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V3156-14 26 November 2014 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · derechos de autor

Taxation of royalties for theatrical works: VAT and IRPF retention

A local council asks whether payments for copyright rights to a Brazilian citizen are subject to VAT and IRPF retention. The DGT confirms that the service is VAT liable, though it may be exempt if the recipient is a natural person, and examines retention based on the author's fiscal residence.

The question raised

Liability for VAT and withholding tax under IRPF on the amount to be paid in respect of copyrights.

The DGT's ruling

The theatrical performance service is subject to VAT as it is located in Spain, but the professional services of authors (natural persons) consisting of the assignment of copyrights are exempt. Regarding Personal Income Tax (IRPF), if the author is a resident in Spain, the remuneration is considered income from employment or economic activity subject to withholding. If the author is a resident in Brazil, it is taxed as Non-Resident Income Tax (IRNR) as royalties, with a maximum withholding rate of 10% according to the Double Taxation Convention.

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