Artists Tax Exemption

Eligibility and How it Works:

The scheme is governed by Section 195 of the Taxes Consolidation Act, 1997. It allows the income of artists derived from the sales of work to be exempt from income tax. In order to qualify the Revenue Commissioners must make a determination that the works are - a) original; and b) generally recognised as having cultural or artistic merit.

The exemption granted applies only to income derived from the sale of these creative and original works. The Act specifically lists these works as: a book or other writing, a play, a musical composition, a painting or other like picture and a sculpture. Those categories might sound a little conservative or outdated but they do seem to have been interpreted in a broad enough manner to accommodate most of what comprises contemporary practice in the visual arts. For example there are artists working in video, performance and other emerging experiential modes of practice listed as recipients of tax exemption on the Revenue Commissioners website. The Revenue Commissioners are assisted in the interpretation of the act by guidelines drawn up by the Arts Council and the Arts Minister.

Writers, composers and visual artists who are seeking artists’ exemption, just need to submit a claim form to Revenue together with samples of their work and any supporting documentation. The form is available from the website. Claims should be accompanied by evidence that the work has been published, produced or sold. Artists who are considered to be producing original creative works of artistic merit are then issued with a certificate of tax exemption.

It should be noted, however, that the exemption is on income tax only - artists are still liable for VAT and PRSI. Artists are also liable for tax on income derived from other activities such as teaching for example. Artists must be resident in Ireland and not resident elsewhere. An artist resident in Ireland is allowed to leave the state for a period of time and still retain the tax-exempt status. This allows for the fact that many artists travel outside of Ireland in order to promote their work and widen their experience.  Interpretative artists such as dancers, actors and performers are not eligible for tax exemptions.

Results and Developments:

The Scheme has resulted in many artists, musicians and writers locating in Ireland to avail of its benefits. A small number of big acts and writers are said to benefit hugely from the scheme with their income from music publishing for example (not sales of CDs MP3s etc) being totally exempt from tax. But these are a high earning minority, the average income of most qualifying artists is relatively low. In 1994/95, the cost was recorded as £5.1 million. This rose steadily to 36.8 million in 2000/01 but dipped to 23.9 for 2002 (the latest year for which figures are available) - down 35 per cent. This may seem high, however, these figures need to be seen in context, Of all the tax forgone to the state in 2002 as a result of all the various tax relief schemes the artists exemption represented just 0.15%.

Based on the Tax Returns received for 2001 the Revenue Commissioners are able to calculate that 694 artists claimed the exemption against sales incomes of less than 10,000. A total of 456 artists claimed exemption on incomes between 10,000 and 50,000, while 114 artists claimed exemption on incomes of between 50,000 and 200,000.  Only 59 artists claimed exemption against income above 200,000. 

The total income of this latter group of 59 artists (individuals earning over 200,000) which was exempted from tax was over 56 million. The total income exempted for tax by those 1,264 artists who earned under 200,000 was just over 23 million. The total income exempted from tax of those 694 artists who earned under 10,000 amounted to just 2.7 million. 

Since the scheme was initiated over 8,400 applications for exemption have been received, of those over 6,300 have been granted. In 2004, 407 exemptions were issued of which 231 were for visual artists.

Statistics, Information and Official Documents

Numbers of persons claiming the artists exemption and the income subject to the exemption in the short tax year 2001

Cost to the Exchequer

www.irishstatutebook.ie/ZZA39Y1997S195.html
Taxes Consolidation Act 1997 Section 195

www.revenue.ie
This site provides further information on the Artists Exemption scheme, the Artists Exemption brochure, as well as the application procedures and forms.