International taxation of artists, depending on the characteristics of the activity, can be especially harsh 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 artists and actors from Spain
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 take 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. This way, we avoid 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%. So the correct compliance would be retaining 140 euros to the actress’s invoice. Also 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. This 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 compensation of the entire amount.
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.
Our International Department at Carrillo Asesores will be glad to help you in any of this cases. Please contact us for further assistance.
