• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Email: accace@accace.com

Contact us
Sign up for news
  • Locations
  • Websites
    • Global (English)
    • Global (German)
    • Czech Republic
    • Germany
    • Hungary
    • Poland
    • Romania
    • Russia
    • Slovakia
    • South Africa
    • Ukraine
    • United States of America (USA)
  • eShop

Accace - Outsourcing and advisory services

  • Services
    • OUTSOURCING
    • Accounting and reporting
    • Accounting online portal
    • Payroll and HR administration
    • Payroll and HR online portal
    • Time and attendance online portal
    • ADVISORY
    • Tax advisory
    • Transaction advisory
    • Legal advisory
    • Corporate and secretarial
    • Advisory online portal
    • MARKET ENTRY SUPPORT
  • COVID-19
  • About us
    • Who we are
    • Case studies
    • Meet our key People
    • Partner with us
    • Corporate Social Responsibility
  • Careers
    • Open positions
    • Who we are
    • Our values
    • Success stories
    • How we care
    • How we act
    • We volunteer
  • Newsroom
  • Events
  • Locations

Royalties according to law on copyright from the VAT point of view | News Flash

9 Jul 2019

Download PDF

Recent decisions of the European Court of Justice (ECJ) concerned, among other things, to the application of VAT in cases of payment of some royalties under law of copyright. The discussed was a VAT regime in relation to the royalty payable to an author of an original work of art on the basis of the resale right; when making decision, the judges referred to the earlier judgment relating to fees on blank media and recording as well as reproduction devices paid by producers and importers.

Royalty payable to an author of an original Work of Art on the basis of the resale right

In the judgement, C 51/18 of December 19, 2018 the ECJ discussed if the royalty payable to an author of an original work of art on the basis of the resale right was subject to VAT.

In the year 2014, European Commission (EC) sent a letter of formal notice to the Republic of Austria expressing its reservations in respect of the administrative practice of imposing VAT on the royalty payable to an author of an original work of art on the basis of the resale right.

The EC had the opinion that royalty did not constitute consideration for the artistic service provided by the author of such a work of art, because the main aim of the royalty is to give the author share in the economic success of his work. In the absence of the supply of goods or services provided by the author in the exercise of the resale right, VAT is not imposed on any transaction.

Tolerating the act of resale and royalty of the representation of an original work

The Republic of Austria noted in its reply to the formal notice, that within the framework of the resale right, the author provides a service by tolerating the act of resale of the work.

Also argued, that this royalty is comparable to a service provided by other creators in the context of the representation of their works, and because these services are subject to VAT, so the royalty payable on the basis of the resale right should be according to the principle of fiscal neutrality also subject to VAT. The Republic of Austria also justified the taxation of that royalty by altering in the taxable amount of the service provided by the author when his work is first placed on the market.

The actual value given in return for goods or service

In the judgement, ECJ reminds, it is clear from settled case-law that a supply of goods or services is made for consideration, only if there is a legal relationship between the supplier, on the one hand, and the customer or recipient, on the other hand, in the context of which there is reciprocal performance, the remuneration received by the supplier constituting the value actually given in return for the goods or services supplied to the customer or the recipient.

Further, the ECJ states, that the legal relationship, in the context of which arisen the resale of an original work of art is so only between the seller and the buyer and the fact, that the creator of the work has the right to remuneration for resale does not have any influence on that relationship.

The seller and the buyer agree freely to the transfer of the work and the price, without having to solicit the author of the work on a permission and the author cannot intervene transaction or prevent in the resale in any way.

Right to royalty on resale

Right to royalty on resale is stated by law and to enable the author to profit from the economic advantages linked to the recognition of his artistic service.

The ECJ has inclined to the EC´s claim that graphic and plastic works of art are unique, therefore, royalty on resale is not comparable to the remuneration gained from exercising the rights of use and exploitation. According to ECJ, the royalty payable to an author of an original work of art on the basis of the resale right is not the subject the VAT. ECJ rejected all arguments of Republic of Austria.

Fees on blank media and recording and reproduction devices paid by producers and importers

In the judgment, which we described above, the ECJ also referred to the earlier judgment C-37/16 SAWP from the year 2017, where the ECJ has dealt with the question, if from the VAT point of view, the holders of reproduction rights make a supply of services to producers and importers of blank media and of recording and reproduction devices on whom organizations collectively managing copyright and related rights levy on behalf of those right holders, but in their own name, fees in respect of the sale of those devices and media.

The obligation to pay of these fees is followed from the special Law on copyright.

ECJ in this case came to the conclusion that supply of services are not provided and fees are not subject the VAT.

Reciprocal performance

According to ECJ in this case there is no reciprocal performance by, on the one hand, holders of reproduction rights or, as the case may be, the organization collectively managing such rights and, on the other hand, producers and importers of blank media and of recording and reproduction devices.

Deduction of the input VAT

In general, input VAT can be deducted if VAT has been correctly applied. Therefore, we recommend to taxable entities to pay more attention to the fees paid under the Law on copyright, to prevent unauthorized deduction of VAT.

