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Galicia’s tax system is very similar to that of the rest of Europe. It consists of direct and indirect taxes that may be collected by the State, the autonomous region or town councils, although State taxes are, quantitatively speaking, the most important. The collection of some taxes, in accordance with the Spanish Constitution of 1978 and the Galician Statute of Autonomy of 1981, is the exclusive responsibility of the regional government. Such taxes include the Corporation Gains and Documented Legal Actions Tax and the Inheritance and Donations Tax.

Both companies and freelance professionals have to pay a series of taxes in accordance with the type of work they do. The most important ones are the following:

Tax on Commercial and Professional Activities (IAE)

This is a local indirect tax regarding which all professionals within Spain (including foreign companies set up in Spain) should be registered in order to carry out their activity, although no payment is required at present. In Santiago de Compostela, the department responsible for local tax administration, payment and inspection (including IAE) is called “Departamento de Gestión Tributaria” and has the following address: Calle Galeraras, 7 bajo (ground floor).

Value-Added Tax (VAT)

In Spain, as in many European countries, a percentage tax is added to the sale of products and providing of services. This tax, in the case of companies set up in Spain, is calculated from the invoices issued (transferred VAT) and received by the company (supported VAT). All the necessary documentation has to be submitted to the corresponding Inland Revenue delegation in order to pay the taxes.

Community foreigners, however, are eligible for a VAT refund on the services received and material purchased in Spain, as long as they can certify, from their country of origin, that they are persons liable for VAT; in this case, they have to submit the corresponding application form to the competent entities in their country.

Non-Community foreigners are only eligible for a VAT refund if their country has a collaboration agreement with Spain, as is the case of Canada, Hungary, Japan, Monaco and Switzerland. Some freelance workers are exempt from VAT, as is the case of those involved in artistic activities: actors, scriptwriters and interpreters, among others.

Income Tax (IRPF)

IRPF is an indirect tax that is calculated according to the type of activity that has been registered. Both individuals living in Spain and non-residents are liable for IRPF. Persons who spend more than 183 days in Spain per year are considered residents for tax purposes and all of their income and assets are subject to Spanish tax.

In the case of non-residents in Spain, only their income and capital gains produced in Spain and their assets acquired in Spain are subject to this tax. Professionals should apply, to the invoices they issue, a 7% deduction during the first three years of commercial activity and a 15% deduction thereafter.

Onerous Patrimonial Transfers and Company Operations Tax

This is an indirect tax that is generally applied to the transfer of assets that are not liable for VAT and to the incorporation, dissolution, extension and reductions of company capital.

The following table shows the basic tax situation of the different types of companies with regard to the main taxes:

Type of Business Direct Taxes Indirect Taxes
Branch or permanent establishment Corporation Tax 35% VAT/Transfer Tax
Subsidiary in Spain Corporation Tax 35% VAT/Transfer Tax
Capitalist company Corporation Tax 35% VAT/Transfer Tax
Personalist company Corporation Tax 35% VAT/Transfer Tax
Groups of companies Tax Transparency VAT/Transfer Tax
Individual trader Imposto Renda ata un máximo do 48% VAT/Transfer Tax

Audiovisual Rights

The Galician Audiovisual Law 16/1999 (September 1st) establishes, in accordance with the autonomous region’s responsibilities, the general principles and institutional lines of action of the audiovisual sector, which it considers a strategy and priority sector, as well as its promotional mechanisms.

This law has resulted in a series of initiatives and projects within Galicia, such as the creation of the Galician Audiovisual Consortium, conceived as a public entity for promoting and boosting activities aimed at developing the audiovisual sector, or the Galician Film Commission.

Also of recent creation is the Advisory Committee of the Future Galician Audiovisual Cluster (group of companies belonging to the same sector), whose objectives include organising innovation, research and sector development projects, increasing the sector’s competitive capacity, the continuous training of its human resources, the search for new markets and, in short, revitalising the industrial fabric.

The Copyright Law is the legal document regulating the rights of audiovisual works and their authors. In accordance with Article 86 of the said law, audiovisual works refer to all creations expressed by means of associated images, with or without an incorporated sound track, which are essentially intended for screening using projection devices or by any other public means of image and sound communication, regardless of the type of formats employed by such works.

Within audiovisual works, the law distinguishes between collaboration works, the unitary result of collaboration between several authors, whose rights correspond to all of them, and collective works, i.e. works created on the initiative and under the coordination of an individual or legal entity that edits and distributes them under his/its name, and formed by the coming together and contribution of different authors, whose personal contributions are merge into a single creation. In this case, unless agreed otherwise, the collective work’s rights correspond to the person that edits and distributes it under his name.

The law considers the author to be the individual that creates a literary, artistic or scientific work. Cinematographic and audiovisual works involve three different types of authorship that have to be duly registered:

- The director-producer. The person that assumes the maximum responsibility and authority over the work’s artistic and technical part, from its preparation to the delivery of the first copy to the businessperson, subordinated to the production company.

- The authors of the argument, adaptation, script and dialogues:

  • Author of the argument: The professional that creates an original work, with the immediate objective of writing the script of an audiovisual work.

  • Author of the adaptation or adapter: The professional that transforms an existing work to serve as the basis of a script.

  • Scriptwriter: The professional that, starting from a prior literary element, produces a creation that contains sufficient literary or technical elements to serve as a script, i.e. a guide in transferring the written creation into images.

  • Author of the dialogues: The professional that puts words to the interpretations that will make up the audiovisual work forming part of the script

- The author of the musical compositions. This is the professional entrusted with the creation or adaptation of the musical works that will be included in the audiovisual work. The musical creation is, due to its exceptional nature, the only one included in the audiovisual work that can be exploited separately.

