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SUISA remuneration is subject to AHV (pension) contributions

Copyright royalties paid out by SUISA are deemed as earned income from independent activities and therefore have to be taken into consideration for the Swiss Compensation Office (pension funds). That way, later claims and pension reductions at a later stage in life can be avoided. Text by Martin Korrodi

SUISA remuneration is subject to AHV (pension) contributions

Many musicians have several income streams. These can include concert fees, honorariums for commissioned compositions as well as salaries for working at a music school or in an orchestra. Copyright royalties paid out by SUISA are yet another income category. It is worth making retirement provisions and therefore to pay AHV contributions (pension scheme contributions) on the relevant income. (Photo: Crafft)

All authors who receive remuneration from SUISA for the usage of their works have to declare it as income and pay taxes on it as well as settle the respective social security payment contributions with the pension funds. The remuneration paid out by SUISA is deemed as earned income from independent activities and are thus subject to AHV (pension) contributions.

If the income from independent activities within a year do not amount to more than CHF 2,300, the Compensation Office will only claim the amounts upon request (see info box at the end of the text). Nevertheless it is recommended that members settle smaller amounts, too: This helps to avoid potential contribution gaps which would lead to pension reductions at a later stage in life.

Especially in the case of freelance music creatives it is worth the effort to request a statement of account from the respective Compensation Office branch in order to discover any contribution gaps they might have. If these gaps have arisen over the last five years, the missing amounts can still be paid in.

The tax authorities notify the data in relation to the assessable income to the compensation offices. Based on this data, the Compensation Office can then determine that no AHV contributions were paid in relation to certain portions of the earned income. They can then claim the missing amounts retrospectively. In the case of such later claims, interest on arrears is due on top. It therefore is well worth while to notify the SUISA remuneration to the Compensation Office in good time and to pay the contributions.

AHV (pensions) – obligatory insurance for all

In the case of the federal retirement, death and disability insurance, insurance is mandatory for all persons who live in Switzerland or work in this country. All insured parties – with the exception of children – are obliged to pay in AHV contributions. In this case the yielded earned income usually acts as the basis for calculation.

In the case of earned income arising from employment this is the salary that the employer has paid out. In the case of self-employment, the amounts are due in relation to the income that has been yielded from self-organised entrepreneurial, operational or business activities.

The following directive can be used as a rule of thumb: AHV contributions must always be paid out on those amounts which you declare in your tax assessment as arising from an occupation. The situation is different regarding income such as revenue gained from capital investment or real estate which are – in terms of tax law – regarded as income but not as earned income in the sense of attracting an obligation to pay AHV contributions.

Copyright royalties are earned income

Not only the composition of commissioned music and stage appearances of performing artists but also the exploitation of rights are a type of occupation by means of which income is generated. As a consequence all authors who claim their rights vis-a-vis users and thus generate licence income are deemed to be self-employed.

This also applies in cases when you have assigned your rights for management to third parties – in this case, this is the norm in the area of non-theatrical music, via collective management by a collective management organisation such as SUISA. If you register with SUISA, you sign a rights administration agreement. With this agreement, members assign their rights to SUISA combined with the instruction to SUISA to carry out the rights management.

In such cases it does not matter, by the way, whether composers – whether as a fixed employee or via a one-off honorarium – have already been paid for the creation of the works and whether AHV contributions have already been paid on said type of income. The exploitation of the rights of your own works is an activity which is independent of the former and it leads to additional earned income. As such, it must be settled with the Compensation Office.

“Exemption limit” up to CHF 2,300 per calendar year

In the case of the exemption limit it is important to take into consideration that this amount includes all income from self-employed activities (cumulative). If SUISA income in a specific year were CHF 1,600 but additional income was generated from independent activities (whether as a main or subsidiary occupation) these types of income must be added to the amount above. If the final total lies above the tax exemption limit, AHV contributions must be paid out to the entire amount – including SUISA remuneration.

In the case of employees (those with a dependent occupation) the tax exemption limit shall also be applicable, but separately on a per-employment basis. If the respective salary is below the amount of CHF 2,300, the amounts will only be collected by request of theemployee. In such cases it is recommended to demand the statement, in particular on occasions when you have held several employments with minimal salaries. Certain employers in the creative sector are obliged to settle AHV contributions from the first CHF 1.00 of salary in order to protect the employees. These include dance and theatre producers, orchestras, audio and audiovisual producers, radio and TV as well as schools offering artistic educations.

If the income is made up of self-employed (independent) and non-self-employed (dependent) activities, the tax exemption limit is usually applicable on a per income category basis. The limit of CHF 2,300 applies for the total of all income from independent activities which includes SUISA remuneration. Salaries that have been paid to you as an employee do not have to be added since the income from dependent (employed) occupation can be regarded separately with respect to the exemption limit as described before.

