Artists’ Exemption from Income Tax in Ireland
Ireland has a distinctive tax exemption for artists, writers and composers under section 195 of the Taxes Consolidation Act 1997.
Where Revenue makes a favourable determination, income from qualifying artistic works can be exempt from Income Tax, subject to a current annual limit of €50,000.
The exemption can be particularly valuable to professional artists, but it does not apply automatically simply because someone earns income from creating art.
What Works Can Qualify?
Revenue can make a determination in respect of works falling within five statutory categories:
- a book or other writing;
- a play;
- a musical composition;
- a painting or other like picture; or
- a sculpture.
For visual artists, the categories of painting or other like picture and sculpture are therefore particularly important.
Questions can arise with contemporary artistic practices which do not fit neatly within these traditional categories.
Originality, Creativity and Artistic Merit
Falling within one of the statutory categories is not sufficient by itself.
Revenue must determine that the work is original and creative and is generally recognised as having cultural or artistic merit. Revenue applies guidelines drawn up for the purposes of section 195 and may consult bodies such as the Arts Council when making a determination.
The Guidelines provide more detailed criteria for determining what amounts to cultural or artistic merit. This can make the application particularly interesting where the work is experimental, interdisciplinary or otherwise difficult to place within traditional artistic categories.
How Much Income Is Exempt?
The exemption is currently subject to a maximum of €50,000 of qualifying income per year.
Importantly, the Artists’ Exemption relates to Income Tax. It does not provide an exemption from USC or PRSI, and VAT may also have to be considered depending on the circumstances.
Applying for Artists’ Exemption
An application is made to Revenue for a determination.
Revenue currently requires an Artist 2 claim form, samples of the relevant work and supporting documentation. For a painting or similar picture, Revenue asks for six good-quality photographs together with a brief CV of the applicant’s artistic career.
A determination generally operates from the year in which the claim is made. Income earned from sales of the work in earlier years is not retrospectively exempt.