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Artists Exemption

Income earned by writers, composers, visual artists and sculptors from the sale of their works is exempt from income tax in Ireland in certain circumstances.

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. Earnings derived from such works are exempt from income tax from the year in which the claim was made.

Guidelines have been drawn up by the Arts Council and the 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 as 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:

1. a book or other writing;
2. a play;
3. a musical composition;
4. a painting or other like picture, and
5. a sculpture.

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 claimants resident abroad. If these claimants receive a favourable advance opinion, they will normally then be given a formal determination in respect of Artists Exemption on taking up residence in the State and meeting the other residence requirements.

• How to Claim the Relief
• Claim Forms
• Operation of the Scheme
• Advance Royalties
• Freedom of Information
• Right of Appeal
• High Income Individuals Restriction
• Guidelines
• Appendix A
• Frequently Asked Questions

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How to Claim the Relief

Writers, composers, visual artists and sculptors seeking Artists Exemption should submit a claim form to the Revenue Commissioners together with samples of their work and any supporting documentation in the form of testimonials etc. which they consider appropriate. Such claims should also be accompanied by evidence that their work has been published, produced or sold. These claim forms are available at the address below or on the Revenue website.

Any income earned from a work before the tax year in which the claim is made will not be exempt.

The following samples and supporting documents are required for each category:

1. a book or other writing - 3 published copies of the book;
2. a play - a copy of the script along with a signed production contract;
3. a musical composition - CDs or cassettes on which claimant must be accredited;
4. a painting or other like picture - 8 to 10 good quality photographs or slides; evidence of sale i.e. invoices and a CV of artistic career to date;
5. a sculpture - as at (4) above.

Claims should be made to:

Office of the Revenue Commissioners,
Income and Capital Taxes Division,
(Artists Exemption Unit)
1st Floor, New Stamping Building,
Dublin Castle,
Dublin 2,
Ireland.

Tel: 353 1 6475000 Ext: 48011, 48684, 48224
Fax: 353 1 6799287
Internet:

• Artists Exemption - Individuals who received a favourable determination in the period since 1 April 2002 - Section 195 TCA, 1997:
• Artists Exemption - Individuals who received a favourable determination during the period 21 April, 1998 to 31 December, 2001 - Section 195 TCA, 1997 (PDF,435KB)

Email: direct-taxes-admin@revenue.ie

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Claim Forms

There are two forms as outlined below:

Claim Form Artist 2

Claim form Artist 2 (PDF, 47KB)

Application forms for Artists Exemption should be made on Claim Form 2. A determination granted on the basis of this claim form will cover the particular work or works submitted with the claim as well as all future qualifying works in the same category provided that they come within the Guidelines.

Application Form Artist 3

Application form Artist 3: advance opinion for non-resident (MS Word, 29KB)

Application form Artist 3: advance opinion for non-resident (PDF, 71KB)

The Revenue Commissioners will give advance opinions to claimants resident abroad. When the claimants become resident in the State and not resident elsewhere a formal determination can then be given.

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Operation of the Scheme

The following payments are exempt from income tax when made to an individual who has received a determination under Section 195, Taxes Consolidation Act, 1997:

1. Arts Council Bursaries when paid directly to the individual by the Arts Council.
2. Residencies when paid directly to the individual by the Arts Council for the purposes of producing a qualifying work.
   (Residencies which relate to teaching art or facilitating other individuals to create works of art or similar type practice do not qualify for exemption)
3. Cnuas payments made under the Aosdana Scheme.
4. Payments from the sale of qualifying works abroad which fall within the Guidelines.
5. Advance Royalties.

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Advance Royalties

Where a taxpayer receives advance royalties, which are attributable to the subsequent publication of a book or other writing, a claim must be lodged with the Revenue Commissioners in the tax year in which the royalties are paid if the royalties are to be exempt. Confirmation from the publisher that the book will be published must accompany the claim.

Where a claim is received in the tax year in which the advance is received, but where a determination has not been granted, any tax liability arising on the advance must be paid. If a determination is subsequently granted, the Inspector of Taxes will review the taxpayer's liability and make any appropriate refund if tax has been overpaid.

