Income from intellectual property rights (1)

Individual taxpayers who earn income from intellectual property rights in Romania are required to declare their income and pay taxes, fees, contributions and other amounts to the general consolidated budget.

Income from intellectual property rights is considered to be obtained from Romania, only if it is received from an income payer in Romania or from a non-resident through a permanent establishment established in Romania.

According to the provisions of Law no. 8/1996 on copyright and related rights, with subsequent amendments and completions, the original works of intellectual creation in the literary, artistic or scientific field are the object of copyright and related rights, whatever the method of creation, mode or form of expression and independent of their value and destination, derivative works that have been created starting from one or more pre-existing works, as well as the rights related to copyright and sui-generis rights.

According to the provisions of Law no. 8/1996 on copyright and related rights, with the amendments and completions, the income obtained from the capitalization in any form of intellectual property rights that come from copyright and rights related to the right of author, including the creation of monumental works of art, patents, designs, trademarks and geographical indications, topographies for semiconductor products and the like.

Income from intellectual property rights is considered to be the income obtained from the capitalization of industrial rights, such as: inventions, know-how, trademarks, franchises and the like, recognized and protected by documents of specialized institutions, as well as copyright, including copyright-related rights.

We mention that are included in the category of intellectual property rights and rights that are the subject of contracts for assignment, rental, collaboration, research, license, franchise and the like, as well as those transmitted by succession, regardless of the name under which it is granted, such as be: direct remuneration, secondary remuneration, fee, royalty and the like. Also considered are revenues from intellectual property rights and revenues from assignments for which the relevant regulations establish the presumption of assignment of rights in the absence of a contrary provision in the contract.

Fiscal treatment of income from intellectual property rights paid by legal entities or other entities that have the obligation to keep the accounting records:

According to art.72 paragraph (1) of Law no.227 on the Fiscal Code, with subsequent amendments and completions, taxpayers who earn income from intellectual property rights owe income tax, the tax being final.

The gross income from intellectual property rights includes both the amounts collected during the year and the equivalent in lei of income in kind.

It is important to specify that the evaluation of revenues in kind is made at the market price or at the price established by the technical expertise, at the place and on the date of their receipt.

The net income from intellectual property rights, including the creation of monumental works of art, is determined by income payers, legal entities or other entities that have the obligation to keep accounting records, by deducting from gross income the expenses determined by applying the flat rate 40% on gross income.

We mention that, according to the Fiscal Code, the lump sum expenses include, among others: social contributions due, commissions, amounts due to collective management authorities or other income payers as payment for services provided for the management of rights by the latter to the holders of rights.

In the case of the exploitation by the heirs of the intellectual property rights, as well as in the case of the remuneration representing the resale right and of the compensatory remuneration for the private copy, the net income is determined by deducting from the gross income the amounts belonging to collective management authorities or other payers. such income, according to the law, without the application of the flat rate of expenses of 40% on the gross income.

            The net income from intellectual property rights is determined as the difference between the gross income and the commission due to the collective management authorities or other payers that, according to the law, have attributions of collecting and distributing the incomes to the rights holders, in the following situations:

  • income from intellectual property rights transmitted by succession;
  • income from the exercise of the right of suite;
  • income representing the compensatory remuneration for the private copy.

The payers of income from intellectual property rights, who have the obligation to calculate and withhold the tax, are, as the case may be:

  • users of works, inventions, know-how and the like, in the situation where the rights holders exercise their intellectual property rights personally, and the contractual relationship between the holder of intellectual property rights and the user is direct;
  • collective management authorities or other entities, which, according to the legal provisions, have attributions for the management of intellectual property rights, whose management is entrusted to them by the holders. This situation also includes the producers and agents mandated by the rights holders, through whom the respective rights are collected and distributed.

Given that the amounts representing income from the exploitation of intellectual property rights are collected by several collective management authorities or other similar entities, the obligation to calculate and withhold the tax rests with the body or entity making the payment to the holder of intellectual property rights.

Payers of income from intellectual property rights have the obligation to calculate, withhold and transfer during the fiscal year the tax due by taxpayers. The tax due is calculated by applying the 10% rate on net income. The tax is withheld from the income paid by the income payers at the time of payment of income.

The calculated and withheld tax represents the final tax and is paid to the state budget until the 25th of the month following the month in which it was withheld.

Attention! Income payers do not have the obligation to calculate, withhold and pay tax from paid income if they make payments to associations without legal personality, as well as to entities with legal personality, which organize and conduct their own accounting, according to law, for which income tax payment it is made by each associate, for his own income.

Individuals who realize income from intellectual property rights, for which the net income is determined on the basis of flat rates of expenses and for which the tax is withheld at source do not have declaratory obligations.

Taxpayers who obtain income from intellectual property rights for which the net income is determined by the income payers, legal entities or other entities that have the obligation to keep the accounting records, do not have the obligation to complete the Register of fiscal records and to keep the accounting records .

Legal basis:

www.anaf.ro;

Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions;

Law no. 207/2015 on the Fiscal Procedure Code, with subsequent amendments and completions; Calendar of tax obligations.