Campaign calls for end to “withholding tax” travails for touring artists

The European Parliament is being urged to alleviate the financial burdens faced by touring musicians by overhauling and standardising the way in which "withholding tax” is applied by member states.

The call is led by the European Music Managers Alliance (EMMA), the umbrella organisation for more than 3,000 music managers across Europe, who have coordinated a letter to MEPs and EU Commissioners on the issue. It is backed by a number of representative bodies for artists, musicians, independent labels, venues, clubs, and festivals as well as music export offices.

Withholding taxes are typically deducted as a percentage of an artist’s gross payment when they perform in a foreign territory. Theoretically, they provide a bond towards any taxes owed in the country of earning. However, according to EMMA, no consideration is made of the actual costs and profitability of touring.

As a result, EMMA argues, many artists will overpay the tax they actually owe, resulting in further deficits or vastly reduced profits.

Jess Partridge, EMMA’s executive director, said: “The cost burdens shouldered by European artists when they want to perform live shows have increased enormously over recent years. To the point where touring across Europe has become financially precarious, especially for small and mid-sized artists who are building an audience. An already impossible situation is being compounded by the unfair and discriminatory way in which withholding taxes are collected.

“We believe the European Parliament has the power to alleviate these challenges. If MEPs want to promote greater cultural diversity and economic activity through cross-border live touring, then it is imperative the present regime of withholding taxes is overhauled, and European artists are given parity with their US counterparts.”

Equal parity with US artists

EMMA added that the situation is compounded by the lack of uniformity in reclaiming these overpayments being often an arduous and sometimes impossible task. As a result, small and mid-sized artists who lack the resources to chase what they are owed are disproportionately impacted.

By comparison, US artists playing in Europe benefit from international treaties that means no withholding tax is charged until they earn over a certain threshold – typically €20,000.

EMMA is recommending that European artists receive equal parity – either from a similar universally-applied threshold on earnings; or by standardising systems that are already operational in Denmark, Hungary, Ireland and the Netherlands, where no withholding taxes are imposed on foreign artists on short-term visits.

Per Kviman, founder of Versity Music and chair of EMMA, said: “Europe’s live music sector is projected to reach a value of $38bn by 2030. That immense cultural and economic impact is wholly dependent upon touring artists and musicians. As well as attracting audiences to their performances, these talented and creative individuals are directly responsible for hundreds of thousands of jobs. However, these benefits are jeopardised by an outdated and discriminatory application of withholding taxes. If we want European artists to compete on a global stage, then it is vital the European Parliament acts on this issue.”