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Acting abroad, where do tax liabilities apply?

Reference is made to our previous posts related to problems that may raise whilst declaration of income in different countries.

Depending on the characteristics of the activity, this problem can be especially harsh for artists and actors when undertaking performances abroad. In fact, all countries want to get “a share of the cake”. Eradicating problems is essential for having a clear guideline of how to work correctly beforehand. Thus avoid unpleasant surprises, at a later time.

Keys to international taxation of Spanish artists and actors

Thinking about a scenario comprising an international tour with concerts or performances in different countries… where is the artist or actor, who is considered a Spanish resident for tax purposes, expected to pay taxes? (please refer to the residence criteria).

When a resident of one country obtains income in other countries, the preliminary factor to be taken into account is the Double Taxation Agreement between those two territories; it is crucial to study the place of taxation of said income, according to the type of income obtained.

Under the assumption that it is concluded that such income should be taxed in the territory where one is not a tax resident, then the correct way to proceed (either by means of a Non-Resident Tax return from that country, or directly with a withholding on the invoice...) must be determined. In case of independent professionals and with regard to Personal Income Tax (IRPF in Spain) within the country of our residence is concerned, this can rebate up to the limit allowed by the Convention, thus avoiding paying taxes twice for the same concept.

Example of how an artist based in Spain pays international taxes

Say, an actress living in Spain executes performance in another country, for which she will be paid 1,000 euros. According to the agreement between Spain and that other country, the income must be taxable in the country where the performance is executed (in this case, the foreign country).

Therefore, under the assumption that a withholding of non-residents for that concept in that country is 14%, the correct compliance would be retaining 140 euros to the actress’s invoice, and to provide her with a relative certificate.

Subsequently, the actress's Spanish personal income tax return, with the necessary documentation in her hands, will indicate an income of 1,000 euros, which will result in an amount payable, from which those 140 euro retained and executed in the foreign country can be compensated (we assume that the legislation allows the entire amount to be compensated).

Therefore, when planning an international tour or performance, we recommend to have an adequate tax planning, it will prevent economic harms for tax adjustments abroad. Moreover, it will minimize the tax burden in the country where one is resident by paying taxes twice for the same concept.

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