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Copyright royalties paid out by SUISA are deemed as earned income from independent activities and therefore have to be taken into consideration for the Swiss Compensation Office (pension funds). That way, later claims and pension reductions at a later stage in life can be avoided. Text by Martin Korrodi

SUISA remuneration is subject to AHV (pension) contributions

Many musicians have several income streams. These can include concert fees, honorariums for commissioned compositions as well as salaries for working at a music school or in an orchestra. Copyright royalties paid out by SUISA are yet another income category. It is worth making retirement provisions and therefore to pay AHV contributions (pension scheme contributions) on the relevant income. (Photo: Crafft)

All authors who receive remuneration from SUISA for the usage of their works have to declare it as income and pay taxes on...read more

New Pension Fund Regulations in force from 01 January 2017

During SUISA’s ordinary General Assembly on 24 June 2016 in Berne, the review of the Pension Fund Regulations was ratified by SUISA members. The changes came into force per 01 January 2017. What do the new regulations mean for our members? Text by Irène Philipp Ziebold

New Pension Fund Regulations in force from 01 January 2017

The current regulations for the SUISA Pension Fund for Authors and Publishers is available in Italian, French and German on SUISA’s website. (Image: Manu Leuenberger)

There were various reasons for SUISA tabling a review of the Pension Fund Regulations: The old regulations set off discussions time and again on whether they sufficiently reflected practice, and that the wording was not specific enough. These issues could be remedied with the review. On top of the above issues, the regulations had to be adapted to the current legislation (Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans/foundation law). Following these amendments, we now have a set of current and fair Pension Fund Regulations.

This is what the system now looks like for our members:

Authors

The Pension Fund for Authors and Publishers (UVF) provides for pension support for our members and affiliates. Once they have reached their pension age, a payment to authors and their respective survivors is guaranteed subject to specific conditions and up to a specific amount at previous levels. The UVF pays such guaranteed income as a pension benefit in such cases if less or no remuneration at all is paid in the course of ongoing distributions. In contrast to a support for the second pillar, the UVF fund only finances the part which authors do no longer receive from the ongoing SUISA distributions.

The UVF fund guarantees authors an income from SUISA when they reach pension age. This is calculated based on the annual average of their previous earnings from the SUISA distributions (the so-called reference income), depends on the membership length and is also multiplied with a factor to be determined by the Pension Board.

The effective pension payment corresponds to the difference between the reference income and the SUISA remuneration in the pension year. The level of the guaranteed income is set at a maximum of CHF 38,500 per annum. Those who receive royalties of more than CHF 38,500 from SUISA distributions for performances and broadcasts, even at pension age, will not be eligible to benefit from the UVF.

The fund is financed by the deductions that SUISA makes from all distributions of the collections arising from performances, broadcasts and compensation claims in Switzerland and Liechtenstein (7.5%).

Publishers

SUISA also makes a deduction on behalf of publishers for the UVF. The UVF thus also provides for pension benefits for publishers if they fulfil the conditions in terms of publishing activities in Switzerland. Publishing companies can, however, not be pensioned. As a consequence, they receive benefits from the fund as soon as they are accepted as affiliates and/or members of SUISA; these benefits are made in the form of contributions to their own occupational benefit institution of the second pillar. It is important that publishers inform SUISA about their occupational benefit institution and submit the relevant payment details.

Revised Pension Fund Regulations

There are no fundamental changes to the SUISA benefits system. The most important changes, apart from some specifications and formulations, are:

  1. Various adaptations to the Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG).
  2. Conditions for the pension of civil partners – as per the new BVG definition – are: The same regulation shall apply for registered and (unregistered) surviving partners as for surviving spouses.
  3. New competence of the Pension Board (Board of SUISA) for regulation changes.

On SUISA’s website, under www.suisa.ch/fuersorgereglement the new regulations as well as a synoptical representation is available, comparing the old and currently valid regulations with the relevant amendments and comments.

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Leave a Reply

All comments will be moderated. This may take some time and we reserve the right not to publish comments that contradict the conditions of use.

Your email address will not be published.

During SUISA’s ordinary General Assembly on 24 June 2016 in Berne, the review of the Pension Fund Regulations was ratified by SUISA members. The changes came into force per 01 January 2017. What do the new regulations mean for our members? Text by Irène Philipp Ziebold

New Pension Fund Regulations in force from 01 January 2017

The current regulations for the SUISA Pension Fund for Authors and Publishers is available in Italian, French and German on SUISA’s website. (Image: Manu Leuenberger)

There were various reasons for SUISA tabling a review of the Pension Fund Regulations: The old regulations set off discussions time and again on whether they sufficiently reflected practice, and that the wording was not specific enough. These issues could be remedied with the review. On top of the above issues, the regulations had to be adapted to the current legislation (Federal...read more