Income earned by writers, composers, visual artists and sculptors from the sale of their works is exempt from tax in Ireland in certain circumstances.
Section 195 of the Taxes Consolidation Act, 1997 allows the Revenue Commissioners to determine that certain artistic works are original and creative works generally recognised as having cultural or artistic merit. Earnings derived from these works are exempt from income tax from the year in which the claim is made.
Guidelines have been drawn up by for determining 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, having regard to the Guidelines, consult with a person or body of persons who may help them in reaching decisions in relation to Artist's Exemption.
The Revenue Commissioners can make determinations in respect of artistic works in the following categories:
The following payments are exempt from tax from when they are made to an artist who has received an Artist's Exemption:
Where an artist receives advance royalties that are attributable to the subsequent publication of a book or other piece of writing, he or she must lodge a claim with the Revenue Commissioners in the tax year in which the royalties are paid if the royalties are to be exempt from tax. The artist must provide confirmation from the publisher that the book will be published with his or her claim. A draft copy of the work must also be submitted.
Where a claim is received in the tax year in which the advance is received but 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 artist's liability and make any appropriate refund if tax has been overpaid.
Advance royalties that paid before the year of claim are not exempt from tax.
People who are claiming an Artist's Exemption must be resident, or ordinarily resident and domiciled, in the State and not resident elsewhere. However, the Revenue Commissioners are prepared to give advance opinions regarding the exemption to claimants who are resident abroad. If these claimants receive a favourable advance opinion, they are given a formal determination in respect of Artist's Exemption once they take up residence in the State.
From January 2011 the maximum amount exempted is €40,000. From the tax year 2011 the artist's exempt income is subject to the Universal Social Charge at the appropriate annual rates.
Section 195 of the Taxes Consolidation Act, 1997 provides that a work for the purpose of the Section is an original and creative work if it is in one of the following categories:
In broad terms, therefore, in order to secure exemption under Section 195, your work has to be both original and creative and to have either cultural merit or artistic merit. It is not necessary for your work to have both cultural and artistic merit - the presence of either quality is sufficient.
A work has cultural merit if:
A work has artistic merit when:
For the purpose of a determination under Section 195 of the Taxes Consolidation Act, 1997, the term original and creative encompasses any unique work that is brought into existence for the first time as an independent entity by the use of its creator's imagination.
A non-fiction book or other piece of writing will be considered original and creative only if:
The following types of work will not be regarded as original and creative:
More information on the Artist's Exemption is available from Revenue.
There are two claim forms for Artist's Exemption - Artist 2 and Artist 3. Artist 2 should be submitted if you are resident or ordinarily resident or domicile in Ireland, while Artist 3 should be submitted if you are resident outside the country.
If you are seeking Artist's Exemption, you should submit a claim form to the Revenue Commissioners, together with samples of your work and any supporting documentation in the form of testimonials, etc., that you consider appropriate. Such claims should also be accompanied by evidence that your work has been published, produced or sold. You can get an Artist 2 claim form (pdf) or Artists 3 claim form (pdf) from Revenue - see 'Where to apply' below.
You will need the following samples and supporting documents for the following categories:
Income and Capital Taxes Division
Artists Exemption Unit
1st Floor, New Stamping Building
Tel:(01) 647 5000 Ext: 48224 or 48011
Fax:(01) 679 9287
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.