Tax Base Royalty

When a tax is applied to a royalty statement, the system needs to know: what amount should the tax be calculated on? This is called the tax base.

For most cases, the answer is simple — tax is calculated on what gets paid out. But some tax rules work differently. French social contributions, for example, are calculated on the royalties an artist earned in the current period, regardless of whether anything is actually paid out. An artist with an unrecouped advance may receive nothing — and still owe social contributions on the royalties they generated.

The Tax Base Royalty configuration lets you define exactly which elements of a statement should be used as the base for a given tax group.

► Where to Find This

Go to SETTINGS → Accounting in the left sidebar → click the TAXES tab → locate the Tax Groups (Select To Edit) panel on the right. Click the edit icon next to a tax group to open its configuration dialog.

► How It Works

The dialog has two tabs:

• Select Taxes — choose which individual taxes (VAT, withholding, social contributions, etc.) are part of this tax group.
• Tax Base Royalty — define what the taxes in this group are calculated on.

On the Tax Base Royalty tab, you select which financial elements should be included in the tax base. The system will sum up all selected elements and use the result as the base for calculating the taxes in this group.

► Statement Net Amount

This is the default and simplest option. When selected, the tax is calculated on the final payable result of the entire statement — what the artist actually receives after all advances, costs, and deductions have been applied.

Use this for standard VAT or withholding taxes that should only apply when something is actually being paid out. If the statement is negative or zero, no tax is calculated.

► Contract Elements

These settings let you build a custom tax base from specific components of each contract. The system calculates the selected elements for each contract and adds them together across the whole statement.

• Royalties
  Includes the gross royalties earned in the current period — from physical sales, digital, licensing, publishing, and performance income. This is calculated before any advances or costs are deducted.
  Use this for social contributions that must be calculated on what was earned, not what was paid — for example, French CSG, CRDS, and Prélèvement de solidarité.

• Advances
  Includes advance recoupment amounts in the tax base. These are amounts previously paid to the artist that are being recouped from the current period’s earnings.
  Use this if your tax rules treat advance recoupments as part of the taxable base.

• Reserve
  Includes reserve movements — amounts added to or released from reserve. Reserves are amounts withheld as a buffer against potential returns.
  Use this if reserve releases are considered a taxable income event under your applicable rules.

• Costs
  Includes costs charged against the contract (for example, recording or marketing costs that are recouped from royalties).
  Use this if costs are part of the gross base before deduction under your applicable tax rules.

• Other Income
  Includes any additional income items posted to the contract that fall outside the standard royalty categories.
  Use this if other income types are subject to the same tax treatment as royalties.

• Contract Total
  Uses the full net result of each individual contract as the tax base — all elements combined. Selecting this automatically deactivates the other Contract Elements options, as it already represents their combined result.
  Use this if you want to base taxes on each contract’s net position rather than selecting specific elements.

► Statement Elements

These settings add statement-level components to the tax base — items that are posted directly to the statement rather than to an individual contract.

• Royalty Amount
  The total royalty amount for the current period across all contracts, excluding any opening balance carried forward from a previous period. This reflects what was earned this period only.
  This is the most common choice for French-style social contributions, where the tax base is the current-period result only.

• Royalty Amount Including Opening
  The total royalty amount for the current period plus the opening balance carried forward from the previous period. This reflects the artist’s cumulative position.
  Use this if the tax base should take prior-period balances into account.

• Additions
  Includes manual additions posted directly to the statement in the tax base.
  Use this if manual additions represent income that is subject to the same tax treatment.

• Deductions
  Includes manual deductions posted to the statement. Since deductions are negative amounts, including them will reduce the tax base.
  Use this if manual deductions should reduce the taxable base.

► Options

• Negative Tax Base from Prior Period
  When enabled, a negative tax base from the previous period is carried forward and offsets the current period’s tax base before taxes are calculated. If last period’s base was negative, it reduces what gets taxed this period.
  When disabled, each period stands alone — a negative base from a previous period has no effect on the current one.
  Leave this disabled for French social contributions, where contributions are due on current-period royalties regardless of prior deficits.

• Opening Balance = Net Plus Taxes
  When enabled, the balance carried forward to the next statement period includes both the net amount and any taxes already deducted. This prevents taxes from being counted twice when a statement ends negative after a tax deduction.
  Enable this when taxes are deducted from a statement that then ends in a negative balance, to ensure the tax deduction is correctly reflected in the carry-forward.