November 25, 2024

Taylor Daily Press

Complete News World

American tax solution for a DJ working through a transparent system

American tax solution for a DJ working through a transparent system

An artist working in the United States using a financially explicit legal form abroad, but not in the Netherlands, may pay US federal income tax.

A Dutchman performed around the world in 2017 as a DJ. He was the owner-manager of BV, who was paid 213,007 euros. In addition, the person was the manager and sole member of a company (LLC) incorporated under the laws of the U.S. state of Delaware. The contracts for the work of the LLC partner were signed by DJ in the United States. For that, the LLC received the kick fee and paid the business expenses. The DJ was paid the LLC’s revenue annually. Dutch tax authorities considered the LLC to be a legal entity, but the LLC was financially transparent to US tax authorities. So that person had to pay 253,581 euros in federal income tax on the profits of the LLC. In the tax account of 2017 / IB / PVV, the person stated 693,204.

Match the artist project

In his tax return, he claimed a double tax deduction of € 497,042 for US taxable income. According to the man, the exemption method was used. Tax authorities have denied this exemption. Federal income tax was wrongly levied in the United States. The inspector says the LLC should have been taxed with the corporation tax in the Netherlands. But that did not happen. Zeeland-West-Brabant court dismisses tax authorities’ position. Under the artist agreement in the tax treaty between the Netherlands and the United States, the working state may tax the artist’s salary. The United States actually imposes taxes. In this sense, the case is different from the judgment of the Supreme Court dated 24 September 2021 (ECLI: NL: HR: 2021: 1352). Look ‘The artist cannot tax the line‘For more information on that judgment.

See also  Belgium soccer player suspended and fined after racist riots in US | game

Solution rate

The court rules that the person can set the federal income tax levied on him against his Dutch income tax. Under the agreement, the Netherlands would have to exempt its residents from Dutch tax on income allowed to be taxed by the United States. However, in the settlement system, the total amount of federal income taxed by the federal government cannot be equated to one-to-one with income declared with US source in the Netherlands. The Court primarily states that tax evasion in the United States is possible only because income components are taxed with a US source. In addition, this income must be included in the taxable income in the Netherlands. The court therefore sets out to take the proportional settlement into account of € 181,553.

Agreement: Art. 18 And 25 NL-USA Agreement

Source: Zeeland-West-Brabant District Court June 9, 2022 (Released June 14, 2022), ECLI: NL: RBNHO: 2022: 4749, AWB 21/5605