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Uncapped Exemption for Irish Artists

Ireland Limits Taxation on Writers, Artists, Composers, Painters, and Other Creatives for Their Contribution to Culture.

Income tax is a direct tax levied by the government on the earnings of its citizens. The Income Tax Act of 1961 requires the central government to collect this tax. Every year, the government can change the income levels and tax rates in its Union Budget. Income does not only refer to monetary compensation. In layman’s terms, the more money you make, the more tax you pay. But did you know Ireland actually has limits for taxing creatives?

Ireland limits the taxation of writers, artists, composers, painters, and other cultural contributors.

The Irish Artist Exemption

In 2015, the amount of tax relief claimed under the artists’ exemption scheme nearly doubled to €10.8 million, increasing the earnings of Irish writers, sculptors, and painters.

According to the latest Revenue Commissioners figures, the exemption resulted in tax relief totaling €10.8 million in 2015, an increase of 86% over 2014. However, the number of artists who successfully applied for the exemption increased only slightly, by 8%, to 2,840, indicating that artists must have higher income figures. Figures for 2016 are not yet available because income tax returns are not due until October 2017.

Artists can apply for a one-year exemption from income tax (not PRSI or USC) on earnings from an approved work of up to €50,000 under the scheme. However, not all artists earn enough in a year to qualify for the total tax exemption. The maximum amount of tax that can be saved in one year through the scheme is €20,000.

According to the figures, the average relief earned in 2015 was €3,802, implying earnings of €19,010 per artist from a work of art in that year based on a 20% tax rate or €9,505 based on a 40% tax rate. According to 2014 data, the average relief was €2,196, implying average earnings of €10,984 or €5,490, depending on the tax rate.

While higher tax savings may sway average figures due to higher earnings, the most an artist can save from the scheme if they pay a higher rate of €20,000. (Source: Irish Times

Uncapped Exemption for Irish Artists

While the figures are rising again, they are still a long way from the days when artists could claim an uncapped exemption; in 2006, for example, the scheme cost the exchequer nearly €66 million in lost tax revenue, with 2,890 artists claiming relief worth an average of €22,802 each.

Earnings for Irish artists can vary greatly. While Paul O’Connell’s The Battle, co-written with Limerick journalist Alan English – who, by the way, is not on the exemptions list – may have sold more than €1 million, many artists will receive a pittance for their efforts. According to the Irish Copyright Licensing Agency’s most recent survey of Irish authors’ incomes, published in 2010, more than half of the writers surveyed earned less than €5,000 from writing-related income in 2008-09, with more than a quarter earning less than €500 per year.

After years of decline, book sales in Ireland have begun to recover. Book sales, for example, increased to €131 million in 2016, the highest level since 2011. (Source: Irish Times

Image from Tax Back

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