Revenue Note for Guidance

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Revenue Note for Guidance

195 Exemption of certain earnings of writers, composers and artists

Summary

This section exempts from income tax certain earnings of writers, composers and artists which would otherwise be chargeable to tax under Case II of Schedule D. For the year of assessment 2015 and each subsequent year of assessment, the maximum amount of income which can be exempted under this section in respect of an individual is €50,000. To qualify, the Revenue Commissioners must, in accordance with statutory guidelines, make a determination that the artistic work is original and creative, is generally recognised as having cultural or artistic merit and is within certain categories of work.

Claims for determinations are considered by the Revenue Commissioners under guidelines drawn up by the Minister for Arts, Heritage and the Gaeltacht and An Comhairle Ealaíon (the Arts Council) with the consent of the Minister for Finance. The relief must be claimed and for the years up to and including 2014 applies only to individuals resident in the State (and not resident elsewhere). For 2015 and subsequent years eligibility for the relief is extended to an individual who is either resident or ordinarily resident and domiciled in one or more Member States, or in another EEA state, or in the United Kingdom and not resident elsewhere.

An appeal mechanism is available to unsuccessful claimants.

The scope of this section is affected by the limitation on certain reliefs used by certain high income individuals in Chapter 2A of Part 15 and paragraph 46 of Schedule 25B (initially inserted by section 17 of the Finance Act 2006).

Details

Definition

(1)work” is an original and creative work within one of the following categories —

  • a book or other writing,
  • a play,
  • a musical composition,
  • a painting or other like picture,
  • a sculpture.

Application

(2) For 2015 and subsequent years eligibility for the relief applies to an individual who is either resident or ordinarily resident and domiciled in one or more Member States, or in another EEA state, and not resident elsewhere. This is extended to individuals resident or ordinarily resident and domiciled in the United Kingdom from 1 January 2021. For the years up to an including 2014 the relief was only available to an individual who was resident in the State (and not resident elsewhere), or who is ordinarily resident and domiciled in the State (and was not resident elsewhere). The relief applies to an individual who is determined by the Revenue Commissioners to have written, composed or executed either solely or jointly a work or works generally recognised as having cultural or artistic merit. In reaching a determination the Revenue Commissioners may consult any person or body of persons as may provide authoritative assistance to them in establishing whether a work is a qualifying work for the purposes of this section. The Revenue Commissioners are also required to consider any evidence in relation to the matter which the individual submits.

The section applies to both an individual who is engaged generally in producing cultural or artistic works and to an individual who produces a particular cultural or artistic work. The Revenue Commissioners will only make a determination where the individual makes a claim and, in the case of a claim relating to a particular work, they will only make the determination after the publication, production or sale of that work.

Exemption from tax

(3)(a) Where an individual makes a claim for relief and the Revenue Commissioners determine that his/her work qualifies for relief, the individual’s profits/gains arising from the publication, production or sale of the work, or works in the same category as that work, are disregarded for income tax purposes to the extent that such profits or gains would otherwise be assessable to income tax under Case II of Schedule D.

(3)(aa) The amount of profits or gains for a year of assessment which an individual shall be entitled to have disregarded shall not exceed €50,000 for the year of assessment 2015 and each subsequent year of assessment and €40,000 for the years of assessment 2011 to 2014.

(3)(b) The exemption does not apply for any year of assessment before the year of assessment in which the individual concerned makes a claim under this section.

(3)(c) Relief may be given by repayment or otherwise.

Information

(4)(a) Where a claim is made in respect of an individual’s general work, the Revenue Commissioners may request that individual to furnish to them such information, books, documents or other evidence as may be of assistance to them in reaching their determination.

(4)(b) Where an individual makes a claim in respect of a particular work which is a book or other writing, a play or musical composition, the Revenue Commissioners may request that the individual furnish to them 3 copies of the work. In the case of a painting or a sculpture, the Revenue Commissioners may request the individual to provide or arrange for such facilities as are necessary for the purpose of assisting them in reaching their determination (for example, arrange a viewing of a painting or sculpture already sold to another person).

(5) The Revenue Commissioners may require a claimant to make available to them within a specified period all books, accounts, etc in the claimant’s possession, being such books, accounts, etc relating to the publication, production or sale of the work the income from which is the subject of the claim for exemption.

Appeals

(6) Where an individual makes a claim for relief and has fulfilled any requests made to him/her for supporting documentation in respect of the claim and the Revenue Commissioners fail to make a determination within 6 months of the date on which the claim is first made, the individual may by giving notice in writing to the Appeal Commissioners, within 30 days after the end of this 6 month period, appeal to the Appeal Commissioners on certain specified grounds. These grounds are —

  • that the work is generally recognised as having cultural or artistic merit, or
  • that a particular work has cultural or artistic merit.

(7) The Appeal Commissioners will hear and determine an appeal in the manner provided for in Part 40A of the TCA 1997.

(8) The Appeal Commissioners may on appeal determine that the claimant has written, composed or executed a work (or works) generally recognised as having cultural or artistic merit, or has written, composed or executed a particular work that has cultural or artistic merit. In making their determination the Appeal Commissioners may consider any evidence or consult any person or body of persons as may, in their opinion, provide authoritative assistance to them in establishing whether a work is a qualifying work for the purposes of this section. A favourable determination by the Appeal Commissioners is treated as if it had been made by the Revenue Commissioners and the exemption from tax applies accordingly. A determination of the Appeal Commissioners may be appealed on a point of law to the High Court.

Apportionment

(10) In determining the amount of income qualifying for relief under this section, the Revenue Commissioners may make any necessary apportionment of receipts and expenses.

Returns

(11) Individuals qualifying for relief are obliged to make a return of their total income (including the exempt income).

Guidelines

(12) An Comhairle Ealaíon (the Arts Council) and the Minister for Arts, Heritage and the Gaeltacht with the consent of the Minister for Finance, may issue guidelines for determining whether a work or works are original and creative works and whether such work has, or is generally recognised as having, cultural or artistic merit.

In drawing up the guidelines, the following matters, which are not exhaustive, may be included in them —

  • guidelines which consist of a list of the types or kinds of works that are not original and creative or that have not or are not generally recognised as having cultural or artistic merit (this list includes works that are published, produced or sold for a specified purpose),
  • guidelines which specify criteria by reference to which questions as to whether works are original or creative and whether they have, or are generally recognised as having, cultural or artistic merit are to be determined.

(13) The Revenue Commissioners are not to determine that a work is original and creative or has, or is generally recognised as having, cultural or artistic merit unless it complies with the published guidelines. Similarly, on appeal the Appeal Commissioners or a judge of the High Court may not determine that a work is original and creative or has, or is generally recognised as having, cultural or artistic merit unless it complies with the guidelines.

(14) Works in the same category as works which have already been granted a favourable determination do not qualify for relief if first published, produced or sold on or after 3 May, 1994, unless the work in the same category also complies with the published guidelines and would qualify to be determined by the Revenue Commissioners as an original or creative work and as having, or being generally recognised as having, cultural or artistic merit.

(15) On application the Revenue Commissioners are to supply an applicant with a free copy of the guidelines.

(16) The name of successful applicants together with the category and title of the work may be published by Revenue.

Relevant Date: Finance Act 2020