We analyze the recently published Royal Decree 31/2023, dated January 24, which amends the Personal Income Tax Regulations to comply with the measures contained in the Artists’ Statute regarding withholding taxes.
On September 6, 2018, the Plenary Session of the Congress of Deputies unanimously approved the report of the Subcommittee on the Drafting of the Artists’ Statute, which called on the government to adopt emergency measures regarding artistic creation, with the aim of improving the working conditions of Spanish artists. Among these recommendations were several of a tax-related nature.
At the start of 2023, Royal Decree-Law 1/2023, dated January 10, was published, introducing some of the key improvements called for in the Artists’ Statute; all of them relate to the social protection of artists in the labor market and are intended to improve the professional standing of creators, artists, and other cultural workers.
Now, with the entry into force on January 25 of Royal Decree 31/2023, the Personal Income Tax Regulations have been amended with regard to withholding taxes and payments on account applicable to various artistic activities, in order to incorporate the recommendations contained in the Artist’s Statute into tax law.
Two provisions of the personal income tax regulations are being amended to improve protection for the various stakeholders in the sector.
- Specifically, paragraph 2 of Article 86 is amended to reduce the minimum withholding tax rate applicable to earned income derived from a special employment relationship from 15 to 2 percent for artists working in the performing arts, audiovisual arts, and music, as well as for individuals who perform technical or auxiliary activities necessary for the conduct of such activities.
- Furthermore, paragraph 2 amends paragraph 1 of Article 95, reducing the withholding tax rate from 15 to 7 percent with respect to economic activities carried out by artists. Specifically, for the new withholding rate to apply, the artist must have earned total income from such activities of less than 15,000 euros in the previous tax year, and this income must represent the artist’s primary source of income—defined as more than 75 percent of the sum of the total income from economic activities and employment earned by the taxpayer in that tax year.
Jaime Hormeño, tax attorney at ELZABURU