Is the Taxman Unfairly Targeting Non-U.S. Live Acts? ‘Touring Across Europe has Become Financially Precarious’
The European Music Managers Alliance is calling for an end to a measure that requires many artists to pay a "withholding tax" when performing in certain European markets.
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European artists, managers, independent labels and venue operators are calling on policymakers to overhaul “outdated and discriminatory” tax measures that they say are being “unfairly” applied to thousands of musicians touring Europe.
The campaign is being led by the European Music Managers Alliance (EMMA), which represents more than 3,000 managers and 10,000 artists. The organization is petitioning the European Parliament to revise current tax laws that require many touring musicians to pay a “withholding tax” charge when they perform in certain EU markets.
Withholding tax is typically deducted as a percentage of a touring artist’s gross payment on a per show basis to cover taxes owed in the country of earning. However, inconsistencies in the way that the tax is applied mean that European artists are often being unfairly penalized compared to those from other international markets, specifically acts from the United States, say artist managers.
Unlike most European artists touring Europe, U.S. acts performing on the continent do not have to pay withholding tax until they earn over a certain threshold, typically set at around $20,000 per year, due to international treaties in place between the U.S. and majority of EU nations.
This exemption allows U.S. artists to maximize their touring income while reducing the ability of European artists to compete in their own home market, says an open letter from EMMA to the European Parliament, also signed by European independent labels body IMPALA and the International Federation of Musicians. Other trade groups backing the campaign include Paris-based artist organization IAO, the European Music Exporters Exchange (EMEE) and live music associations Live DMA and Liveurope.
Small and mid-sized European touring acts are also being disproportionally punished due to irregularities in how withholding tax is charged in different European markets, they argue.
At present, the amount of withholding tax an artist pays is based upon the gross payment an artist receives for a festival performance, concert or tour in most European markets, rather than net profit, meaning that costs are not taken into account. As a result, many small and medium-sized touring acts who make only a minor profit from European treks, or return home having made a net loss, often overpay the amount of tax they owe.
“Reclaiming these overpayments is frequently an arduous and sometimes impossible task,” says the letter to members of European Parliament.
Meanwhile, withholding tax rates vary wildly between EU member states with Italy applying the highest tax rate at 30%, Spain charging up to 24% and Germany fixing the tax rate at 15.8%. The lowest rates can be found in Eastern Europe, Luxembourg and Malta who all apply a 10% withholding tax charge. In contrast, Denmark, Hungary, Ireland and the Netherlands do not collect withholding tax from foreign artists on short-term visits.
Outside of the EU, similar tax clauses exist for foreign artists touring the U.S., Canada, United Kingdom and Australia, but they only apply if the tour is profitable.
To address the many inconsistencies around withholding tax in Europe, music groups want policymakers to standardize how the tax is applied within the EU, thereby reducing the costly administrative and financial burden for emerging and mid-level touring artists.
One proposed solution is applying the $20,000 minimum threshold for U.S. acts to all European artists performing live shows in the 27-member EU bloc.
A more radical recommendation is that all 27 EU member states, including the major touring markets of France, Germany and Spain, follow the examples of Denmark, Hungary, Ireland and the Netherlands and stop collecting withholding tax from foreign artists altogether.
In instances where withholding tax is still applied, European music trade groups want to see expenses and costs deducted before the charge is calculated.
“The cost burdens shouldered by European artists when they want to perform live shows have increased enormously over recent years. To the point where touring across Europe has become financially precarious, especially for small and mid-sized artists who are building an audience,” said Jess Partridge, executive director of EMMA in a statement.
“An already impossible situation is being compounded by the unfair and discriminatory way in which withholding taxes are collected,” said Partridge, calling an overhaul of the current tax regime “imperative” if European artists are to be “given parity with their U.S. counterparts.”
Per Kviman, founder of Swedish management company Versity Music and chair of EMMA added: “If we want European artists to compete on a global stage, then it is vital the European Parliament acts on this issue.”
