Copyright in the IT sector: back in the spotlight!

The favorable tax regime for copyrights means that income from the assignment or licensing of copyrights, related rights, or licenses—up to an annually indexed ceiling—is treated as income from movable property. A 15 percent withholding tax is payable on this income, which is a more favorable rate than the progressive rates applicable under personal income tax. In addition, a deduction for expenses provides a further reduction in this tax burden.

Until January 1, 2023, the works referred to in Book XI of the Economic Law Code (“WER”) were eligible for the preferential regime. Under this regime, computer programs (Art. XI.294 WER) were also considered “literary works,” so that copyrights were also recognized in the IT sector and were a standard part of the compensation package.

However, the widespread use of tax-friendly copyrights proved not entirely to the liking of the legislature (and the tax authorities), so changes were made through the Program Act of December 26, 2022. From then on, for tax purposes, copyrighted works had to fall under Articles XI.165 or XI.205 of the WER (literary or artistic works, and performances by performing artists), which implicitly meant that the tax legislature henceforth excluded computer programs from the copyright regime. Only income from artistic activities that was irregular and variable in nature remained eligible (as originally intended).

The exclusion of computer programmers caused quite a stir and even led to an appeal for annulment before the Constitutional Court on the grounds of discrimination against other digital professions. While software developers were excluded from the regime, it continued to apply to web designers, game developers, and content creators, among others. In its ruling of May 16, 2024, however, the Court held that the exclusion of computer programs and software was sufficiently justified because the income was not of an irregular and fluctuating nature. The result? Starting with the 2023 tax year, software developers were excluded from the copyright regime.

Despite the Constitutional Court’s favorable ruling, the federal government apparently still felt uneasy about the exclusion of computer programs. It therefore announced that the door would be reopened for them. This has since been accomplished through the Act of July 10, 2026, on the reform of personal income tax, which now explicitly refers to Title 6 (“Computer Programs”) of Book XI of the WER and to computer programs as referred to in Articles XI.294 and XI.295 of the WER. Since no further changes have been made to the legislation, those who wish to reapply for copyright protection must comply with the provisions in effect since January 1, 2023.

In practical terms, this means that anyone who does not hold an artwork certificate is required to transfer or license the rights to a third party for the purpose of communication to the public, public performance, or reproduction. In the field of software development, this requirement can be problematic, particularly when the software is intended for internal use or for a specific client. However, unlike his predecessor, Minister of Finance Jan Jambon states that the three purposes mentioned above – for which copyrights are transferred or licensed – should not be interpreted cumulatively. In other words, meeting just one of these conditions is sufficient. It is therefore no longer required that the general public be able to access the software, as long as reproduction takes place.

In addition, there is a limit on the amount that can be taxed favorably as income from movable property. If copyrights are used in the course of professional activities, they may be classified as professional income if the following three thresholds are not met:

First, there is an absolute threshold of 77,220.00 EUR for the 2027 tax year. Therefore, the amount that may be considered as income from movable property can never exceed this amount.

Second, a relative threshold applies if the transfer of rights is linked to the performance of a service. This is normally the case when rights are transferred in the course of an employment contract or when the work is created on behalf of a third party. In that case, the copyright must be limited to a maximum of 30 percent of the total compensation received for the services rendered. It is important to note that this percentage is not a blanket exemption but must still be assessed against what is in line with market conditions or as set forth in existing rulings, albeit always within the relative threshold.

If the absolute or relative threshold is exceeded, only the excess amount is classified as professional income. However, before assessing these thresholds, you must also assess the average threshold. If copyright royalties were received in the four preceding taxable periods and the average amount of that income exceeds the absolute threshold in the assessment year, then there can be no movable income at all in the current income year. This means that the full amount of copyright royalties will then be taxed as professional income.

Until December 31, 2025, the 15 percent tax rate on royalties was further reduced by a flat-rate expense deduction of 50 percent (on the first bracket of 20,100 EUR) and 25 percent (on the bracket from 20,101 EUR to 40,190 EUR). This naturally made the system even more attractive.

As of January 1, 2026, the legislature has significantly restricted the scope of this flat-rate expense deduction, as only holders of a standard artwork certificate (or the “plus” version, not the “starter” version) may still make use of it. Such a certificate is reserved for individuals active in the (performing) arts and must be presented at the time of payment or receipt of income. Those who do not have such a certificate may prove their actual expenses and claim them as a deduction.

The reintroduction of the copyright regime in the IT sector is, of course, a great opportunity to receive tax-friendly compensation for software development. Additional good news is that this regulation applies retroactively as of January 1, 2026. In principle, employers can benefit from an exemption from social security contributions on these payments. However, this legislation still refers to Articles XI.165 and XI.205 of the WER, so we will have to wait a little longer for the amendment regarding the reintroduction of this regime for computer programs. Should this adjustment not materialize, software developers would be treated less favorably from a social security perspective than other digital professions. This could give rise to an annulment proceeding on the grounds of discrimination.

In practical terms, eligible employees will need to amend their employment contracts. These contracts must stipulate that the copyrights to their works are transferred or licensed to the employer and specify how—in accordance with market conditions—the copyright compensation will be calculated. It is important that the copyright compensation does not replace existing professional income. It is common practice to determine, at the end of the year, what percentage of total working hours was spent on “creative” projects. This must, of course, be verifiable. In addition, the amount paid must fall within the limits mentioned above (i.e., a maximum of 30 percent of gross salary) and must also be reported on Form 281.45 to be included with the personal income tax return.

For individuals who work through a corporation, this arrangement is also possible. In this case, an additional agreement will need to be drawn up between the corporation and its manager. Self-employed individuals who generate income (freelancers) are also eligible for copyright protection.