Advance royalties paid before the year of claim are not exempt.

If you are in doubt or if you require more information please contact the Artists Exemption Section for further details at the address given above.

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FOI – Release of Information under the Freedom of Information Act 1997

In the event of an individual receiving a favourable determination the individuals name and the type/ title of their work will be published on the Revenue website under the FOI Act.

Determinations made since 1st April 2002 are published on the revenue website under:
Artists Exemption - Individuals who received a favourable determination in the period since 1 April 2002 - Section 195 TCA, 1997 .

Determinations made in the period 21st April 1998 to 31st December 2001 are at:
Artists Exemption - Individuals who received a favourable determination during the period 21 April, 1998 to 31 December, 2001 - Section 195 TCA, 1997 (PDF,435KB)

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Right of Appeal

A claimant has a right of appeal if the Revenue Commissioners do not make a determination in relation to the claim within six months of the claim being made. The appeal must be made by notice in writing to the Revenue Commissioners and it must be made within 30 days after the end of the six month period.

The normal provisions of the Taxes Acts in relation to the hearing/ rehearing of appeals and the stating of cases for the High Court apply.

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High Income Individuals Restriction

With effect from 1 January 2007 Artistic income is regarded as a "specified relief" and may be affected by High Income Individual Restriction.

Broadly, the reliefs affected are the various property based tax incentives and certain other reliefs of which artistic income is one.

The provision works so that the "specified reliefs" which a high-income individual can use to reduce his/her tax bill in any one year are limited to the greater of 50% of the individuals "adjusted income" and €250,000.

"Adjusted Income" consists of an individual’s taxable income to which will be added the aggregate amount of the specified reliefs. The restriction will only apply to those individuals whose "adjusted income" is over €250,000 per annum.
Artists who have exempt income in any one year which does not exceed the threshold amount of €250,000 will not be affected by this measure provided they do not avail of any other specified reliefs.

The following are some simple examples of how the "High Income Individuals" Restriction affects the Artist Exemption. For the purposes of the examples it is presumed that the individuals have not availed of any other "specified reliefs".

Individuals in receipt of Artists Exemption are required to submit a self-assessment tax return by the return filing date for the tax year involved. In addition, individuals affected by the restriction are required to submit a statement on a prescribed form Form RR1 (PDF, 80KB) with their tax return.

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Guidelines

Guidelines drawn up under Section 195, Taxes Consolidation Act, 1997 by the Minister for Arts, Sport and Tourism with the consent of the Minister for Finance in relation to the implementation of Section 195.

Introduction

1. Guidelines were drawn up in 1994 to determine whether works falling to be considered under Section 195, Taxes Consolidation Act, 1997 are original and creative works and whether they have, or are generally recognised as having, cultural or artistic merit.

General

2. Section 195, Taxes Consolidation Act, 1997 provides that a work for the purpose of the Section is an original and creative work in one of the following categories:

1. a book or other writing;
2. a play;
3. a musical composition;
4. a painting or other picture;
5. a sculpture.

Revenue may determine such a work to have, or to be generally recognised as having, cultural or artistic merit.

3. In broad terms, therefore, in order to secure exemption under Section 195, a work has to be both original and creative and to have either cultural merit or artistic merit.

4. In order to be granted a determination under Section 195, it is not necessary for a work to have both cultural and artistic merit - the presence of either quality is sufficient.

5. In applying these guidelines, Revenue may, as provided for in Section 195, consult with such person or body of persons as may, in their opinion provide authoritative assistance to them in establishing whether a work is a qualifying work for the purposes of Section 195.

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Definitions

Cultural or artistic merit

6. A work has cultural merit if its contemplation enhances the quality of individual or social life by virtue of that work's intellectual, spiritual or aesthetic form and content.

7. A work has artistic merit when its combined form and content enhances or intensifies the aesthetic apprehension of those who experience or contemplate it.

Original and Creative

8. For the purpose of a determination under Section 195, Taxes Consolidation Act, 1997 the term "original and creative" encompasses any unique work which is brought into existence for the first time as an independent entity by the exercise of its creator's imagination.

