Sale of copyrights and VAT taxation
A few years ago, the tax authorities imposed a uniform rate of 23% on authors. Beginning in 2015, the situation began to change with the emergence of new jurisprudence lines with a slightly different position in relation to authors. The Minister of Finance then decided that copyright can manifest itself through any manifestation of creative activity of an individual nature. He noted here that its value or purpose is irrelevant. How should copyright law be approached today in certain economic domains? In the article below, we describe the sale of copyrights and the VAT tax on them.
The economic activity of the creator and the sale of copyrights
The basic issue in the sale of copyright on the basis of VAT is the identification of the creator as a person running a business. In the light of the VAT Act, pursuant to Art. 15 sec. 1. of the VAT Act, taxpayers are legal persons, organizational units without legal personality and natural persons who independently conduct business activity, regardless of the purpose or result of such activity.
On the other hand, the legislator considered economic activity to be all activities of producers, traders or service providers, including entities acquiring natural resources and farmers, as well as activities of freelancers.
Economic activity includes, in particular, activities consisting in the use of goods or intangible assets on a continuous basis for commercial purposes.
VAT exclusions of revenues from categories such as revenues of personally performed artistic, literary, scientific, coaching, educational and journalistic activities, including participation in competitions in the field of science, culture and art and journalism, indicates that in the light of the VAT Act, the sale of rights copyright depends on whether, for example, the creator runs a business. If so, the sale of copyrights by him will be subject to VAT.
Subject of copyright
The foundations of copyright law are, in particular, the following works:
expressed in words, mathematical symbols, graphic signs (literary, journalistic, scientific, cartographic and computer programs),
architectural, architectural and urban planning and urban planning,
musical and verbal-musical,
stage, stage and music, choreographic and pantomime,
audiovisual, including film.
Pursuant to Art. 8 of the Act on Copyright and Related Rights, the author is entitled to copyright, unless the Act provides otherwise. It is presumed that the creator is a person whose name in this capacity has been shown on copies of the work or whose authorship has been made public in any other way in connection with the dissemination of the work.
In turn, art. 1 clause 2 point 9 of the Act on Copyright and Related Rights indicates that the subject of copyright are audiovisual works, including films. The copyright belongs to the creator. On the other hand, the co-authors have the copyright jointly.
The reference to Art. 69 of the above Act, where it was explained that the co-authors of an audiovisual work are also people who have contributed creatively to its creation, and more specifically: director, cinematographer, creator of an adaptation of a literary work, creator of musical or verbal-musical works created for an audiovisual work and script creator.
On the basis of the above provisions, it can be stated that the creator will be any person who conducts creative activity, i.e. activity resulting in the creation of a work within the meaning of Art. 1 clause 1 of the Act on Copyright and Related Rights.
Taking photos for a feature film, series, event, advertising block, theater
An entrepreneur who is an active VAT taxpayer provides services consisting in taking photos for an advertising film, fictional film, television theater, series and event, remunerated in the form of a fee for the performance of the work. In addition, it transfers the proprietary copyrights to the work to the producer, without any time limits, but it is distributed only in Poland. The transfer of copyrights is included in the aforementioned fee. The performance of the work ends with issuing a VAT invoice directly to the client. The invoice includes remuneration for the performance of the work and the transfer of proprietary copyrights to the producer.
Pursuant to Art. 41 sec. 2 and art. 146a point 2 of the VAT Act (item 181 of Annex 3 to the VAT Act), the entrepreneur with the title realization of these works is the creator within the meaning of the Act on Copyright and Rights. The service provided, consisting in the transfer of copyrights to works whose creator is an entrepreneur, in connection with the concluded license agreement and in exchange for the fees specified in the agreement, has the right to benefit from taxation at the 8% VAT rate.
This is also confirmed by the position of the Director of the Tax Chamber in Warsaw in the individual interpretation of January 21, 2016. with reference number IPPP2 / 4512-1094 / 15-4 / KOM.
Interior design projects
An entrepreneur who is an active VAT payer runs a sole proprietorship involving the development of interior design projects.
The service consists of, among others from the preparation of projections of interior designs, a list of materials to be used for the implementation of the project, computer visualization of interiors, as well as author's supervision over the entire project. The entire service includes preparation of the project and other duties of an interior designer, including the transfer of proprietary copyrights to the prepared project.
The entrepreneur providing the services concerned acts as an individual creator within the meaning of the provisions of the Act of February 4, 1994 on copyright and related rights.
It should be added that the entrepreneur carries out the interior design project himself, which makes him the sole creator of the projects.
Taking into account the above facts and taking into account the inseparability of the above-mentioned activities, i.e. sale of the project and copyrights, this activity will be subject to tax on goods and services at the rate of 8%.
