TONO members who have established VAT-liable businesses for their work as songwriters, composers, lyricists and music publishers do not have to pay VAT on TONO income. – Fee income from abroad is VAT-free, and if you do not pay VAT on TONO income from Norway in the period from 1 December this year and the end of 2023, or until new VAT rules are introduced, we will pay the VAT claim to the members, says Willy Martinsen, Communications Director at TONO.
/ 23/11/2022 / Willy MartinsenThe Norwegian Tax Administration announced on December 23, 2021 that they were in the process of studying new regulations for value added tax on collectively collected royalties from TONO, Gramo Norwaco and others.
TONO has received verbal assurances from the Norwegian Tax Administration that they will not initiate inspections of VAT-liable TONO members who do not calculate and pay VAT on their TONO income as long as they are working on developing the new regulations.
Current regulations do not allow for the collection of value added tax from customers for collectively collected fees, and it does not appear reasonable that licensees must calculate and pay VAT on TONO revenues in Norway before new regulations are in place.
– We want to give TONO members who have established companies for their music creation, and who are liable for VAT, a reassuring assurance that it is completely risk-free not to calculate and pay VAT on TONO income until new regulations are in place. Even though we have received assurances from the Norwegian Tax Administration that they will not conduct a VAT audit of TONO members who do not pay VAT on TONO income, we give the members an obligation that we will pick up the bill if that should happen, says Martinsen.
The obligation includes TONO revenues generated in Norway, i.e. remuneration for the use of the music by Norwegian businesses, and applies to remuneration paid by TONO in the period from December 1 to the end of 2023, or possibly earlier if the new VAT regulations come into effect earlier.
The payment obligation requires that the TONO member notifies TONO of any inspection by the Norwegian Tax Administration as soon as it is initiated. TONO will also have the opportunity to contest any claims from the agency on behalf of the licensee, and the payment obligation does not cover subsequent calculations that may be due to other errors in VAT processing attributable to the TONO member.
TONO can also reassure members with VAT-liable businesses that they do not need to pay VAT on TONO revenues generated abroad. The Norwegian Tax Administration has clarified to TONO that TONO is understood as an "intermediary" between the licensee and the customer under current VAT regulations.
The TONO member's customer relationship is thus considered to be direct with a customer abroad. This means that TONO members liable for VAT are on an equal footing with other Norwegian VAT-liable businesses when it comes to export revenues.
TONO's commitment means that creators with a Norwegian VAT-registered enterprise and who are TONO members have a lower VAT risk than if they were instead a member of a collective management company in another country.
When current regulations define TONO as an intermediary, copyright income generated in Norway becomes subject to VAT, regardless of which "TONO company" one is a member of, Norwegian or foreign.
With this new initiative, TONO wants to strengthen TONO's collective management, for the benefit of all TONO members.
– It is the collective management model that gives TONO the strength to ensure authors the strongest possible position in the music economy, and it is in the interest of the entire TONO community that there are as many of us as possible. If Norwegian TONO members report a transfer to management companies in other countries, it is a loss for TONO and for our collective management, which also affects our broad membership base, says Martinsen.
The measure will also help facilitate future Norwegian music exports:
– If Norwegian music exports are to be strengthened, it is important to keep Norwegian rights in Norwegian hands. Real measures are required to prevent Norwegian songwriters, composers and lyricists from moving all or part of their activities to other countries. We now want to give TONO members the security that the tax authorities have not been able to give them while we wait for new VAT regulations. With this measure, the risk of any subsequent calculation of VAT has been effectively removed, says Martinsen.
About TONO
TONO was founded in 1928 and is a non-profit cooperative owned and managed by composers, lyricists and music publishers, and on their behalf manages the economic copyrights in the music they have created. TONO grants permission for the use of protected music on radio, TV, the internet, concerts and cinemas, etc., for a fee, and transfers its financial results each year to the rights holders of music that has been played publicly. TONO has more than 38,000 members in Norway, but also works for millions of authors and music publishers from around the world. TONO gives music creators a financial basis to create new music, and collects and simplifies the licensing of protected music to music users. TONO had a turnover of NOK 843,9 million in 2021. Visit tono.no for more information.
Questions from TONO members: medlem@tono.no
Media inquiries: Willy Martinsen, Communications Director at TONO, mob 909 65,254, willy.martinsen (a) tono.no