Author: dr Rijkele Betten
The Belgian Tax Authorities have recently published a draft circular on the application of the 2006 Belgian United States Income Tax Treaty (hereinafter the 2006 Treaty).
Regarding Entertainers and Sportsmen the Belgian authorities have indicated the following.
Article 16, paragraph 1 of the 2006 Treaty reads as follows:
“1.Income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio, or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, which income would be exempt from tax in that other Contracting State under the provisions of Articles 7 (Business Profits) and 14 (Income from Employment) may be taxed in that other State, except where the amount of the gross receipts derived by such entertainer or sportsman, including expenses reimbursed to him or borne on his behalf, from such activities does not exceed twenty thousand United States dollars ($20,000) or its equivalent in euro for the taxable year of the payment.”
The Belgian authorities have indicated that in their view it is relevant whether in the tax year at hand an amount exceeding $20,000 was assigned and paid. They give the example of a Belgian resident artist who signs a contract in 2008 for a series of concerts in the United States during 2009 against a gross fee of $28,000. The contract stipulates that $10,000 will be payable in 2008 at the moment of the signing of the contract, and that the remaining $18,000 will become payable as the performances take place during 2009. In this case the income will not be payable in the United States because the payment in 2009 does not exceed $20,000 per tax year.
COMMENT RB. This example is rather clear. It would be interesting to know what the view would be if part of the gross fee (which would make the total gross fee exceed $20,000) would be paid out after the year in which the performances took place. For instance, if the gross fee would be $28,000 and an amount of $10,000 would be paid out in 2010. Supposedly, the facts and circumstances would need to be considered to judge whether such splitting has to be accepted. Whether just paying the amount in 2010 would be sufficient remains to be seen.
Source: Arne Smeets and Steven Claes, Draft Circular Belgium US Income Tax Treaty, Fiscoloog International, 31 July 2012, Nr. 344, at 4-5.