This is also confirmed by the position of the Director of the Tax Chamber in Katowice in the individual interpretation of September 23, 2015. with reference number IBPP2 / 4512-616 / 15 / WN, as well as the position of the Director of the National Tax Information
in the individual tax ruling of March 14, 2017. with reference number 2461-IBPP2.4512.38.2017.1.MG.
Photography and films
An entrepreneur who is an active VAT payer is an artist photographer not associated anywhere.
No license or permission is required to practice this profession.
In cases where contracts concern, for example, wedding photos and films and are concluded with city portals or concern companies where the photos (films) are to be intended solely by the recipient for their own use - the entrepreneur grants a non-exclusive license for non-commercial use of photos and videos made under this orders by the ordering party in all fields of use. The license is granted for an indefinite period. The use of photos and videos by the contracting authority in any other way requires the written consent of the entrepreneur - the contractor.
The entrepreneur receives remuneration for the services provided, the amount of which is determined each time depending on the scope and type of the order. There are cases when the copyright to the photos taken is not transferred by contract.
In connection with the above, an entrepreneur acting as an artist providing services consisting in the production of photographic works and films at the request of other entities along with the transfer of copyright to the work made in accordance with the provisions on copyright and related rights, remunerated in the form of a fee, will be taxed at the rate of 8 %.
On the other hand, in the event that the entrepreneur, being the contractor of the commissioned photographic works and films, does not transfer the copyrights to the client, the above-mentioned activities will be taxed at the rate of 23%.
This is also confirmed by the position of the Director of the Tax Chamber in Katowice in the individual interpretation of May 8, 2015. with reference number IBPP3 / 4512-180 / 15 / UH.
The entrepreneur started a business in 1998 consisting in:
conservation and restoration of works of art,
in 2004 extended the given activity to include the protection of monuments, a
in 2010 supplemented it with the activity of historical places and buildings as well as similar tourist attractions.
The entrepreneur performs works on objects entered in the register of monuments after obtaining relevant permits at the Provincial Office of the Monument Conservator.
After completion of the work and receipt of the remuneration (fee), the copyrights are transferred to the client (ordinance of the Minister of Culture of June 9, 2004 on conservation, restoration, construction works, architectural restoration research, and other activities related to the monument entered in the register of monuments. and archaeological research and searches for hidden or abandoned movable monuments), who receives documentation of these works.
The entrepreneur classifies his conservation and restoration works as services related to culture,
within the meaning of the provisions on copyright.
The Provincial Administrative Court, rejecting the complaint of the tax authority regarding the subjective and objective exemption of the above-mentioned services from VAT, stated that the wide range of conservation and restoration works performed by the entrepreneur undoubtedly also includes activities of a technical nature, which are by definition not of a creative nature. At the same time, it concluded that the entrepreneur's activity covers a wide range of activities, constituting an individualized and creative contribution to the protection of cultural heritage.
"(...) This is also how this type of activity is perceived in the International Charter of Monument Conservation and Restoration, adopted in 1964 by the II International Congress of Architects and Technicians of Monuments in Venice.
and Historic Places, also known as the Venetian Charter. In its art. 2, it was decided that the conservation and restoration of monuments is a discipline that refers to all branches of science and technology that can contribute to the research and protection of historic heritage.
Consequently, such a defined subject of the services provided by the applicant is covered by the subjective and objective exemption provided for in Art. 43 sec. 1 point 33 lit. b of the VAT Act.
According to Art. 132 sec. 1 lit. n Directive 2006/112 / EC of the Council of 28 November 2006 on the common system of value added tax (OJ EU L.2006.347.1), Member States exempt the provision of certain cultural services as well as the supply of goods strictly related to them, by bodies governed by public law or other cultural institutions recognized by the Member State concerned.
The quoted legal norm is included in the chapter on exemptions for certain activities performed in the public interest. Tax exemption for conservation and restoration services, provided that they are creative and individual, is undoubtedly an exemption for activities performed in the public interest. The purpose of introducing an exemption for cultural services in EU law was to reduce the costs of access to culture and national heritage. The above services indirectly achieve this goal.
The Provincial Administrative Court also referred to the statement of the Supreme Administrative Court in the previously quoted judgment of 5 December 2013, I FSK 1750/12, "It is not (...) a reasonable view that the loss of binding force of the above-mentioned legal norms contained in a legal act of a sub-statutory rank means that as of January 1, 2012, conservation and restoration services ceased to benefit from the tax exemption. on goods and services ".
The position of the Provincial Administrative Court in the judgment of November 25, 2015. with reference number I SA / Bd 882/15.