Understanding Withholding Tax for Musicians

When you perform abroad, the country you’re working in may want a share of the income you generate. Withholding tax is how they secure that share.

The exact rules are determined by international tax agreements known as double tax treaties. The UK has treaties with many countries (but not all), which are designed to prevent you from paying tax twice on the same income.

However, treaties don’t always remove the burden entirely. They can be applied very differently depending on where you’re performing.

The Impact of Withholding Tax on Performance Income

Think about the recent “Taylor Swift effect” and the economic boost her UK concerts delivered. Governments know the financial impact of visiting artists. Withholding tax is their way of capturing a slice of those earnings.

• For UK musicians abroad: Withholding tax may be applied on your performance fees.

• For UK promoters: The reverse is true. You’re required to deduct 20% withholding tax when paying non-UK artists who perform here.

  
  

How Different Countries Apply Withholding Tax

Most countries impose withholding tax on gross income (before expenses), which can feel punitive. The rates vary significantly:

• Luxembourg: 10%

• USA: 30% (with some exemptions available)

• Italy: 30%

  
  

Because it’s based on gross income, even modest fees can be hit hard.

Strategies to Reduce the Impact of Withholding Tax

The good news? There are ways to reduce the impact:

1. Exemptions and Thresholds

2. The USA has a minimum annual threshold for performance income before withholding tax applies.

4. Musicians can complete W8BEN (individuals) or W8BEN-E (companies) forms to access treaty benefits.




5. Foreign Tax Credit

6. If you’ve suffered withholding tax, you may be able to claim it back as a foreign tax credit on your UK tax return.

8. But this credit is capped. If your UK tax liability is lower than the amount withheld, you’ll lose the difference.




9. Filing a Local Return

10. In countries like the USA or Australia, you may be able to file a tax return locally to reclaim excess withholding.

11. In some EU countries (like Italy), this simply isn’t possible.

13. Always weigh the cost and hassle of filing locally against the potential refund.

The Importance of Documentation

To recover or offset withholding tax, documentation is everything.

• Before Performing:

- Promoters often request a Certificate of Residence from HMRC to confirm your UK tax residency.

- Remember: an A1 form relates to social security, not withholding tax.

• After Performing:

- Ideally, obtain a withholding tax certificate from the country where you worked.

- If not available, a fee statement from the promoter showing the deduction can help.

- As a last resort, rely on contracts and net payment records — but these are much weaker evidence.

Business Structure and Withholding Tax

Even if you operate through a UK limited company, beware of the “look-through” rule in some countries.

For example, the USA can apply withholding tax directly on individual artists, even if the contract is with your company. This creates a mismatch where the company earned the income, but the tax credit attaches to you personally.

On the flip side, if your performance is funded by public money in the host country, you may be able to apply for an exemption altogether. Always review the double tax treaty of the country you’re visiting to check.

Key Takeaways on Withholding Tax

• Withholding tax is a real cost for musicians working abroad.

• Rates vary from country to country - sometimes dramatically.

• Good paperwork and preparation make all the difference in recovering or offsetting tax.

• Consider your business structure and whether exemptions might apply.

• Always get tailored professional advice before making decisions.

  
  

Final Note

Withholding tax can feel like a minefield. However, with the right preparation, you can reduce its impact on your international income.

I recently wrote in more detail on this topic for Classical Music Magazine - you can read the article here.

Understanding the intricacies of withholding tax is essential for any musician performing internationally. By being informed and prepared, you can navigate this complex landscape more effectively.