Basically: Who has to pay artists’ social security contributions?
- Typical exploiters: Entrepreneurs must pay artists’ social security contributions (hereinafter: KSA) if they operate a business that is listed in the catalog of Section 24 para. 1 KSVG is listed (e.g. theater, orchestra, gallery). Companies also include individual artists, non-profit associations, etc. These entrepreneurs listed in the catalog are colloquially referred to as “typical exploiters”.
- Self-promoters: Entrepreneurs must pay KSA if they carry out advertising or public relations work for the purposes of their own company and do not merely occasionally commission self-employed artists to do so (§ 24 para. 1 sentence 2 KSVG; Künstlersozialversicherung, Ruppelt/Küttner, para. 26-27). These entrepreneurs are colloquially referred to as “self-promoters”. Artists are deemed to have been commissioned only occasionally if the remuneration for the commission does not exceed EUR 450.00 (§ 24 para. 3 KSVG).
- Verwerter i. S. d. § 24 Abs. 2 KSVG: Unternehmen müssen auch dann KSA abführen, wenn sie zwar keine typischen Verwerter sind, sie allerdings Verwerter i. S. d. § 24 Abs. 2 KSVG sind. Ein Unternehmen ist Verwerter i.S.d. § 24 Abs. 2 KSVG, wenn es
- does not only occasionally award commissions to independent artists and publicists,
- to use their works for their own company, and
- if the company generates income in connection with this use.
Re (1.3.1) Occasional placement of orders
There are two cases of occasional commissioning: Firstly, if no more than three events are held per year in which the artistic performance is presented (Section 24 para. 2 sentence 2 KSVG). Secondly, if the remuneration for the order does not exceed EUR 450.00 per year.
Ex: The Association for the Promotion of Cultural Exchange organizes an evening with a small theater group four times a year. The theater group receives EUR 1000.00 for their performance. Guests are invited for the evening via the internal newsletter. The entrance fee is EUR 3 per person.
As a rule, the association will not be a typical user within the meaning of § 24 para. 1 p. 1 (does not operate a theater). However, he organizes a performance more than three times a year so that he has to pay KSA.
Re (1.3.3) – > no revenue generation
No revenue can be generated if the association does not charge admission for the performances. Gem. § 24 para. 2 KSVG, the obligation of an exploiter to pay KSA requires that the artistic performance is directly related to the generation of income. In our opinion, such a direct connection does not exist if the performance is supported by public funds but no admission fees are collected. In this case, there is no direct connection between the exploitation of the art and the generation of income.
Which payments to persons/companies trigger KSA?
- Exploiters who pay a fee to natural persons (self-employed artists) for artistic services must pay KSA. The same applies to payments to a GbR. Although the GbR is not a natural person, it is treated in the same way as a natural person in connection with the KSA (NJOZ 2011, 1218, para. 15). The recycler must also pay KSA if the natural person or the GbR has its registered office abroad.
- Payments to legal entities under public and private law (GmbHs, associations and other corporations) as well as legal forms equivalent to these within the meaning of the KSK (OHG, KG) do not generally trigger an artists’ social security contribution. It is assumed that they do not provide any artistic services themselves and that the artists’ social security contribution has already been paid by the legal entities as part of the payments to the artists and publicists (Künstlersozialabgabe, Jürgensen, 4th edition, p. 83).
The principle that no CRSA applies to payments to legal entities does not apply, for example, if these legal entities are so-called third parties within the meaning of Section 25 para. 1 sentence 2 KSVG or § 25 para. 2 KSVG are.
To third parties within the meaning of § 25 para. 1 sentence 2 KSVG applies if a person not obliged to pay the levy (based abroad or not a user within the meaning of § 24 KSVG) makes a payment to an artist and the artist provides the artistic performance for a party obliged to pay the levy (a theater based in Germany). To third parties within the meaning of § 25 para. 2 KSVG may also apply to commission business and the brokerage of art sales. For more details, please refer to section 3. of these explanations.
- Constellations with a foreign connection
- Utilization at home or abroad
The exploiter must pay KSA if he exploits the artistic work in Germany. The artist’s place of residence is irrelevant, see BSG judgment of 25.10.1995 – 3 RK 11/94; BSG judgment of 20.07.1994 – 3/12 RK 63/92.
Example: A French musician performs for a German organizer at a festival in Germany.
The event takes place in Germany, so the German organizer must pay the KSA.
No KSA is payable if the artist’s performance is exclusively exploited abroad (see BSG ruling of 18.09.2008, reference B 3 KS 4/07 R). This applies even if the artists performing in Italy are based in Germany.
Ex: A German promoter organizes and stages a tour of the Russian National Ballet in Italy. The production was tested in Russia.