Contact our tax experts from Slovakia!

CONTACT

Katarína Balogová
Tax Director Slovakia
Tel: +421 2 325 53 000
E-mail: katarina.balogova@accace.com

Related news

Value-added tax in Romania | eBook

on 24 February 2021, in Country guidelines and eBooks, Romania, Taxation
Read more

10 facts about taxation in Slovakia | Infographic

on 22 February 2021, in Infographics, Regional Studies, Slovakia, Taxation
Read more

Meal vouchers vs. financial contribution for meal in Slovakia | News Flash

on 19 February 2021, in News Flash, Other industries, Payroll, HR and Labour Law, Regional Studies, Slovakia
Read more

We are entering the new year with an expanded range of services in Slovakia | News Flash

on 17 February 2021, in Corporate News, Local news, Other industries, Slovakia
Read more

Labour Law and Employment in Slovakia – 2021 Guide

on 01 February 2021, in Country guidelines and eBooks, Payroll, HR and Labour Law, Regional Studies, Slovakia
Read more

2021 Company Formation in Slovakia

on 01 February 2021, in Country guidelines and eBooks, Legal and corporate, Regional Studies, Slovakia
Read more

Value-added tax in Slovakia | eBook

on 13 January 2021, in Country guidelines and eBooks, Slovakia, Taxation
Read more

2021 Transfer Pricing Overview for Slovakia

on 13 January 2021, in Country guidelines and eBooks, International transactions, Regional Studies, Slovakia
Read more

2021 Tax Guideline for Slovakia

on 13 January 2021, in Country guidelines and eBooks, Regional Studies, Slovakia, Taxation
Read more

2021 Tax Calendar | Slovakia

on 12 January 2021, in Calendars, Other industries, Slovakia, Taxation
Read more

DAC 6: Reporting obligation for cross-border arrangements in Slovakia | News Flash

on 07 January 2021, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Brexit from the tax point of view in Slovakia | News Flash

on 22 December 2020, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Start-ups and memorandum of association in Slovakia: What to pay attention to? | News Flash

on 17 December 2020, in Legal and corporate, Local news, News Flash, Other industries, Slovakia
Read more

Crowdinvesting and managing shares in start-ups | weBlog

on 16 December 2020, in Legal and corporate, Local news, News Flash, Other industries, Slovakia
Read more

Institute of a “micro-taxpayer” from 2021 in Slovakia | News Flash

on 14 December 2020, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Motor vehicle tax return in Slovakia | News Flash

on 03 December 2020, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Approved amendment to the Motor Vehicle Tax Act in Slovakia | News Flash

on 23 November 2020, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Changes in the Value Added Tax Act from January 1, 2021 in Slovakia | News Flash

on 18 November 2020, in Local news, News Flash, Other industries, Slovakia, Taxation
Read more

What does an amendment to the Commercial Code and the Commercial Register Act brings in Slovakia? | News Flash

on 08 October 2020, in Legal and corporate, Local news, News Flash, Other industries, Slovakia
Read more

Expected changes in the Income Tax Act from January 1, 2021 in Slovakia | News Flash

on 07 October 2020, in Accounting and finance, Local news, News Flash, Other industries, Slovakia, Taxation
Read more

Primary Sidebar

<< Back to newsroom

NEW TO THE MARKET?

Use the free consultancy delivered by our in-country experts to get you prepared.

See what is included and schedule your call now!

We only need your email

Footer

About Accace

Originally established in Central and Eastern Europe in 2006, Accace ranks among the leading outsourcing and consultancy providers in the region. Engaging over 600 experts, we have vast experience with handling small to large scale, multi-country outsourcing projects and providing a comprehensive range of our services to over 2,000 customers.

About Accace Circle

Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience. Covering almost 40 jurisdictions with over 2,000 professionals, we support more than 10,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 170,000 pay slips globally.

Locations and contacts | Accace Circle

Our services

Accounting and reporting
Payroll and HR administration
Tax advisory
Transaction advisory
Legal advisory
Corporate and secretarial

Our eShop

Market entry support
See full list of services

Our online portals

Accounting portal
Payroll and HR portal
T&A portal
Advisory portal

Get in touch with us

Locations and contacts
Contact us
Sign up for news
Newsroom
Careers


Follow us

Facebook LinkedIn Twitter Instagram Youtube


Accace Circle

© Accace all rights reserved | Code of conduct | General Disclaimer | Disclaimer Newsroom | Cookie policy | Privacy policy | GDPR Statement

Get free access to
valuable insights
expert knowledge

Our legislation updates make it easy for you to keep on top of the latest changes affecting your business. Receive our articles, opinions, tips, industry news, country profiles, regional overviews and studies, latest events and even more, directly into your mailbox.

Check out our Newsroom to see what is included!

We only need your email

We will send you only relevant information we consider may be of your interest and treat your personal data in compliance with our Privacy policy and GDPR statement.

Unable to subscribe?  Try this page.

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies. Find out more.