TLDR: Waiving the withholding tax mechanism makes the author liable for VAT under common law for all taxable transactions, starting from the first day of the month following notification to the Business Tax Service (SIE). It applies to all royalties received by the author, covers a minimum period of five years (renewable by tacit renewal), and must be notified in writing, with acknowledgment of receipt, to the SIE and all relevant publishers, collective management organizations, and producers.
Immediate tax consequences
The waiver requires the author to declare and pay VAT under common law rules for all transactions subject to the tax. This obligation takes effect from the first day of the month following notification of the waiver to the SIE.
Scope of the waiver
The waiver applies to all royalties received by the author, without exception, and also concerns all publishers, collective management organizations, and producers that pay royalties to the author. It is valid for the author and all the aforementioned third parties.
Notification formalities
The waiver must be submitted in writing and sent by registered letter with acknowledgment of receipt to the Business Tax Service (SIE) at the place where the profession is exercised. The author must then send, without delay and by the same means, a copy of this letter along with proof of its dispatch to the SIE to all relevant publishers, collective management organizations, and producers.
Duration and renewal
The waiver mandatorily covers a period of five years, including the year of its declaration. It is automatically renewable by tacit renewal for another five-year period, unless the author requests a return to the withholding tax regime within the thirty days preceding the expiration of each period. If the author benefits from a VAT credit refund (Article 271 of the CGI) during or at the end of the waiver period, the waiver is automatically renewed for another five-year period.
Return to the withholding tax regime
The return to the withholding tax regime must be requested in writing, with acknowledgment of receipt, to the SIE and all relevant publishers, collective management organizations, and producers. This request must be submitted within the thirty days preceding the end of the waiver period, following the same procedures as the waiver itself.
Applicable tax regime after waiver
If the author’s turnover does not exceed the franchise thresholds, they benefit from the franchise, unless they have opted for VAT payment. Otherwise, or if they have opted for VAT payment, they are subject to all obligations incumbent on VAT taxpayers, subject to the specific provisions for authors.
Absence of waiver
In the absence of a formalized waiver in accordance with the prescribed procedures, the author remains subject to the withholding tax obligation for all royalties received.