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Update of the OECD Model Tax Convention – Substantial Change to the Commentary on Article 17 on Artistes and Sportsmen

In fact, Article 17 no longer refers to “Artistes and Sportsmen” but has been changed to “Entertainers and Sportspersons” intended to be a more modern and gender-neutral wording.

The updated Commentary contains several changes following on from the work done and feedback received in relation to this article. However, it must be recalled that the commentary in itself is not binding and does not work directly, but is rather a recommendation for Member States when negotiating new treaties and interpreting existing treaties.

In 2013, the EAEA and Pearle*, as European social partners in the Live Performance sector submitted a joint statement to the OECD, drawing attention to the ongoing problem of double taxation affecting performers and suggesting how this might be addressed.

Dick Molenaar, tax expert in the artistic field, offered some analysis of the commetary and its implications, as follows:

The new Commentary on Art. 17 has the following options:

- Paragraph 2: exemption for salary payments to employed artistes and sportsmen. This was already available in the old Commentary, but now a clear text proposal is given.

- Paragraph 10: deduction of expenses in the state of the performance

- Paragraph 10.1: a minimum amount under which performance fees are exempted. IMF SDR is equal to EUR 17.000. Unfortunately the OECD recommends in Par. 10.3 to tax the income first and refund only after the year, which is a major administrative obstacle.

- Paragraph 14: exemption for subsidized artistes and sportsmen

- Paragraph 14.1: payments from teams and groups to individual artistes and sportsmen can be exempted in the performance state, comparable to Par. 2.

While there are positive elements, these are not as far-reaching as the changes that FIA called for and overall, this Update is disappointing, despite some improvements. Performers are only partially helped by this, with only some reduction of the risk of international double taxation. More work still needs to be done to improve their tax position.

Furthermore, lobbying work will be needed at national level to encourage national tax administrations to take account of, and apply, the changed Commentary.

You can get a full overview of the changes in the updated Convention below. The changes relevant to Article 17 are boxed in red.