The Constitutional court rejects the actions introduced by several software designers and IT companies for the cancellation of the legislative provision which excludes income relating to computer programs from the specific copyright tax regime.
Officially back to its roots
The new copyrights regime has been modified by the program-law of 26 December 2022 (see our newsflash of 2 December 2022), limiting the scope of the regime as of 1 January 2023. The purpose of this legislative change was to go back to the initial scope that the legislator had in mind when introducing the copyright regime in 2008, meaning the application of a favorable tax regime for income irregularly and volatile in the exercise of artistic activities (and then depending on the success of the art created).
The reform excluded certain professions, including software designers (more generally, IT profiles), from the benefits of the fiscal regime. Consequently, several software designers and IT companies contested the constitutionality of the program-law of 26 December 2022, arguing that the principle of equality and non-discrimination (articles 10, 11, and 172 of the Constitution) were violated, as a difference of treatment is created between authors of literary or artistic works protected by copyright, depending on whether these artistic works are computer programs or not.
On 16 May 2024, the Constitutional court pronounced its decision on this matter. Unfortunately for the IT sector, the Constitutional court recognised that the contested legislation indeed excludes the computer programs from the application of the special tax regime for copyright income, but ruled that this exclusion is reasonably justified taking into account the above-mentioned purpose of the legislative change.
How we can help
As mentioned above, the new copyright regime was effective on January 1, 2023. However, the law provided for a one-year transitional period for individuals who were already receiving copyright income in 2022 and are not eligible for the new regime .
If it was then still possible under these circumstances to use the copyright tax regime for the IT sector in 2023, it is now clear this regime can not be applied to the IT sector anymore as from 2024, even if a positive ruling was obtained in the past towards the ruling commission (SDA).
In the event you continued to apply the copyright tax regime for the IT sector in 2024, and the income should then be reclassified as professional income, a procedure will have to be put in place in order to recuperate the movable withholding tax withheld on the income (paid as copyright income).
As it will not be possible to apply for the copyright regime in the IT sector, this will notably have an impact on the gross/net ratio of your population. We can help you to look into your current practice, map and estimate the impact on your population. Moreover, we can consider alternatives to compensate (at least partially) for the financial loss incurred due to the implementation of the new legislation.
For more insights on this matter, reach out to your regular PwC contact or Bart Van den Bussche.
