The performance income of foreign artists in the Netherlands is subject to 20% withholding tax. Promoters, clubs and festivals are responsible for retaining this artist tax. Foreign artists are exempted from Dutch social security. Generally, a contract will state that 20% artist tax will be deducted from the gross artist fee and the net fee of 80% will be paid to the artist.
However, there are four ways to reduce artist tax:
1) Artist is a resident of one of the following countries that have concluded a tax treaty with The Netherlands
If the artist is able to prove that he or she is a resident of one of the treaty countries, this artist will be exempted from Dutch artist tax. Exemption will only be granted after the promoter has verified on the night of performance that the people on stage during the performance are indeed the persons of which passport copies have been provided. This means the promoter can not pay 100% before the show.
- An individual artist can prove he/she is a resident of one of the treaty countries by providing the promoter with a passport copy AND his/her address in the country of residence.
- For groups the only thing required is passport copies of the majority of the group.
Artists who are not residents of one of the treaty countries mentioned have the following options:
2. Kleinevergoedingsregeling (KVR)
At a fee up to €163 per perfomance, an artist may also indicate that he / she wishes to make use of the so-called Kleinevergoedingsregeling (KVR): the fee, or part of it, becomes in that case gross amount artist paid, and on that amount the client is also not liable for social insurance contributions. However, the artist must declare this amount as income later in his / her annual tax return.
This deduction can be employed regardless of the actual expenses. The artist does not have to apply for a KVR as the promoter, club or festival can use the KVR as long as the artist gives his/her permission.
3. Kostenvergoedingsbeschikking (KVB)
Foreign artists can apply for a kostenvergoedingsbeschikking (KVB) at the tax administration for foreigners if the expenses are higher than the KVR allows to deduct (i.e. higher than € 163 per person per show). With a KVB all production expenses can be exempted from Dutch artist withholding tax. The artist can apply for a KVB before the show, which will then be based on an estimation of the expenses. If the artist applies for a KVB after the show it will be based on the actual expenses and invoices. The application has to be filed within one month after the show date. The accountants mentioned below can apply for KVB’s for foreign artists.
To apply for a KVB the accountant needs the following information:
- One name, address and date of birth (or Dutch social/fiscal number), preferably the band leader.
- The number of performing artists
- The copies of passports of the majority of the performing artists
- The approval by the tax administration for the KVB
- Copy of the contract (or deal memo)
- Budget of earnings
- Expense breakdown
- Tour itinerary if the show is a part of a whole tour
Examples of costs that can be deducted from the artist fee are:
crew/tourmanager, airfares, hotels, travel costs, trucks, busses, containers, PA, backline, lights, freight, rehearsal costs, pre-production, per diems, management commission, agent commission, legal/immigration, stationery and office supplies, wardrobe, cleaning, telephone, fax, mobile, insurance
4. Income tax refund
In the Netherlands, foreign artist can choose to file an income tax return after the year closes.
The tax rates of the actual income (in 2004 1%, 8% and up) start much lower than the withholding rate (20%). The break-even-point lies at ca. € 49.000 per year, which means that most foreign artists are entitled to a tax refund.
The authorities are entitled to ask anyone to show his or her identity papers. So please note that any foreign artist or accompanying person needs to carry his/her passport on him/her during the events in the Netherlands.