Touring for most acts today is a truly international operation, especially as more markets and regions are opening up. Careful and strategic planning around taxation – how much is due to be paid and in which countries – is essential. Steve Wren from SRLV explains the key principles and dos and don’ts of withholding tax, as well as highlighting the latest issues.
Local withholding tax can be a complex area to navigate. Without the right advance preparation and advice, it is easy to make mistakes that can expose artists to significantly higher tax charges.
For me, there are three main reasons why this cost should be taken seriously:
- Withholding tax is a significant cost that artists incur at the time of their shows and needs to be planned for as part of preparing tour budgets and cashflow forecasts.
- Jurisdictions such as the UK and US have even legislated that claimants must have reduced their withholding tax as much as “reasonably” possible, to offset it fully.
- The tax affairs of celebrities often make the headlines for the wrong reasons. So whilst mitigating tax costs as much as possible, artists and their advisers should always be mindful of adhering to compliance requirements.
Has the cost of touring gone too far?
The costs of touring for artists and putting on shows for smaller venues has received significant coverage over the past year, and quite rightly so.
For smaller artists, the level of withholding tax hit the headlines in IQ recently, with non-US artists looking enviously at the $20,000 de minimus contained within the majority of tax treaties the US has with other countries, which allow most small US acts to avoid the withholding tax cost of touring.
However, for US artists this de minimus is not always applied automatically and may need to be claimed; hence, it could still be a cashflow cost, with a possible repayment later. The UK does operate an administrative de minimus for foreign artist withholding tax linked to the personal allowance (£12,570), but there are limitations to its operation, and it is not an exemption; it is simply for administration purposes and once exceeded, the whole amount is taxable.
Ideally, the UK and other countries would bow to pressure and include withholding tax exemptions or limit its scope. Changing international tax treaties takes years, so the onus is on local jurisdictions to implement local laws to effect change.
Interestingly, there are some contradictory rules when it comes to tax in the UK. Whilst there are significant tax incentives for industries including TV and film (via a tax credits system), no government incentives apply to the music touring industry.
“Withholding tax can operate very differently from country to country”
Contract wording & withholding tax
I am often asked to comment on withholding tax matters within show contracts and it is obviously important to establish the parties’ obligations in this regard.
An area that usually prompts a lot of discussion is the “net deal”. This is where the promoter offers an amount, net of taxes. Sometimes this is used where no withholding taxes are applied, such as Ireland, Denmark, and the Netherlands.
Outside of these, withholding taxes will be applicable, so advisers need to know the amount of taxes an artist will be liable for (to reach the net) and also receive back-up documentation, should an artist’s home tax authority want to substantiate the amount being claimed as a credit against home taxation.
Failure to understand or pin down the local withholding tax amount in any “net deal” can result in an artist having a higher overall tax burden than would otherwise arise.
How does withholding tax generally operate and are there any changes in approach?
Withholding tax can operate very differently from country to country. Some jurisdictions do not withhold, some use a tax on net profit basis (subject to an application process), whereas most of Europe and South America tax the gross income the artist will receive but at a supposed lower rate (perhaps with contract splits).
Filing withholding tax applications on time continues to be the key for the countries operating on a net basis. Failing to do this can cause havoc with tour cashflow. Whilst any overpayment can be reclaimed on filing a tax return, this may not be allowed until long after the tour has finished and many months after vendors will want to be paid.
As far as changes in approach, we are seeing differences between promoters in France and Spain regarding contract splits and the need to provide back-up documentation. Whilst having documents to support your expenditure is clearly the preferential route, we have seen some Spanish promoters requiring the artist entity to provide an indemnity to them (should the tax authorities view that more withholding tax is owed and go after the promoter).
“South America has been a high withholding tax jurisdiction for some time, to the extent that some of our clients are questioning even going there”
South America has been a high withholding tax jurisdiction for some time, to the extent that some of our clients are questioning even going there. Whilst withholding mitigation is limited, there is increased speculation that Brazil’s desire to fully join the OECD (Organisation for Economic Cooperation & Development) may result in a loosening of the withholding tax burden (25% on gross), which would be very welcome.
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 cannot stress enough that, if this documentation is needed, then it is 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 (LLPs) are widely used, with the recent increase in Corporation Tax to 25%, 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.
“After each show/tour, it is vital to ensure you hold all relevant documentation required to support withholding tax claims back home”
What to do after the relevant shows
This is sometimes overlooked, but after each show/tour, it is 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 US, Australia, and France. Indeed, the ability to file advance withholding applications in the US requires your performers to have been compliant in their US 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 is not you).
- Start a dialogue with the local show promoters well in advance, but do not 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/cannot do.
- Where direct invoicing will be needed, speak to production suppliers about your requirements in advance.
- If you need documents from an artist’s tax authority (such as a certificate of tax residence or social security documentation), it is advisable to make the request as far in advance as possible.
