Written by Tabitha Topping
For any author it’s obviously incredibly exciting when a translation rights deal is done, however there is an aspect of these sort of deals that is rarely discussed… tax forms.
For the uninitiated, many countries have double taxation agreements with one another which means if a resident of one country is expecting income from another and they have the relevant documentation, they can avoid paying tax twice. Sounds simple, right? You’d be surprised…
At the beginning of each calendar year we have to assess which of our clients are most likely to receive translation rights income and from where. Are we in the middle of negotiating a Spanish deal for Author A? Has Author B been selling well in France, and are we expecting a sizeable royalty payment for them? Often it can be difficult to predict, but once we have a list (and obviously this list is not comprehensive – for example, we often make translation rights deals later in the year we were not expecting to in January), we can then send the relevant instructions to the relevant clients.
These differ from country to country. Some countries have specific forms that need to be filled out by the author and then stamped by their tax authority, while a simple certificate of residence will suffice for others.
We always advise that authors apply for tax forms as soon as they can. It can take months for tax forms to be returned to clients and publishers cannot make payment without them. Furthermore, tax forms may only be used for the year they are issued (Germany is the sole exception to this) so if an author’s form only arrives in November and misses the publisher’s last pay run of the year, the author will have to start the process all over again in January. This often means that large swathes of income is held up, which can be enormously frustrating for publishers and authors alike.
As an agency we are legally not allowed to complete tax forms on behalf of our clients, so our role is to mediate between client and publisher/co-agent. We share the relevant documentation with our clients and then send periodic reminders to them about completing the forms in good time.
Authors are obviously free to go without the tax forms and subject their income to the full withholding tax (and sometimes a tax form only reduces the tax by such a negligible amount it’s not worth going through the whole arduous process), but given the squeezing of author incomes in recent years we usually recommend that authors apply for tax forms.
So, in essence tax forms are great! They allow authors to keep more of their advance and/or royalties, which usually means that an author can afford to write more – yay! Unfortunately the tax forms process is labor-intensive and time consuming… but as agents we will be there for every step of the journey and do our best to make the process as easy and pain-free as we can. So, if you’re an author and receive an email saying ‘it’s time to apply for your [insert country]’s tax forms’, please don’t panic!
