N.B. this post is the last of a two-part article.

Bureaucracy

Generally, local tax authorities do not care how urgent a request for a Certificate of Tax Residence/ Social Security form or other form/certification is. It simply joins a pile and is dealt with when they get to it.

The application process to obtain this documentation can be very lengthy, particularly when dealing with public offices. I can’t stress enough that if this documentation is needed, then it’s vital to start applications early to ensure that everything runs smoothly with the local promoter. Whilst there were understandable delays following COVID we are not seeing any discernible improvement in turnaround times, albeit online applications (where possible) do seem quicker.

The relocation of the UK Foreign Entertainers Unit (“FEU”) from Liverpool to Manchester has meant a loss of experienced personnel, with lengthy delays in agreeing applications for foreign artists and additional scrutiny over expenses.

Touring entity types for a UK Artist

The entity type determines how the applicable foreign tax can be offset against an artist’s UK tax bill. Whilst UK Limited Liability Partnerships are widely used, with the recent increase in Corporation Tax to 25 per cent, there may be advantages to using a UK Limited Company for certain territories. This has come to the fore in Canada where there is comment locally regarding limited liability protection, coupled with the fact that the withholding tax rate on net profits matches the UK corporation tax rate.

In some instances, the type of entity used can cause issues in the foreign jurisdiction. For example, the use of a UK LLP is not advisable if an artist is performing a show in Thailand, due to local laws and a very unsupportive UK/Thailand tax treaty.

It continues to be advisable not to use an unlimited liability vehicle, as well as ensuring that  artist touring entities are separate from any other trading vehicle that artists have; particularly one in which they hold valuable recording and publishing rights.

What to do after the relevant Shows.

This is sometimes overlooked, but after each show/tour, it’s vital to ensure you hold all relevant documentation required to support withholding tax claims back home.

Despite mitigating withholding taxes at the time of the shows (or in advance), some jurisdictions will still usually require a subsequent tax return filing by the stage performer/s, such as the USA, Australia and France. Indeed, the ability to file advance withholding applications in the USA requires your performers to have been compliant in their USA tax affairs and filing end of year tax returns for prior tours.

Think ahead! Tour planning tips for withholding tax.

• Engage with those preparing tour budgets and cashflow forecasts at an early stage (if that isn’t you).
• Start a dialogue with the local show promoters well in advance, but don’t be afraid to question it.
• Understand the show contract and what the parties’ obligations are.
• Be sure to understand exactly what is required from a withholding tax aspect and what you can/can’t do.
• Where direct invoicing will be needed, speak to production suppliers about your requirements in advance.
• If you need documents from an artist’s or artists’ tax authority (such as a certificate of tax residence or social security documentation), it’s advisable to make the request as far in advance as possible.
• If local advisers are necessary to file applications (USA and Australia, for example) engage with them well in advance of the show to obtain quotes for their services and relevant timelines.
• Follow through the planning and ensure it stays on track.
• Don’t forget to gather all relevant documentation and ensure any subsequent tax filings are submitted on time.

Whilst it’s useful to understand the basics, it’s advisable for artists and managers to engage a withholding tax specialist, given the complexities and that every tour is unique.  The key is to start early and have an open dialogue with promoters and the artist representatives.

For further information about withholding tax or any of the issues raised, please contact Steve Wren.

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About Steve

Steve Wren is a tax partner at SRLV, one of the UK’s top three accountancy and business advisers to the music industry.  Voted in consecutive years as one of Billboard Magazine’s Top Business Managers in 2024, he’s specialised in the taxation of entertainment clients since 1992 and advised touring artists, from independents to household names on a regular basis, for more than 15 years.

Alongside UK musicians and international acts, Steve and his team regularly advise promoters and agents across a range of tax matters, including more specialist areas, such as withholding tax.

 

This material is published for the information of clients and contacts. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or SRLV LLP.