No reduction for irregular income on the assignment of film copyrights

The Directorate General of Taxes (DGT) has issued a relevant ruling for authors and writers who receive significant income in a single tax year due to the assignment of their intellectual property rights, specifically in the cinematic field.

What the DGT has ruled

The query concerned the possibility of applying the 30% reduction provided for in Article 32.1 of Law 35/2006 (LIRPF) upon receiving a full payment in a single year for a film screenplay adaptation and collaboration contract. The DGT has ruled that this reduction is not applicable for two fundamental reasons:

• Income derived from the assignment of copyrights does not fall into the category of income obtained in a notoriously irregular manner according to Article 25 of the IRPF Regulations.
• The requirement that the period of generation of said income must exceed two years is not met.

Furthermore, the administration emphasizes that the regulations expressly exclude consideration for the assignment of intellectual property rights from the category of prizes.

What this means for you

If you are an author or professional receiving income from the assignment of intellectual property rights, you cannot apply the 30% reduction for irregular income, even if the payment is received in full in a single tax year. The fact that the income is one-off or high does not automatically transform the nature of the earnings for the purposes of the reduction under Article 32 of the LIRPF.

What you should do

It is necessary to analyze the nature of each contract and the way the rights accrue to determine the correct tax treatment. Since the regulations specifically exclude these payments from the category of prizes, the correct classification of earnings in the Personal Income Tax (IRPF) return is fundamental to avoid inspections or requests from the Tax Agency. It is recommended to assess each particular situation according to the structure of the assignment contracts.