(Or the story on how Portugal can become the modern mecca of international musicians)
It may not be the first thing that comes to mind when one thinks of the extravagant and flamboyant lifestyle of a “Rock Star” but rest assured – all those broken hotel rooms, bottles of liquor, private jets, supercars and other amenities that shall remain unnamed have to be paid for. And not all of them are deductibles.
It may come as a surprise to you, but taxes have actually been a driving force behind some rock’n’roll classics in the past. There’s the obvious example of the Beatles’ Taxman – 1 for you 19 for me is becoming uncomfortably close these days – but the Rolling Stones’ Exile on Main St. was recorded while the Stones were tax sheltering in France, the Dire Straits’ hit Money For Nothing had Sting on vocals due to a chance encounter on a Caribbean Island – where the Dire Straits were recording and Sting was… well, Sting was officially windsurfing, but allegedly tax sheltering. One of my personal favorites, AC/DC’s masterpiece Back in Black was also recorded in the Bahamas and as a long-time hard-rock and metal fan, I can assure you that tropical sunsets and piña-coladas do not inspire legendary riffs and immortal rock songs, so there must have been some other reason for that.
I mean, let’s face it: you make it out of the garage to the van, from the van to the stage, to the stage into the world, you sell your soul for a six-string only to… pay taxes? Yeah, that’s not going to fly.
Interestingly though, not a lot of jurisdictions have made a point on attracting artists into their territory with a favorable tax regime.
Enter… Portugal and the NHR regime(s).
The first NHR regime in Portugal, provided for exemption on foreign sourced royalties that were liable to tax at source under the applicable tax treaty (all of them were), thus making them tax exempt in Portugal.
The new NHR 2.0– that assumes a lot of forms and acronyms, but let’s call it this for simplicity – doesn’t even tie the exemption to a tax treaty. It just requires that the royalties are foreign sourced.
The NHR 2.0 does have a few more loops to jump to access it, but the tax benefits it grants in the end are even better than those of the first regime – includingfull capital gains tax exemptionon a potential sale of catalogue, should it be the case. One of the Stairways to NHR 2.0 (cheesy pun absolutely intended) is through the incorporation of educational companies, so you can both contribute to the musical community in Portugal while also enjoying a sunny lifestyle and a cool tax break.
At this point I’m not sure if it’s the music-addicted teenager in me writing, or just the tax nerd that wanted to find something cool in taxes, but if there is a way to make my country a hub for artist that can inspire the next generation to write legendary songs through taxes, than for those about to NHR 2.0… We salute you! (and I’m all out of puns).
If you’re an established artist and want to know more about thepotential benefits of NHR 2.0 for musicians, authors, publishers and other players in the art & music industry,feel free to contact us for an exploratory call!
