The full text of this fact sheet in PDF format can be found here.
When you pay amounts to an artist or professional sportsman in the context of a short-term assignment (3 months or less), in principle there is a fictitious employment relationship: the artist and professional sportsman arrangement. The client of the artist must then withhold and remit payroll taxes on the fee paid (and any benefits in kind).
(Sample) agreement
This does not apply when the artist or professional athlete performs the work on the basis of a contract of engagement approved by the tax authorities.
Two sample agreements have been approved for artists. You can find these sample agreements on the website of the Belastingdienst. These agreements provide for waiving the application of the artist arrangement.
It is not necessary to fill in and sign the sample agreement for every performance by the artist. It is sufficient for the artist to send a statement to the contracting authority indicating that he or she does not wish to apply the artist arrangement. On the basis of such a statement, the withholding of payroll taxes is then omitted.
Withholding statement
Withholding obligation is also not an issue when a person or body has been designated as withholding obligation towards the artist or professional athlete. This appears from a withholding statement issued by the Belastingdienst, of which you have to include a copy in your administration. The withholding statement protects you from withholding payroll taxes.
Artist
Artist is anyone who, as such, delivers an artistic performance intended to be listened to and/or viewed (in)directly by an audience (i.e. it must be performances before an audience).
Not being an artist:
- photo models, mannequins, ed.
- announcers, presenters, ed.
- sound and lighting technicians, ed.
However, DJs, vjs and mcs performing at dance parties, festivals, etc. are considered artists.
If the action has been agreed directly with a natural person for the purpose of his personal affairs[1] (e.g. a wedding), the artist scheme does not apply and no payroll taxes need to be paid.
Amateur companies
Members of amateur companies are not subject to payroll taxes if:
- the leader of the company has a withholding statement;
- individual members can be considered volunteers;
- individual members do not receive more than €170 per month AND €1,700 per year (including ALL expense allowances and benefits);
- the remaining part of the fee benefits the association's or foundation's treasury as a contribution to expenses.
Professional sportsman
For the purposes of these regulations, an athlete is a professional athlete if he/she:
- lives abroad, but;
- not in Aruba, Curaçao, Sint Maarten or any of the BES islands, and;
- The Netherlands has not concluded a tax treaty with the country of residence.
From professional sport exists if:
- the client pays starting fees to the athlete;
- the athlete receives a fee of more than €250 and 3 or more of the following criteria are met at the same time:
- the athlete has a certain level of performance or licence allowing him to participate in the competition;
- the athlete receives a travel or accommodation allowance;
- the athlete receives prize money of more than €350;
- the grand prize for the winner is more than €2,500;
- the public has to pay for admission to the event.
If there is no professional athlete, no payroll taxes need to be withheld. However, the amounts paid out must be processed in the payer's administration and if the remuneration exceeds €250, this must be declared to the Tax Office using the form Opaaf of amounts paid to a third party (IB47).
Rate
Wage tax is due on the allowance paid to the artist or professional athlete (including benefits in kind). The calculation of the allowance is beyond the scope of this note. The payroll tax rate is 36.55% (2019 rate) for artists resident in the Netherlands. A rate of 20% applies to professional athletes and foreign performers.
However, if all obligations arising from the artist and professional sportsman scheme are not met, the anonymous rate of 52% must be applied. Obviously, a net fee must be grossed up.
With regard to artists and professional athletes residing in the Netherlands, employee insurance contributions and income-dependent contributions under the Health Insurance Act are also due, according to the rules normally applicable to them (not elaborated upon in this memorandum).
For whom.
Of course, the issues described above play out with regard to operators of catering establishments and (professional or otherwise) organisers of festivals and sporting events.
But even a regular business owner can face the issue when hiring an artist, for example to brighten up an opening, anniversary or staff activity.
The artist arrangement can also come into play when a foundation or association hires an artist.
The purpose of this note is to outline a scheme and is of a particularly signalling nature.
For the sake of readability, matters have therefore been simplified. VWG is not liable for the consequences of actions taken or not taken as a result of this memorandum.
[1] This is therefore not the case when the artist is hired, for example, by the owner or operator of the venue where the wedding party is celebrated.