Social Insurance for Artists (Künstlersozialabgabe)


Companies that use artworks are obliged to pay into a special social insurance fund for artists.

The payment of this form of social insurance is closely monitored. It should be carefully documented and calculated beforehand to avoid unpleasant surprises.

Identifying businesses liable to pay social insurance for artists

Companies that engage in artistic or journalistic activities are obliged to pay this kind of social insurance. This obligation used to be monitored on an irregular basis by the German Artists’ Social Welfare Fund (Künstlersozialkasse); in 2007, however, this task was taken over by the statutory German pension insurance scheme, the Deutsche Rentenversicherung. This now identifies without exception all companies liable to pay pension insurance. Because of a change in law that entered into force in early 2015, these monitoring activities were drastically ramped up once more. The pension providers are now required by law to assess at least every four years all employers already registered in the German Artists’ Social Welfare Fund and all those with more than 19 employees. Moreover, companies with fewer than 20 employees are also regularly reviewed.

Uncertainty in companies

There is great uncertainty among companies. In the arts sector the unease has been further exacerbated by the termination of the Ausgleichsvereinigung Kunst (German Art Compensation Association), which used to facilitate the collection of contributions to the German Artists’ Social Welfare Fund. Starting on March 31, 2016 galleries were for the first time required to notify the German Artists’ Social Welfare Fund directly and that even on a different calculation basis than before. Not everyone made a smooth transition into the new system.

Liability for contributions and assessment basis

So who is liable to pay into the fund, and what is the basis for the assessment? Any company or business that makes direct use of the services of independent artists and publicists is required to pay contributions into the German Artists’ Social Welfare Fund. This includes, for example, publishers, theaters, galleries, advertising agencies, museums and event organizers. But it may also affect companies that one would not expect. A company that merely hires a freelance photographer for the image design of a brochure for advertising purposes may also be liable to pay into the welfare fund for artists. Contracting an independent journalist to provide an article for the company newsletter would also trigger such a liability. Even the creative activity of the company’s own manager may render contributions to the artists’ fund compulsory.

On the other hand, the acquisition of art for personal purposes does not fall within the scope of the German Artists’ Social Security Act. In other words, the acquisition of art to decorate a company’s own offices or the incorporation of art into the building itself are not included.

If a company is found to be liable to pay these contributions, the question is then exactly how to calculate the level of contributions to be paid. In principle, they are to be paid on any payment a company has to make for the use of the work of artists or publicists. But how to proceed, for example, with incidental costs? Travel expenses, allowances, services with a foreign element or payments to third parties? Ultimately, these questions can only be answered on a case-by-case basis. Companies should however make sure that the bills they receive are itemized and detailed.

If a company is in principle liable to contribute, it must report any payments that trigger a liability on its own initiative and without having to be prompted by the German Artists’ Social Welfare Fund. This must take place by March 31 of the following year. In the event of inaccurate statements, fines of up to € 50,000 may be levied and additional charges will also apply. These may be significant because, in the context of a company audit, the past five years are reviewed.

Recommended action:

If you want to avoid unpleasant surprises, you should verify whether your company is liable to pay contributions into the artists’ welfare fund and also what the basis of assessment would be. This is the only way to establish that contributions are being made in accordance with statutory requirements without the risk of incurring additional charges.

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Tags: #Art, #Kunst, #Künstlersozialabgabe, #Künstlersozialkasse, #Social Insurance for Artists

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