When a software developer, marketer, consultant or other 'creative' employee creates copyrighted works, the copyrights in principle belong to the employee (and not to the employer!).
However, the employer and employee may choose to consider part of the salary as remuneration for the transfer of the copyrights on these works. The employee enjoys a very favourable tax rate of only 7.5% on this part, while the costs for the employer remain the same!
This way of 'alternative pay' is becoming very popular: more than 38,000 Belgians benefited from this regime in 2018. you can see what the impact is on the wages of employees.
Ruling?
A so-called 'ruling' or 'advance decision' is an agreement between the tax authorities and the taxpayer on how certain tax laws will be applied in practice. A ruling offers legal certainty to the applicant as it is binding for all services of the FPS Finance. The agreement is valid for a period of 5 years and cannot be backdated.
All previous decisions issued by the Ruling Commission can be consulted - anonymously, of course - at www.fisconetplus.be. The number of copyright rulings has increased by a staggering 115%(!) since 2017.
Why apply for a copyright ruling?
By means of such a ruling, the taxpayer receives absolute certainty about the correct application of the copyright regime. Among other things, the applicant makes an agreement with the tax authorities about the percentage of the gross salary of the employee(s) that can be paid out in royalties. In this way, the taxpayer will not be faced with unpleasant surprises during any checks. And this for a future period of five years.
How does the ruling procedure work?
A ruling application is usually done with the help of a third specialised party, such as Payflip. The ruling process usually starts with the preparation of a pre-filing application. A pre-filing application is an anonymous, simplified procedure to get early feedback from the ruling commission on whether a ruling application would succeed or fail. This process takes approximately 4 to 8 weeks.
If the prefiling application is accepted, the applicant sends the official, non-anonymous application to the so-called Ruling Committee. This usually takes over the decision of the prefiling. The official approval is then expected about 10 weeks later. The whole process therefore takes about four months (from the prefiling application). Since rulings do not work retroactively, the taxpayer can 'apply' the ruling in the month following the month in which the ruling is issued.
In the case of a copyright ruling, this means that an employer can pay out a tax-friendly copyright remuneration in the month following the month in which the ruling was issued.
What is Payflip's role in this?
Applying for a ruling is quite a tax law matter and one for which many consultants charge high prices ('hourly bill'). However, this does not necessarily have to be so expensive. Through an automated process, Payflip makes this form of remuneration affordable for SMEs.
Together with you, we go through the classic questions concerning the application for a copyright ruling: what does your company do, what are the job categories that could qualify for the regime, what is the creative time use of those employees. Payflip will then send you a more detailed calculation of the net benefit your employees can receive. Then you will receive a quotation from Payflip. The price can already be found on our page about copyrights.
Once the offer is accepted, we immediately start working on a first draft of the ruling application. For this, you need to upload some data on our GDPR-friendly platform that we need to start the prefiling phase. Once we have started, we will keep you informed about the communication with the tax authorities. If all goes well, after four months you will have a ruling in your mailbox! If you are interested, take a look at payflip.be/authors' rights or contact us at info@payflip.be.
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