Tax Treatment of Additional Compensation for Authors Under Copyright Law Changes in Germany

• The article discusses the VAT treatment of additional compensation for previously transferred copyrights in the context of screenwriters.
• A change in copyright law allows authors to receive fair and success-dependent compensation for their works.
• In 2014, various professional associations reached an agreement with broadcasters on compensation rules for fictional programs.
• The article raises the question of how subsequent success-related compensation for authors should be treated for VAT purposes.
• A case involved a screenwriter who entered into contracts with film producers, transferring usage rights of his works.
• The screenwriter initially invoiced the broadcaster for his subsequent revenue share without VAT, but the tax office later assessed VAT at 19%, which was corrected to 7%.
• The reduced VAT rate applies to the transfer of usage rights under specific tax regulations.
• Public broadcasters typically do not have input tax deduction rights, making them burdened by both the new compensation and the associated VAT.
• The Federal Fiscal Court (BFH) ruled that success-related additional compensation is directly linked to the original contractual relationship and qualifies for the reduced VAT rate.
• Reference to the BFH ruling dated May 8, 2024 (XI R 16/20) for further details.

Source: nwb-experten-blog.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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