The German organizer does not have to pay KSA as he does not exploit the artistic performance in Germany. However, if there is a possibility that the performance rehearsed abroad could also be shown in Germany, the exploiter must also pay artists’ social security contributions on the rehearsal fee abroad (see BSG ruling of September 18, 2008, file number B 3 KS 4/07 R). The possibility of performing in Germany means that the rehearsals in Russia also have a domestic connection.
- Recyclers based abroad
Companies based abroad do not have to pay KSA. This applies even if the performance takes place in Germany. According to the territorial principle, the artists’ social security contribution can only be levied on exploiters based in Germany, cf. section 36a KSVG in conjunction with section 30 para. 1 SGB I; Münchner Anwaltshandbuch Sozialrecht, 5th edition, 2018 para. 110.
Example: An English organizer holds a festival in Germany and pays the artists for their performance.
The organizer does not have to pay KSA on the artists’ fees, as the organizer is not based in Germany.
In summary, we note that, according to the above, the organizer must pay KSA if it is within the meaning of § 24 para. 1 or 2 KSVG, he exploits the artistic performance in Germany and he has his registered office in Germany. However, the location of the artists is not important.
In our previous examples, there were two contractual partners (artists and organizers).
- Three-person constellation with a foreign connection with a temporal and factual connection (§ 25 para. 1 sentence 2 KSVG)
Example: Contracts with production companies from abroad
If there are three or more constellations of persons, it must be carefully checked whether and who must pay the KSA.
If a third party not liable to pay the levy (e.g. production company based abroad) pays remuneration for an artistic service (fees to an artist) that is provided for a party liable to pay the levy (performance for a theater organizer in Germany), the party liable to pay the levy must pay KSA, cf. 1 SENTENCE 2 KSVG.
Ex: A theater based in Germany organizes a festival. The group Powergame is to perform at the festival. The Powergame group has a production company (limited liability company) based in England, which concludes the contracts with the organizers. The theater based in Germany concludes the contract with the production company based in England and pays the fee to it. The production company based in England in turn concludes a contract with the artists and pays them the remuneration.
The domestic organizer does not have to pay KSA on the fee paid to the foreign production company. The foreign production company is a legal entity. No CRSA must be paid on payments to legal entities.
The foreign production company does not have to pay KSA on the fee it has paid to the artist. Recyclers based abroad do not have to pay KSA.
However, the domestic organizer must, in accordance with § 25 para. 1 sentence 2 KSVG KSA on the remuneration that the artists receive from the foreign contractual partner. The assessment basis for the KSA is therefore not the total remuneration paid by the German theater to the foreign production company. Rather, only the remuneration received by the theater group from the foreign production company is the basis for calculating the KSA, cf. 1 SENTENCE 2 KSVG. If the remuneration is not known, according to the KSK, 25% of all gross income from ticket sales, merchandising etc. should generally be used as the basis for assessment, cf. information leaflet no. 4 of the KSK; http://bdk-obb.de/wp-content/uploads/Info_04-Abgabepflicht_von_Veranstaltern.pdf.
The just discussed § 25 para. 1 sentence 2 KSVG (obligation of the domestic exploiter to pay the levy in the case of contractual constellations with a foreign production company) refers to three constellations of persons whose contractual relationships are related in terms of time and subject matter.
- Three-person constellation with foreign connection without temporal-objective connection (§ 25 para. 4 KSVG)
In connection with legal transactions that have a foreign connection, § 25 para. 4 KSVG is of significance. § 25 para. Section 4 KSVG also refers to three-person constellations that do not have a uniform factual and temporal connection. There is no uniform factual and temporal connection if, for example, the artist sells a work to a gallery in France without it being clear at that time whether, when and to whom the work is to be (further) sold. After some time, the work is sold on to a German gallery owner.
Gem. § 25 para. 4 KSVG, the domestic exploiter who acquires an artistic or journalistic work of an independent artist from a legal entity based abroad (which is not itself the artist of the work) must pay KSA. This shall only apply if the person was resident in Germany at the time the work was created. The basis of assessment is the remuneration paid to the artist by the person/company based abroad.
The obligation to pay the levy does not apply if the domestic exploiter can prove that artists’ social security contributions have been paid on the remuneration or that the sale of the work took place more than two years ago.
Ex: A set designer based in Germany sells her set design to a Portuguese production company. A year later, it sells it on to a theater in Germany.
Here, the theater in Germany must pay KSA even though the theater’s contractual partner is a legal entity. The assessment basis is as in § 25 para. 1 sentence 2 KSVG the amount of the fee paid by the foreign production company to the stage designer.
- Assessment basis KSA for foreign reference
The assessment basis for the KSA must take into account the so-called foreigner’s tax. The assessment basis is made up of the amount paid out and the withholding tax, see http://www.kuenstlersozialkasse.de/unternehmen-und-verwerter/bemessungsgrundlage.html. VAT is not part of the assessment basis.
