General information on taxation of visual artists

From the point of view of taxation, it is usually most beneficial to have your entire income taxed as a single type, i.e., either as personal income or as entrepreneurial income. This is because you can only deduct the expenses and losses of one form of operation from the income of that form of operation. 

Changing between different tax acts to pay taxes from one year to the next is not in line with generally accepted accounting principles. 

Wages and any grants received are taxed under the Income Tax Act. If, in addition to your artistic work, you are also an employee, or the main source of income for your artistic work is a grant, it is usually most advantageous that all your activities, including sales of artwork, are taxed under the Income Tax Act. This way you can deduct expenses related to the sale of your artwork from your wage income to the extent that the sales proceeds cannot cover expenses from your artistic activities. 

Entrepreneurs are subject to the Business Income Tax Act. If the majority of your income comes from the sale of artwork and commissions, you will usually be subject to the Business Income Tax Act. In this case, it is advisable to operate as an entrepreneur so that you can deduct expenses for your artistic work from your other income if necessary. 

There are many similarities in the way that expenses are deducted under both the Income Tax Act and the Business Income Tax Act but there are also differences, so it is important to follow the correct instructions when filing your tax return. 

Entrepreneurs report their income and expenses from their artistic work either via the MyTax e-service or using Form 5 Business tax return for business operators and self-employed persons. When your primary income comes from the sale of artwork, it is a good idea to obtain accounting services from an accounting firm. An accounting firm can also help you make use of tax shelters. 

If you have obtained a Business ID, the tax authority may send you Form 5, even if you previously reported your income and expenses from artistic work on Form 11. Simply having a Business ID does not mean that you are subject to the Business Income Tax Act if your business activities remain small in scale. 

If the sales proceeds from your artistic activities exceed EUR 15,000, you are liable to pay VAT for your sales. However, whether you are subject to VAT is not decisive in determining the act under which law your income will be taxed. Read more on the VAT liability of visual artists. 

You must also account for the taxation of any grants you receive. Grants for artists can be considered either tax-exempt or taxable income depending on three factors: the purpose of the grant, the source of the grant and the total amount received in grants for that year. Read more about the taxation of grants. 

More information: 

Guidelines by the tax authority: Tax return – the self-employed 

Guidelines by the tax authority: Taxation of grants