Is copyright royalty income from a music distributor business income or other income?
Income from continuous, repeated songwriting activity is classified as business income (3.3% withholding), while occasional copyright royalties may be classified as other income (8.8% withholding, 60% expense ratio recognized) - the classification depends on your frequency and scale of activity. Since streaming settlements keep arriving with a time lag from multiple distributors and associations even after release, gather every withholding certificate and combine them to avoid omissions, and we recommend depreciating MIDI equipment over 1 million KRW.
Income Structure Features for Composers
Key Necessary Expense Items
Tax Advantages for Composers
Review Expense Ratios Based on Income Classification
If occasional copyright royalties are classified as other income, an expense ratio may be recognized under certain conditions, so accurately judging your income classification based on recurrence is where tax savings begin.
Track Income Yearly for Ongoing Royalty Settlements
Since streaming settlements keep arriving even after release, reviewing your settlement records every year lets you manage them without missing anything in your filing.
Spread Tax Burden Through Equipment Depreciation
MIDI equipment and audio interfaces over 1 million KRW should be depreciated over time so you can claim stable expenses every year.
The Most Common Mistake in the Field
The most common mistakes are misclassifying royalty income between business and other income, or missing part of the settlement amounts split across multiple distributors and associations. Gathering and combining every withholding certificate is essential.