There are two types of royalties: patrimonial rights and moral rights. The former are the rights of reproduction, distribution, pubic communication and transformation. These rights are expressed in different exploitation types or formats. Moral rights refer to the recognition of the created work’s authorship and integrity; they cannot be waived and are inalienable.

According to Article 14 of the Copyright Law, which specifies the content and characteristics of moral rights, the author is entitled to:

  1. Decide the way his work will be distributed
  2. Decide if the distribution will be done using his name, a pseudonym or anonymously
  3. Demand recognition of his authorship of the work
  4. Demand respect for the work’s integrity
  5. Modify the work, respecting the rights of third parties, if such exist, as well as assets of cultural interest
  6. Withdraw the work from the market
  7. Access the only or rare copy of the work

The rest of the personnel involved in the audiovisual work are not considered authors of the part corresponding to their contribution to the audiovisual work.

Royalties always have to be granted expressly since, in cases of doubt, a restrictive interpretation of the granting of royalties will be made. It is advisable to do so in writing, making clear what royalties are granted, the types of exploitation, the formats, the territory and the duration of such.

Royalties are generated every time that an audiovisual work is shown in a cinema or is broadcast by a television channel. Membership of a copyrights association is required in order to receive the payment of royalties. In Spain, the following are the main associations:

  • SGAE: Sociedad General de Autores y Editores.
  • AGEDI: Asociación de Gestión de Derechos Intelectuales
  • AIE: Sociedad de Artistas Intérpretes y Ejecutantes de España.
  • AISGE: Artistas, Intérpretes, Sociedad de Gestión.
  • DAMA: Derechos de Autor de Medios Audiovisuales

Audiovisual works can be registered with any of them, indicating the percentage corresponding to each of the authors for making the work. The only requirement is that the work should be premiered or broadcast in a medium generating royalties: cinemas, televisions… By registering the work, its author is entitled to the patrimonial rights established by copyright law, which are traditionally the following four:

  • Right of reproduction
  • Right of distribution
  • Right of public communication
  • Right of transformation

Copyrights associations recommend that the audiovisual authors include in their production contracts a rights reservation clause, in order to eliminate the possibility of only receiving 20% of total income instead of 100%.

Likewise, all works (audiovisual and non-audiovisual) can be registered in another organism included in the Copyrights Law, in order to certify the authorship of a registered work and decide who is entitled to its exploitation rights. There are two delegations of the Copyrights Register in A Coruña province; one in the city of A Coruña (Calle Durán Loriga, 9) and the other in Santiago de Compostela (Calle Hórreo, 61 bajo –ground floor).

Registering in the Copyrights Register is voluntary; however, such registration, as previously mentioned, certifies the authorship of the work and, consequently, the exploitation rights derived from it during the author’s life and during seventy years after his death or the declaration of such.

The person that is the exclusive holder of the exploitation rights of a work or production protected by copyright law, may use the symbol © in front of its name, regardless of whether the said work or production has been registered or not. Therefore, the author, starting from the creation of the work, or the holder, starting from the acquiring of his rights, may use the aforementioned symbol without requiring any formality or authorisation. To that end, he only has to place the symbol © in front of its name and indicate the place and year of the work’s or the production’s distribution.

Royalties and copyright are independent of and compatible with other rights, such as industrial copyright (brand rights), honour rights, privacy rights and image rights.

If a newly created audiovisual work uses pre-existing works, such as paintings, songs, photographs or moving images, then the rights of such works should always be taken into account.

In addition to the author, the producer also plays an important role in the creative process of audiovisual works. From a professional point of view, the producer is the person that decides to make a certain audiovisual project, chooses the professionals that will do so, decides the appropriate means for its execution and obtains the necessary funding (using his own and third-party resources).

From a legal point of view, the producer is the individual or legal entity that has the initiative of and assumes the responsibility for recording an audiovisual work. The Copyright Law (Articles 121 to 125) recognisers that the producer is entitled to:

  1. Authorise the reproduction of the work
  2. Authorise the public communication of the work
  3. Authorise the distribution of the work
  4. Other exploitation rights (e.g. photographs)
  5. Duration of the exploitation rights (50 years)

Interpreters (actors, actresses and musical interpreters participating in executing a score) are also regulated and protected by the Copyright Law, which recognises that they are entitled to the following patrimonial rights:

  1. Exclusive authorisation of the direct or indirect reproduction of their performance
  2. Exclusive authorisation of the public communication of their performance
  3. Exclusive authorisation of the distribution of copies of their performance

As in the case of authors, interpreters are entitled to receive fair payment for the public communication, renting, loaning and private copying of an audiovisual work. These rights and their corresponding payment are managed by the following two entities: AISGE (“Artistas, Intérpretes, Sociedad de Gestión”) and AIE (“Artistas, Intérpretes y Ejecutantes”). These rights last for fifty years starting from the moment of interpretation or the recording’s distribution.

Furthermore, interpreters enjoy other rights very similar to the author’s moral rights, such as the right to oppose their performance being mutilated, deformed or altered in any way that may harm his prestige or reputation, or the right to exclusively authorise the dubbing of their performance in their language. Both rights last during the author’s life, thereafter being transferred to his inheritors for twenty years.

Hiring actors and actresses (main, secondary or cast) for a production always requires a work contract. There is a Collective Agreement (July 4th, 1985) that regulates the relationship between non-extra actors and audiovisual producers. The work of the latter is regulated by the Royal Decree of Special Hiring in Public Entertainments 1435/1985 (August 1st, 1985), the same as that of musical interpreters.