9. A non-fiction work in category (a), a book or other writing, will be considered original and creative only if,

1. It comes within one of the categories cited in Appendix A, and
2. The essence of the work is the presentation of the author's own ideas or insights in relation to the subject matter, and the ideas or insights are of such significance that the work would be regarded as a pioneering work casting new light on its subject matter or changing the generally accepted understanding of the subject matter.

Exclusions from the compass of "original and creative"

10. The following types of work in the categories set out in Section 195, Taxes Consolidation Act, 1997 will NOT be regarded as coming within the compass of "original" and creative".

1. A Book or other writing, notwithstanding paragraph 9, above
   1. A book or other writing published primarily for, or which is or will be used primarily by, students pursuing a course of study or persons engaged in any trade, profession, vocation or branch of learning as an aid to professional or other practice in connection with the trade, profession, vocation or branch of learning.
   2. An article or series of articles published in a newspaper, magazine, book or elsewhere - except a book consisting of a series of articles by the same author connected by a common theme and therefore capable of existing independently in its own right.
2. A Play
   Types or kinds of plays written for advertising purposes which do not exist independently in their own right by reason of quality or duration.
3. A Musical Composition
   Types or kinds of musical compositions written for advertising purposes which do not exist independently in their own right by reason of quality or duration. Arrangements, adaptations and versions of musical compositions by a person other than a bona fide composer who is also actively engaged in musical composition.
4. A Painting or like picture
   Types or kinds of photographs or drawings (other than a set or sets of photographs or drawings that are collectively created for an artistic purpose) which are mainly of record, or which serve a utilitarian function, or which would not exist independently in their own right by reason of quality or by reference to their potentiality for inclusion as part of an art exhibition.
5. A Sculpture
   Types or kinds of objects which are primarily functional in nature, objects produced by processes other than by hand, objects produced by hand by persons other than those actively engaged as bona fide artists in the field of visual arts.

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Appendix A

Non-fiction categories applicable to be considered as eligible for a determination under Section 195.

1. The following categories of literature (and any combination thereof) coming fully with the terms of reference of the Arts Council encompassing the subjects of fiction writing, drama, music, film, dance, mime or visual arts, and related commentaries by bona fide artists:

• arts criticism
• arts history
• arts subject works
• arts diaries
• autobiography
• belles-letters essays
• biography
• cultural dictionaries
• literary translation
• literary criticism
• literary history
• literary diaries

2. The following categories of works coming fully within the terms of reference of the Heritage Council including works which, in their entirety, comprise one or more of these categories:

• archaeology
• publications associated with items or areas of significant heritage value

3. The following category of works coming fully within the terms of reference of the National Archives Advisory Council:

• Publications which relate to the archives which are more than 30 years old concerning Ireland, and are based largely on research from such archives.

4. Categories of works which in their entirety comprise one or more of the categories cited in paragraph 1 to 3 above.

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Frequently Asked Questions

A. What income is exempted under the Artists Exemption Scheme?

Artists exemption exempts from the charge to income tax the profits or gains arising to a writer, composer, visual artist or sculptor from the publication, production or sale of his/her work.

B. Who can claim artist's exemption?

An application must be made to the Revenue Commissioners to establish if an individual falls within the category of taxpayers who can claim artist's exemption. To claim artist's exemption the individual must have produced a work or works which is an original and creative work or works in one of the following categories:

• a book or other writing
• a play
• a musical composition
• a painting or other like picture
• a sculpture

which has received a determination from the Revenue Commissioners in respect of cultural or artistic merit, and, be either resident in the State and not resident elsewhere or ordinarily resident and domiciled in the State and not resident elsewhere.

