If the contract with the authors is sufficient to cause the assignment of rights, accounting law requires a company for each payment to be caused by an invoice, royalties invoice, receipt, etc.
This is one of the reasons why producers must settle with authors given copyrights, whose content may vary knowing that the calculation basis and payment of contributions depends on the income category in which
the copyrights are fiscally declared.
According to the definition of the Agence pour la Gestion de la Sécurité Sociale des Auteurs, or AGESSA” (which is the Social Security Fund for Artists and Authors together with La MAISON DES ARTISTES), “any individual or legal entity is considered a producer whose registered office is located in France and who in exchange for the right of commercial exploitation of an original work pays remuneration or copyright to the author”.
Any producer having to remunerate an author is required to identify themselves through AGESSA or La MAISON DES ARTISTES by completing a tax identity registration form. At the end of this identification procedure, the producer is normally assigned an identification number to be reflected on the royalties invoices.
Producers must first settle the so called “producer-contribution”, which is independent of the withholding tax and is due by the producer in all cases. In an amount equivalent to 1.1% of the gross author remuneration, it is composed as follows: social contribution of 1% + vocational training contribution of 0.10%.
Furthermore, all producers are required for each royalty payment to pay to AGESSA a withholding tax (payment of social security contributions for the author).This withholding tax requirement applies unless the author has a withholding tax exemption, through form S2026.This exemption is by no means systematic since only the authors declaring their income in Non-Commercial Earnings (Bénéfices Non Commerciaux, BNC) who have made the request and whose file has been accepted can benefit from it at the end of their first year of activity. The author must then present this exemption to the producer who will keep a copy of it as proof of the non-payment of the withholding tax in case of an audit by the Union de Recouvrement des cotisations de Sécurité Sociale et d’Allocations Familiales, or “URSSAF” (Union for the Recovery of Social Security Contributions and Family Allowances).
For their part, the authors must also register with the social agencies, and this, even though they have joined the Société des Auteurs et Compositeurs Dramatiques, or “SACD” (one of the French oldest copyright collecting agency for dramatic authors and composers) and declared their work. However, if the author's social fund is AGESSA, in practice no legal provision compels an author to join. Likewise, no criminal sanction is provided for in case of non-affiliation despite reaching the ceiling of 8,703 euros in annual revenue, beyond which the author must be affiliated with AGESSA.
Yet, when the producer establishes a royalty, the SIRET number of the author (assigned number of the Computerised Registry for Businesses in the Territory) appears obligatorily on said note.
In this way, AGESSA and URSSAF are able to notice through cross-checking that the author whose SIRET number appears on different royalties has for example reached the amount of 12,000 euros in one year (for example 4,000 euros paid by a first producer, 2,000 euros by a second producer and 6,000 euros by a third and final producer). If this amount is greater than 8,703 euros set to be subject to an affiliation with AGESSA as it is in this case, but the author is not affiliated, AGESSA and URSSAF will then verify the payments made for social contributions and quickly realise that there have not been any.
This is only if the producer is able to provide a copy of the withholding tax exemption provided by the author when establishing the copyright, that in case of an URSSAF audit, he will a priori suffer no correction. As a reminder, form S2026 is proof that given the particular status of the author, the producer was not required to deduct social contributions from the remuneration of the latter and pay them to AGESSA in the form of a withholding tax.
Failing to present this exemption to URSSAF, the producer may be subject to prosecution.