Authors, literary agents and VAT: a quick guide
Created: December 2017
A common area of confusion for authors and literary agents is establishing when to apply VAT to a transaction and at what rate, particularly when there are many international aspects involved.
The position for VAT registered authors
- Authors dealing with UK publishers should add VAT to any fees for services, royalties and advances. Most UK publishers operate self-billing systems so will deal with the necessary paperwork.
- Authors who have contracts with publishers in other EU countries should obtain the publisher’s VAT number; income received from them is then outside the scope of VAT. Details of the income received and EU VAT numbers have to be declared quarterly on EC Sales Lists.
- Authors dealing with non-EU publishers do not need to add VAT as this income is outside the scope.
The position for VAT registered literary agents
- Literary agents should charge VAT on their commission to a UK-based author where the publisher is based in the UK or the EU.
- Where the publisher is outside the EU, the agent’s services to a UK-based author are zero-rated, so no VAT should be charged.
- Literary agents who act for an author based in the EU will need to obtain evidence that they are operating as a business. Ideally, this would be their local VAT registration number, but HMRC will accept other evidence that an author is in business. If a VAT number is provided, it should be displayed on the agent’s invoice, together with the following statement ‘Article 44 EC Directive 2006/112 Reverse charge applied’ and no UK VAT should be charged. If, for some reason, the EU author cannot be regarded as a business, then UK VAT should be charged on the commission.
- Literary agents who act for an author based outside the EU can treat their commission as ‘outside the scope of VAT’ and no UK VAT is charged.
For more information, please contact:
Mike Block, VAT Principal
T 020 7380 4987