Apart from a classic salary or a managing director’s remuneration, there is another way to legally pay yourself money from your own s.r.o., at significantly lower cost: author’s remuneration under a licence agreement.
You know how it is. You are starting a business. Most small entrepreneurs choose self-employment as their form of business (most often as a sole trader), since it is a cheaper, faster route with less “paperwork” than an s.r.o. (limited liability company).
You invest a great deal of time, energy and your know-how in the business. You create a website that is well thought out in terms of both design and functionality, logos, original articles, promotional materials, blogs, videos and the like. All so that you can break through and your business can succeed.
You have made it! You are expanding and considering setting up an s.r.o. The reasons vary – you want to protect your personal assets (since as a self-employed person you are liable with all your assets), have a better image towards business partners or take advantage of more flexible tax and contribution options.
You set up an s.r.o. and start thinking about how to take money out of it. Money flows into your company, but it is not yours – it belongs to the company. And that is the case even if you are its sole managing director and shareholder. In an s.r.o., it is prohibited to pay advances on future profits, so you need to find a way to take money out of the s.r.o. during the year if you do not want to wait for dividends to be paid once a year after the end of the tax period.
There are several ways to take money out on an ongoing basis – most often:
• remuneration of the managing director (which is subject to both health and social insurance contributions),
• an employment relationship with the s.r.o., i.e. a salary (again, the contribution burden is considerable).
But there is also another legal option for paying yourself funds from your s.r.o. without the obligation to pay contributions and even with a lower tax burden – through a copyright licence agreement.
WHAT IS A COPYRIGHT LICENCE AGREEMENT?
A copyright licence agreement is an agreement by which the author (you – as a natural person) grants your company (the s.r.o.) authorisation (a licence) to use a copyright work.
Works may include, for example:
• texts, blogs, articles,
• websites, graphic design, logos,
• software solutions, applications, code,
• video content – e.g. YouTube videos, advertising spots,
• photographs, illustrations, promotional banners,
• music, sound recordings,
• e-books, podcasts and much more.
If you created such works as a natural person (self-employed or outside business activity), you are entitled to remuneration for granting your own company consent to use them. The company pays you for using them and you, as the author, pay no contributions on this income – only income tax. Sounds great. However, everything has its rules, and the copyright licence agreement is no exception. For this reason, we recommend consulting a legal expert on setting up this model.
HOW CAN WE HELP YOU?
Our law firm also specialises in commercial and copyright law. We will be happy to:
• comprehensively assess whether the work you have created meets the criteria of a copyright work and whether it is appropriate to use the copyright licence agreement regime in your case,
• prepare a tailor-made copyright licence agreement,
• advise you on how to use legal and efficient options for taking money out of an s.r.o.,
• help you set up internal processes and transfer pricing documentation (transfer pricing and setting the remuneration in line with market conditions must not be forgotten),
• answer your questions regarding the tax and legal consequences.
Of course, a copyright licence agreement is not only a tool for efficiently taking money out of your own s.r.o. A copyright licence agreement allows creators to protect and, at the same time, flexibly manage their intellectual property. This type of agreement is commonly used by various creative professions, including programmers, software developers, architects, artists, authors of online courses, writers and other creators. Thanks to a copyright licence agreement, authors can clearly define the scope, manner and conditions of use of their works, secure fair remuneration and at the same time retain control over their creative output. It is therefore a key tool not only for protecting rights, but also for effective cooperation with companies or clients. We will be happy to prepare a copyright licence agreement for you that is clearly set up to protect your rights and ensure fair conditions for the use of your works.
If you are interested in legal services in connection with a copyright licence agreement, you can contact experts in this field here.
