Founding an equalization association for the payment of the artists' social security contribution

Source: BUS Rheinland-Pfalz

You must pay the artists' social security contribution if you are one of the companies,

whose corporate purpose is either to use and market artistic or journalistic services or works
- for example as a publishing house, theater, advertising agency, film production company, gallery or music school
or advertising or public relations work and in this context regularly place orders with self-employed artists or journalists,
- for example, to graphic designers, layout artists, photographers for the creation of advertising materials, musicians, singers and presenters at public events, copywriters or web designers for the creation of a homepage

In addition, there are further obligations associated with the duty to submit:

Reporting obligations: You must report the total remuneration you have paid to self-employed artists or journalists in the calendar year to the KSK annually using a form. If you do not submit the report, the KSK will estimate the amount of remuneration.
Record-keeping obligations: You must keep records of the taxable remuneration that you have paid to self-employed artists or journalists in the calendar year. The records must be presented in the event of a tax audit.
Company audits: The German Pension Insurance or the KSK carry out regular audits. If necessary, they will issue a notice levying additional claims and late payment surcharges for the past 5 calendar years.

The Artists' Social Security Act offers you the option of forming a compensation association with several companies in order to pay the artists' social security contribution in a lump sum. The equalization association assumes your rights and obligations vis-à-vis the KSK, in particular the reporting and payment of the artists' social security contribution and the advance payments.
The advantages of the equalization association:

The artists' social security contribution is collected in a lump sum. This eliminates the need for you to compile the reports each year. This also means that you no longer have to assess each year which of the services you have received from self-employed artists or journalists are subject to the levy.
You no longer have to collect and record the fees for the annual returns.
There will no longer be any tax audits in which additional claims may be made. Only at the end of the 7-year contract period is an inspection by the KSK of a random sample of companies required. As the composition of the random sample varies, you will not be subject to frequent audits.
It is possible for the equalization association to be reimbursed for administrative costs.

If you want to set up an equalization association or join an equalization association,

first contact the KSK to find out about the procedure and requirements for setting up or joining an equalization association.
The establishment of an equalization association involves the following steps:
You inform the KSK that you would like to set up an equalization association.
A minimum number of companies interested in joining a compensation agreement is required. Depending on the number of members of the equalization association, a number of 50 companies may be sufficient.
Interested parties must agree to take part in a review. Some of the potential participants in the equalization association are checked by the KSK. This serves to determine the deviating calculation size. They do not lead to a decision or the direct levying of additional claims on the companies checked.
- However, the accession of companies not previously included in the equalization association requires that any existing obligation to pay artists' social security contributions has been properly fulfilled in the past 5 years and that payments have been made subsequently, if this has not already been done. This can be done uniformly for all companies in a lump sum or by retroactive registration with the KSK.
It is also necessary for interested companies to determine the amount of remuneration paid for artistic or journalistic services in the past 3 years.
- If there are sufficient companies that are already registered with the KSK and have submitted declarations for the past 3 years, this is not necessary. In this case, the reports submitted by the companies to the KSK are used as a basis.
Depending on the number of participating companies, a representative proportion of the members will have the amount of fees subject to the levy for the past 3 years checked.
The future calculation figure for the members is then determined. For this purpose, a base figure must be found on which to base the calculation. This should be a calculation figure that is available to all members of the equalization association and that can be easily determined (e.g. income, remuneration paid by the employers' liability insurance association, sales revenue).
The agreement to be concluded between the equalization association and the KSK must then be approved by the Federal Social Security Office.

In order to establish a compensation association, a representative of the companies in the compensation association must be prepared to organize the establishment and subsequent handling of the compensation association on behalf of the members.

The formation of a compensation association
- takes place by means of a written agreement between the representative of the companies and the KSK
- and requires the approval of the Federal Social Security Office.
The agreement presupposes that a flat-rate calculation figure is found. It is therefore not possible to establish an equalization association if the basis of assessment is the actual remuneration paid to self-employed artists or journalists.

In order to establish an equalization association, the representative of the companies must

send a list of companies interested in joining the equalization association with
- names,
- addresses,
- contact details,
- company number and
- tax number of the artists' social security fund (if available).

Your contact person for the equalization associations at the KSK will be happy to advise you on this.

The establishment of equalization associations is particularly worthwhile for you,

if the effort involved in preparing the annual reports is very high.
- As this is a lump sum, you must expect that in some years during your membership of the equalization association it may deviate in your favour or to your disadvantage from the amount of the artists' social security contribution to be paid on the basis of the actual declarations.
The lump sum is therefore not suitable for you if you attach importance to paying the artists' social security contribution only in the amount that is actually due.

Founding an equalization association for the payment of the artists' social security contribution

Process flow

Requirements

Which documents are required?

What are the fees?

What deadlines do I have to pay attention to?

Processing duration

Legal basis

Applications / forms

Appeal

What else should I know?

Professionally released on