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.
The first €40,000 per annum of profits or gains earned by writers, composers, visual artists and sculptors from the sale of their work is exempt from income tax in Ireland in certain circumstances.
The €40,000 limit was introduced in the tax year 2011.
Guidelines have been drawn up by the Arts Council and 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 has 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:
- a book or other writing
- a play
- a musical composition
- a painting or other like picture
- 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 prospective claimant’s resident abroad. In the event that a favourable advance opinion is given, the prospective claimant will be advised to make a formal application for a determination on taking up residence in the State and meeting the necessary residence requirements.
- How to Obtain a Determination
- Advance opinion for Non- Residents
- Advance Royalties
- Right of Appeal
- Income Levy and Universal Social Charge
- PRSI ,VAT and the High Earners Restriction
- Freedom of Information
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 be also accompanied by evidence that their work has been published, produced or sold.
Any income earned from a work before the tax year in which the claim is made will not be exempt.
Claims for Artists Exemption should be made on Claim form Artist 2 (PDF, 92KB). 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 they fall within the guidelines.
Depending on the category in which artists exemption is being claimed the following items should be submitted in support of a claim
- a book or other writing – 3 published copies of the book
- a play – a copy of the script along with a signed production contract
- a musical composition – CDs or cassettes on which claimant must be accredited
- a painting or other like picture – 8-10 good quality photographs of work together with evidence of sale i.e invoices and a brief CV of artistic career to date
- a sculpture – as at (d) above.
Revenue will give an advance opinion to individuals resident abroad. In the event that the individual becomes resident in the State and is not resident elsewhere, a formal determination will then be made
Where a taxpayer receives advance royalties, which are attributed to the subsequent publication of a book or other writing, a claim must be made with the Revenue 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 as to exemption 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 in the year before a claim is made are not exempt. The normal accounting rules concerning the recognition of income will apply.