
2. the amount of the compensation is limited to the smaller of the following amounts for the taxable period 2022 or 2021, 2020, 2019 or 2018 in the event of regularisation:

→ The amount declared to the personal income tax as movable income

→ The difference between the compensation declared to the tax authorities and the compensation declared to the NSSO as remuneration in performance of an employment contract

3. The employer declares to the NSSO the amount to be converted before the end of 2023 and presents on request the proof of the converted amount. This is the amount for 2022. If nothing was declared in 2022, this is the amount for 2018, 2019, 2020 or 2021 respectively.

Procedure for regularisation 

If the employer has awarded compensation for copyright, which was wrongly not declared to the NSSO but was declared to the personal income tax as income from movable property, he can regulate his situation towards the NSSO by declaring these amounts for the years 2018, 2019, 2020, 2021 and 2022 before 30 June 2023.

This declaration will no longer result in the payment of contributions, surcharges, lump-sum allowances or interest to the NSSO.

Entry into force

These changes enter into force with retroactive effect to 1 January 2023.

For Partena Professional customers

If you are a Partena Professional customer and are affected by this regime in 2022, you will be contacted in order to provide us with the relevant information for the treatment of copyright via a social certificate that you have to fill in.

We also remind you, if necessary, to provide us as soon as possible with the tax certificate you have received from us and that you have to fill in.

Would you like additional information?

If you would like more information on the copyright regime and/or the social security and the tax treatment of copyright, please contact our consultants at globalmobility@partena.be: globalmobility@partena.be

Source: Royal Decree of 7 April 2023 amending article 19 of the Royal Decree of 28 November 1969 adopted in implementation of the Act of 27 June 1969 amending the Decree-Law of 28 December 1944 on social security for workers, Belgian Official Gazette of 14.04.2023; www.socialsecurity.be