- If local advisers are necessary to file applications (US 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.
- Do not forget to gather all relevant documentation and ensure any subsequent tax filings are submitted on time.
Whilst it is useful to understand the basics, it is 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.
Steve Wren is a tax partner at SRLV, one of the UK’s top three accountancy and business advisers to the music industry. Alongside UK musicians and international acts, Wren and his team regularly advise promoters and agents across a range of tax matters, including more specialist areas, such as withholding tax.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Withholding tax: Where are we now?
Steve Wren from SRLV explains the key principles and dos and don’ts of withholding tax, as well as highlighting the latest issues
18 Mar 2025
Touring for most acts today is a truly international operation, especially as more markets and regions are opening up. Careful and strategic planning around taxation – how much is due to be paid and in which countries – is essential. Steve Wren from SRLV explains the key principles and dos and don’ts of withholding tax, as well as highlighting the latest issues.
Local withholding tax can be a complex area to navigate. Without the right advance preparation and advice, it is easy to make mistakes that can expose artists to significantly higher tax charges.
For me, there are three main reasons why this cost should be taken seriously:
Has the cost of touring gone too far?
The costs of touring for artists and putting on shows for smaller venues has received significant coverage over the past year, and quite rightly so.
For smaller artists, the level of withholding tax hit the headlines in IQ recently, with non-US artists looking enviously at the $20,000 de minimus contained within the majority of tax treaties the US has with other countries, which allow most small US acts to avoid the withholding tax cost of touring.
However, for US artists this de minimus is not always applied automatically and may need to be claimed; hence, it could still be a cashflow cost, with a possible repayment later. The UK does operate an administrative de minimus for foreign artist withholding tax linked to the personal allowance (£12,570), but there are limitations to its operation, and it is not an exemption; it is simply for administration purposes and once exceeded, the whole amount is taxable.
Ideally, the UK and other countries would bow to pressure and include withholding tax exemptions or limit its scope. Changing international tax treaties takes years, so the onus is on local jurisdictions to implement local laws to effect change.
Interestingly, there are some contradictory rules when it comes to tax in the UK. Whilst there are significant tax incentives for industries including TV and film (via a tax credits system), no government incentives apply to the music touring industry.
Contract wording & withholding tax
I am often asked to comment on withholding tax matters within show contracts and it is obviously important to establish the parties’ obligations in this regard.
An area that usually prompts a lot of discussion is the “net deal”. This is where the promoter offers an amount, net of taxes. Sometimes this is used where no withholding taxes are applied, such as Ireland, Denmark, and the Netherlands.
Outside of these, withholding taxes will be applicable, so advisers need to know the amount of taxes an artist will be liable for (to reach the net) and also receive back-up documentation, should an artist’s home tax authority want to substantiate the amount being claimed as a credit against home taxation.
Failure to understand or pin down the local withholding tax amount in any “net deal” can result in an artist having a higher overall tax burden than would otherwise arise.
How does withholding tax generally operate and are there any changes in approach?
Withholding tax can operate very differently from country to country. Some jurisdictions do not withhold, some use a tax on net profit basis (subject to an application process), whereas most of Europe and South America tax the gross income the artist will receive but at a supposed lower rate (perhaps with contract splits).
Filing withholding tax applications on time continues to be the key for the countries operating on a net basis. Failing to do this can cause havoc with tour cashflow. Whilst any overpayment can be reclaimed on filing a tax return, this may not be allowed until long after the tour has finished and many months after vendors will want to be paid.
As far as changes in approach, we are seeing differences between promoters in France and Spain regarding contract splits and the need to provide back-up documentation. Whilst having documents to support your expenditure is clearly the preferential route, we have seen some Spanish promoters requiring the artist entity to provide an indemnity to them (should the tax authorities view that more withholding tax is owed and go after the promoter).
South America has been a high withholding tax jurisdiction for some time, to the extent that some of our clients are questioning even going there. Whilst withholding mitigation is limited, there is increased speculation that Brazil’s desire to fully join the OECD (Organisation for Economic Cooperation & Development) may result in a loosening of the withholding tax burden (25% on gross), which would be very welcome.
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 cannot stress enough that, if this documentation is needed, then it is 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 (LLPs) are widely used, with the recent increase in Corporation Tax to 25%, 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 is 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 US, Australia, and France. Indeed, the ability to file advance withholding applications in the US requires your performers to have been compliant in their US tax affairs and filing end of year tax returns for prior tours.
Think ahead! Tour planning tips for withholding tax
Whilst it is useful to understand the basics, it is 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.
Steve Wren is a tax partner at SRLV, one of the UK’s top three accountancy and business advisers to the music industry. Alongside UK musicians and international acts, Wren and his team regularly advise promoters and agents across a range of tax matters, including more specialist areas, such as withholding tax.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
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