Performing Arts Employers Associations League Europe

…1 Pearle*-Live Performance Europe (Performing Arts Employers Associations League Europe AISBL) Square Sainctelette 19/6 – B-1000 Brussels Phone +32-2-203.62.96 / e-mail [email protected] / www.pearle.eu PUBLIC CONSULTATION ON THE FUNCTIONING OF THE ADMINISTRATIVE COOPERATION IN THE FIELD OF DIRECT TAXATION RESPONSE OF PEARLE* Brussels, 4 March 2019 Ref P7514 Identification number EC register 4817795559-48 Introduction The European Commission launched a public consultation to evaluate the Council Directive 2011/16/EC on administrative cooperation in the field of taxation. The main aim of the Directive (and ensuing amended versions) is to let Member States cooperate to fight against cross-border tax evasion and promote fair competition in the single market. Cooperation between Member States also allows to apply taxes correctly to taxpayers.

…competition in the single market. Cooperation between Member States also allows to apply taxes correctly to taxpayers. As a principle, Pearle*-Live Performance Europe supports those objectives in order to create a level playing field for all citizens and businesses operating in the Internal Market. Pearle*-Live Performance Europe is the European federation representing the interests of more than 10,000 organisations in the music, performing arts and live entertainment sector. In the context of the consultation of the Commission, Pearle*-Live Performance Europe wishes to add further comments. Specific issues on administrative cooperation and double taxation Live Performance organisations earn income for performances abroad. Member States have the option to levy withholding taxes on the artist income.

…earn income for performances abroad. Member States have the option to levy withholding taxes on the artist income. Following the OECD Model tax convention EU Member States have included in their Bilateral Double Tax Treaties article 17 on entertainers and sportspeople. Whereas the EU advocates for measures to avoid cross-border double taxation live performance organisations are paying withholding artist taxes on performances which take place abroad. Ref.

…live performance organisations are paying withholding artist taxes on performances which take place abroad. Ref. Ares(2019)6268013 - 10/10/2019 2 Pearle*-Live Performance Europe (Performing Arts Employers Associations League Europe AISBL) Square Sainctelette 19/6 – B-1000 Brussels Phone +32-2-203.62.96 / e-mail [email protected] / www.pearle.eu A majority of live performance organisations are SMEs, including micro-enterprises, and the artists employed earn average wages negotiated in collective agreements, which is a common practice in other sectors too.

…employed earn average wages negotiated in collective agreements, which is a common practice in other sectors too. Due to the fact that nearly all EU Member States apply article 17, there is often a situation of excessive taxation, because the tax credit is lower than the foreign tax, while groups, orchestras, ensembles and theatre or dance companies mostly experience double taxation because the tax credit cannot be applied by the group and the individual performers. This is a genuine obstacle for cross-border work within the EU. In the context of the Council Directive, administrative cooperation between Member States could allow to avoid double taxation and create a fair tax system for the sector. This would result in the same treatment as other companies, employees and self-employed persons who undertake cross-border activities.

…in the same treatment as other companies, employees and self-employed persons who undertake cross-border activities. The best option to achieve the goal of being treated in the same way, would be to remove Art. 17 of the bilateral tax treaties between EU Members States. When it is evident that the artists reside in one of the EU Member States, which can be confirmed by the tax authorities in the residence state, the risk of tax avoidance and non- compliance will not be bigger than for other taxpayers. Returning to the normal rules for companies, self-employed (Art. 7) and employees (Art. 15) would remove a major obstacle for artists who perform in other states. It would stimulate the cultural exchange and diversity such as endorsed in article 167 TFEU, it would take into account social aspects and contribute to growth.

…and diversity such as endorsed in article 167 TFEU, it would take into account social aspects and contribute to growth. Moreover it would reduce administration costs for governments, as it would allow to focus on main areas of tax evasion or tax fraud only. When Art. 17 for performing artists is maintained, other options can restrict some of the problems that follow from this source taxation. The OECD gives the following options in its latest 2014 Commentary on Art. 17: (a) exclude employees and let Art. 15 prevail over Art. 17 (b) insert a de-minim-amount equivalent to 15 000 EUR1 expressed in the currency of the other state, for individual artists and sportspersons per year per country (c) allow the deduction of expenses specifically in tax treaties (d) exclude performances which are supported by public funds from Art.

…of expenses specifically in tax treaties (d) exclude performances which are supported by public funds from Art. 17 1 OECD : 15 000 IMF Special Drawing Rights 3 Pearle*-Live Performance Europe (Performing Arts Employers Associations League Europe AISBL) Square Sainctelette 19/6 – B-1000 Brussels Phone +32-2-203.62.96 / e-mail [email protected] / www.pearle.eu (e) exclude recognized cultural and sports non-profit organisations and exchanges from Art. 17 (f) exclude payments to third parties in treaty states, when the artists or sportsperson are not owners or shareholders of that third party and do not received bonuses or profit shares (g) exclude cross-border competitions from Art. 17 With these options a new text for Art. 17 will be created, which would take away many problems for performing artists.

…these options a new text for Art. 17 will be created, which would take away many problems for performing artists. Pearle would like to add to option (c) that the proof of deduction of expenses can immediately be taken into consideration instead of to be done afterwards. As described in the Commission reports of December 2017 and 2018 and the staff working document SWD (2017)264 of 18 December 2017 the automatic exchange of information (AEOI) in administrative cooperation is already working well. In addition the spontaneous exchange of information (SEOI) between Member States is considered as being effective in different domains. Bearing in mind the improved cooperation between Member States, Pearle* believes that this demonstrates the possibility to make an end to unnecessary excessive and even double artist taxation. The Council Directive could incorporate such option.

…an end to unnecessary excessive and even double artist taxation. The Council Directive could incorporate such option. Contact: Anita Debaere Director +32-2-203.62.96 [email protected] PEARLE* - Live Performance Europe, is the European employers’ federation of performing arts organizations. Pearle* represents through its members associations the interests of more than 10,000 theatres, theatre production companies, bands and music ensembles, orchestras, opera houses, ballet, dance companies, festivals, concert venues, producers, promoters, agents, comedy, circus and others within the performing arts and music sector across Europe. The Live Performance sector has a turnover of 44,5 billion euros is the biggest employer of the cultural industries with over 2 million employees.

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