C. Where should the application for artists exemption determination be sent?
Applications should be submitted to:
Office of the Revenue Commissioners,
Income and Capital Taxes Division,
(Artists Exemption Unit),
1st Floor,
New Stamping Building,
Dublin Castle,
Dublin 2,
Ireland.
Tel: + 353 1 6475000 Extensions: 48011, 48684 or 48224
Fax: + 353 1 6799287
e-mail: direct-taxes-admin@revenue.ie
Internet:

• Artists Exemption - Individuals who received a favourable determination in the period since 1 April 2002 - Section 195 TCA, 1997:
• Artists Exemption - Individuals who received a favourable determination during the period 21 April, 1998 to 31 December, 2001 - Section 195 TCA, 1997 (PDF,435KB)

D. If the determination is granted, how does the individual claim exemption from income tax on the profits or gains from the work involved?

The exemption should be claimed on the return of income submitted annually under the self-assessment system to the Inspector of Taxes. PAYE taxpayers must also make this return. Despite having obtained the artists exemption determination, the individual is still obliged by law to include details of the exempted profits or gains on his/her annual return of income. Because this return is made under self-assessment, it is accepted on a non-judgmental basis by the Inspector of Taxes but, as with all self-assessment returns, it may be subjected to a verification audit by the Revenue Commissioners at a later date.

E. If the artist's exemption determination is granted, does the individual need to apply in respect of all future works?

No - the determination covers both the original work submitted as well as any future work in the same category provided that this work comes within the Guidelines. However, a fresh application must be made to the Revenue Commissioners in respect of work produced in a different category. For example, if a determination is granted in respect of category (a) " a book or other writing" and subsequently the taxpayer writes a play, the play must be submitted for a determination in category (b) " a play".

F. What claim form should be used to make the application?

Claim form 2 is the most commonly used form. A determination granted on the basis of this claim form will cover the particular work or works submitted with the claim as well as all future works in the same category provided that they come within the Guidelines.

G.The claim form requires a "PPSN number" - what is this and how can it be obtained?

The Personal Public Service Number (PPS Number) is the citizen’ s unique reference number for all dealings with the Irish Public Service, including social welfare, tax, education and health services eligibility. If the individual does not have a PPSN number he/she should contact the local Social Welfare Office.

H. Do I need to make a tax return?

You are obliged to make a tax return annually. A return for the year is due by 31st October of the following year, i.e. Returns for 2008 due 31st October 2009, and the return must include your exempt income. The return should be made on a Form 11 (PDF, 613KB) which are available from your local tax office.

I. If an individual is audited in relation to artists exemption, what would the audit focus on?

The audit would focus on whether

• The profits or gains on which artists exemption was being claimed are derived from works in respect of which a determination has been granted,
and

• Any later works in the same category as the work(s) which received the determination – the legislation provides that any later work(s) in the same category as the originally-determined works are also entitled to the exemption provided that they meet the criteria set out in the Guidelines.

It should be noted that, independent of any audit, an individual may apply to the Revenue Commissioners either directly or via the expression of doubt facility for a determination in respect of any later works.

J. For how long must I keep records?

You must keep records for a period of six years unless advised otherwise by the Revenue Commissioners.

K. What happens if the determination is refused?

If a determination is refused, the taxpayer may:

• Re-submit the claim, perhaps with additional supporting documentation, for further consideration by the Revenue Commissioners, or
  
• Appeal Revenue's failure to make the determination to the Appeal Commissioners.

The Appeal Commissioners will hear the case and the appellant will be permitted to bring formal evidence and witnesses in support of the claim and can be represented by a lawyer or tax practitioner. The decision of the Appeal Commissioners can be appealed to the Circuit Court and by way of submission to the High Court as a case stated on a point of law.

L. Does the exemption also extend to PRSI and levies?

No - PRSI and levies are payable on the profits or gains derived from a work or works which have received a determination. This is a matter for the Department of Social and Family Affairs and the contact point in that Department is:
Department of Social and Family Affairs
Cork Road,
Waterford.
Tel: 051 356002 Fax: 051-877838
Website: www.welfare.ie

M. Am I liable to register and pay VAT?

Yes, you are if your annual turnover exceeds €35,000 (services) or €70,000 (goods).

N. The Artists Exemption Guidelines refer to certain categories of work such as a book or other writing, a play etc. - if the work does not fall into those categories, can artists exemption apply?

