Art can be very subjective but when it comes to Revenue, they will determine if you are entitled to earn money tax free on your original creation based on whether it has cultural or artistic merit.
So, if you are earning additional income through your creativity, you may be entitled to earn this tax free by claiming “Artist Exemption”.
Occasionally while I am chatting with clients about their tax return, I learn that they have a creative side outside of their contracting work and they are making some extra money out of it.
Rather than advising them to add it to their income streams for tax purposes we might explore if it is worth their while applying for Revenue’s Artist Exemption Scheme.
While certain creatives are exempt from paying tax, the scheme does not apply to everyone and to every piece of art. The Irish Revenue commissioners must first determine if the individuals work, or works are generally recognised as creative, original and having cultural or artistic merit.
Thankfully, our Irish tax inspectors do not make their determinations single-handedly! They interact with The Arts Council who have provided a comprehensive document to assist Revenue when determining whether an individual’s piece of work meets the criteria.
The work must fall within one of the following categories:
(a) a book or other writing,
(b) a play,
(c) a musical composition,
(d) a painting or other like picture,
(e) a sculpture.
To apply for the Artist Exemption, a form must be completed and submitted to Revenue. If approved, the income will be exempt from Income tax (but not USC or PRSI) up to a limit of €50,000 per annum from the tax year in which the claim is made.
If you’ve been successful in securing the exemption, I will make sure it is correctly reflected on your tax return so you don’t pay any more tax than you should. I might even buy your book and ask you to sign it for me!
Tax should not be a driver as to how you live your life. Understanding the system and insightful planning can make that financial difference for you and your family. As an added bonus, I enjoy hearing your story!
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