TLDR: VAT withholding is presumed to apply to copyright payments made to authors benefiting from the franchise (Article 293 B of the French Tax Code), unless they explicitly waive it. This presumption applies to payments made by publishers, collective management organizations, and producers, and does not affect the benefit of the franchise.
Legal presumption of withholding
VAT withholding is presumed to apply to copyright payments made by publishers, collective management organizations, and producers, even if the author benefits from the VAT franchise (Article 293 B of the French Tax Code). This presumption is automatic in the absence of an explicit waiver by the author, in accordance with Article 285 bis, paragraph 2, of the French Tax Code.
Scope of the presumption
The presumption covers only payments made by the three categories of payers mentioned (publishers, collective management organizations, producers). It does not extend to other sources of income for the author, which remain subject to the general rules of the franchise.
Waiver of the withholding mechanism
The author may waive VAT withholding by notifying their decision to the relevant payers and the tax office to which they are subject. This waiver:
- must be explicit and formulated in accordance with the procedures set out in Article 285 bis, paragraph 3, of the French Tax Code;
- applies to all royalties received by the author;
- takes effect on the first day of the month following its notification;
- covers a period of five years, renewable by tacit renewal.
Independence between franchise and withholding
The benefit of the franchise (Article 293 B of the French Tax Code) is not called into question merely because an author receives royalties subject to withholding. The absence of a waiver of withholding does not equate to an option for VAT payment under Article 293 F of the French Tax Code. The two mechanisms (franchise and withholding) operate on separate levels.
Consideration of royalties for the franchise
Royalties subject to withholding are taken into account for assessing the thresholds below which the specific franchise for authors and performing artists applies. This means that these royalties contribute to the calculation of the author's total turnover, even if they are subject to withholding.
Additional declarative obligations
Authors who have not waived withholding and receive royalties from persons other than publishers, collective management organizations, or producers must:
- pay VAT in accordance with the procedures set out in Article 285 bis, paragraph 5, of the French Tax Code;
- file an annual turnover declaration for these royalties.