I would think?? that the taxman would say that technically the site (there are only 2 with this?) are paying the person on sale of image thereby if someone has 1 $0.25 in a year the site still has to pay the tax to the taxman, regardless of whether the person reaches payout. If so then the taxman is the winner as the 75% would never claim it back.

I have no idea if there is a possibility to have my photography earnings as royalties instead of work income, also if it would make any difference in taxes.

I wonder what is the principle behind it?  Aren't the earnings fruit of my work, the same way I earn my sallary from my job as an engineer?

You are in Brazil, right?  I don't know how they view it, but the IRS in the US definitely does view it as work income, if you are still working on stock photography.

Arguably if you stop working on photography and your images continue to draw royalties years after that might be able to be considered as royalty income.  

At least that is how the accountant explained to me.  

That would be right if you are a national you would not pay withholding tax while you are producing images, you would have running and equipment costs that you would off-set against your income tax liability when you do your accounts, so you are not taxed at source.

If you stopped producing stock images you would still be active because the works would still be generating licences, and the revenue would be subject to income tax.

Is it a royalty payment or income from the sale of a product.

There are many part-time photographers that feel what they are earning is pocket money and not worth declaring as taxable, this was a similar scenario to casual worker and the construction industry at one time in the UK, avoiding or evading paying the income tax, the tax office realised that this was losing a massive amount of reveue and changed to a sytem of taxing at source.

I was wondering if the IRS and HMRC might change this industry to include nationals in the future, how they see the revenue, to me it is not a wage but a product that you lease rights to, but is it then a royalty payment.

The sales of licences from non-nationals that will never hit the payment level should attract withholding tax, but withholding tax is only liable on payments so the tax office will never see this revenue if things stay the same.

The whole business of payment levels is defended by some photographers, but in reality it is not a financial number plucked out of the air or based on the cost of reviewing a new contributors images, but is cynically calculated to maximise profit from photographers failure, the common observation is 75% of photographers never making a first payment, so the stocksites know what revenue the average contributor can generate, but set the level 25% above that value, there is a lot of profit in there for the stocksites and a lot of lost income tax revenue.

In the current financial climate, the IRS and HMRC will be looking for where they can find more taxable income, and this industry is new, ripe and ready for picking, my day job is as a freelance IT consultant and HMRC has changed this industry over the last few years to bring it in line with the Construction Industry and I am now taxed at source.

David     (HMRC = HM Revenue & Customs)    

Quote from: Adeptris on June 16, 2009, 07:12

The whole business of payment levels is defended by some photographers, but in reality it is not a financial number plucked out of the air or based on the cost of reviewing a new contributors images, but is cynically calculated to maximise profit from photographers failure, the common observation is 75% of photographers never making a first payment, so the stocksites know what revenue the average contributor can generate, but set the level 25% above that value, there is a lot of profit in there for the stocksites and a lot of lost income tax revenue.

I don't get this reasoning. Are you suggesting that agencies are keeping money for "witholding tax" but not actually paying it to tax authorities? I'd think this would be considered fraud in most countries.

If they don't pay the contributor (because said contrib hasn't reached minimum payout) then they don't reach the point of withholding the tax from the payment. Presumably it only goes to the IRS if the contributor actually gets paid. Hence the sites get the use of a lot of money.

I have seen a post here where one site had a policy where they paid out all deffered revenue under the payment level at year end to the contributors, much better for new and part-time contributors.

Okay, maybe this is "fair". But there is cost involved in each payment made - guess how many contributors need to be tracked down to get current payment data... Someone has to pay for that cost...