Artist’s exemption Finance Act 2011 changes

Finance Act, 2011 introduced a cap of €40,000 on the amount of profits or gains in respect of which an individual is entitled to claim the artist’s exemption. The benefit of the exemption had been reduced since 2007 by virtue of the specified relief restriction. The specified relief restriction is the mechanism for ensuring high earners cannot reduce their tax bill to nil by availing of reliefs and exemptions.

The Commission for Taxation recommended that the exemption be abolished altogether. So the introduction of a cap, while severe, can only be welcomed by the sector in that context.

With the changes made in 2011 I thought it a good time to revisit the exemption and explain the conditions attached to it.

The exemption is available to individuals who are resident in Ireland and have written, composed or executed a “work”. A work is:

  • A book or other writing (not restricted to fiction – see Bertie Ahern’s auto-biography, maybe not such a good example(!) or Ryan Tubridy’s JFK in Ireland)
  • A play
  • Musical composition
  • A painting
  • A sculpture.

The work must be original and creative and have cultural or artistic merit.

Income from the publication, production or sale of the work or works up to €40,000 per annum is exempt from income tax.

It is important to note that the exemption is from income tax and not the income levy (2009 and 2010), the universal social charge (USC) or self-employed PRSI.

Another point to note is that it is only available from the year in which it is first claimed and a return total income from all sources must still be made.

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