No - the work must come within one of the five categories referred to. It should be noted that the categories are provided for by the artists exemption legislation and not merely the Guidelines.

O. What is the effect of Appendix A of the Guidelines?

Part 9 of the Guidelines provides, inter alia, that a non-fiction book or other writing will be considered original and creative only if it comes within one of the categories cited in Appendix A of the Guidelines i.e.

• arts criticism
• arts history
• arts subject works
• arts diaries
• autobiography
• belles-letters essays
• biography
• cultural dictionaries
• literary translation
• literary criticism
• literary history
• literary diaries

The effect of Appendix A is to establish, in the case of non-fiction books and other writings, a minimum threshold for deciding whether or not such a book or other writing is original and creative. In essence, where a book or other writing does not, as a minimum, come within one of the categories referred to in Appendix A, it cannot be considered original and creative for the purposes of Section 195, TCA 1997.

P. Are Advance Royalties exempt from tax?

Yes - in certain circumstances. Where an individual receives advance royalties which are attributable to the subsequent publication of a book or other writing, a claim must be lodged with the Revenue Commissioners in the tax year in which the royalties are paid if the royalties are to be exempt. Confirmation from the publisher that the book will be published must accompany the claim.
Where a claim is received in the tax year in which the advance is received, but where a determination has not been granted, any tax liability arising on the advance must be paid. If a determination is subsequently granted, the Inspector of Taxes will review the taxpayer’s liability and make any appropriate refund if tax has been overpaid. Advance royalties paid before the year of claim are not exempt.

Q. What is the position in relation to mechanical royalties paid under a recording contract?

The Revenue Commissioners accept in principle that mechanical royalties can qualify for artists exemption if they derive from a musical composition within the meaning of Section 195 which was granted a determination under Section 195 and which was different from the initial musical composition.

R. What is the practice with regard to Fine Art Prints?

The standard practice is that a limited edition signed and numbered qualifies for exemption. Reproductions do not qualify.

S. What is the practice with regard to artistic photography?

A limited edition signed and numbered qualifies. Reproductions do not qualify.

T. How many reproductions are allowable for sculptural casts?

Where a cast is made, up to a maximum of 10 reproductions are allowable and each one must be signed and numbered.

U. Do I need Tax Clearance?

If you receive a payment(s) or a commission(s) in excess of €6,500 within a twelve-month period from a Government or Public Body you are required to produce a Tax Clearance Certificate. In this regard you should contact your local tax office or apply online.

V. Can non-residents avail of Artists Exemption?

No - Claimants for artists exemption must be resident, or ordinarily resident and domiciled, in the State and not resident elsewhere for tax purposes. However, the Revenue Commissioners are prepared to give advance opinions regarding the exemption to claimants resident abroad. If these claimants receive a favourable advance opinion, they are given a formal determination in respect of artists exemption when they satisfy the residence criteria and submit a claim.
When the individual becomes resident he/she must submit a claim with evidence of residency, i.e. copy of lease, evidence of house purchase or rent etc. The individual must also apply to the local Social Welfare Office for a PPS No. A copy of leaflet RES 1 i.e. Explanatory leaflet relating to residence in Ireland for tax purposes is issued with each non-resident application form.

W. Useful Contact Numbers

• Claim Forms and Information:
  Office of the Revenue Commissioners,
  Income and Capital Taxes Division,
  (Artists Exemption Unit),
  1st Floor,
  New Stamping Building,
  Dublin Castle,
  Dublin 2,
  Ireland.
  Tel: + 353 1 6475000 Ext:. 48011, 48684 or 48224
  Fax: +353 1 6799287
  e-mail: direct-taxes-admin@revenue.ie
• PRSI:
  Department of Social and Family Affairs,
  Cork Road,
  Waterford.
  Tel: 051-356002
  Fax: 051-877838
  Website: www.welfare.ie
• Appeals:
  Office of the Appeal Commissioners,
  8th Floor,
  Fitzwilton House,
  Wilton Place,
  Dublin 2.
  Tel:01-6624530
  Fax: 01-6611892

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