Income Tax and Value Added Tax (VAT)
There are numerous situations in which artists are confronted with taxes. This chapter deals with the most frequent cases:
From a fiscal perspective, self-employed artists are considered to be business operators, if and when they receive fees from various customers and therefore have to deal with income tax and with value added tax. The following chapter describes the most important rules and procedures applying to those complex issues, first the domestic provisions, and then those applying to cross-border activities.
Employed artists who work under a service contract also pay taxes on their income, i.e. wage tax. Wage tax is a special form of income tax, it is calculated by the employer when disbursing the salary, retained, and directly remitted to the tax office. In such a case, there is no need to act for the taxable person. However, in some cases it may become necessary to hand in a tax return (“compensation of wage tax paid in excess“) or it may be advantageous for the taxable person to hand in a tax return on a voluntary basis.
Not only natural persons, but also legal persons (e.g. companies or associations) are taxable. With the association being a common legal form in art and culture, this chapter also deals with the most important rules governing the taxation of associations. The relevant issues here are: Under which conditions does an association enjoy tax privileges? What does this precisely mean? Moreover, is an association subject to VAT?