The new Aena Prize for Hispanic American Fiction, which in its first edition has gone to the The good evil by Argentine Samantha Schweblin as best book of the year, has a prize of one million euros. It is presumed that the prize seeks to be a more “literary” version of the more “commercial” Planeta prize, awarded with the same amount. In both cases the gossip tends to be the amount more than the texts, very far from other literary awards, and in a frequently precarious profession: literature does not provide food. And one of the common questions is how much literary awards are taxed. What remains “clean” for the award-winning author.
There are several possibilities. The first bifurcation opens between the prizes that are taxable and those that are exempt, at the decision of the State, due to their public relevance. In this second option, those that are paid immaculately in their entire amount, are, for example, the Cervantes prize, which grants 125,000 euros to the career of a writer in the Spanish language, or the national awards, which distinguish the best of the year in different disciplines (narrative, cinema, dance, poetry, art, circus, comics, etc.) with a general award of 30,000 euros. “I’m going to spend them sparingly, because I’m doing very badly,” said Álvaro Pombo when he was awarded the Cervantes. In your case, you can spend every last euro.
Among those who pay taxes, there are also several options. “Some awards related to publishers and other institutions, and that include publication, are given as an advance payment of copyright,” explains the lawyer of the Collegiate Association of Writers Carlos Muñoz Viada. This is the case of the Planet: when Sonsoles Ónega or Juan del Val earn a million it is considered an advance for the profits from sales. That is, until their royalties from the sale of each book reach one million, they will not begin to charge more. The issue regarding advances is that it is the publisher who assumes the risk: if they did not sell any copies, the publisher would earn zero euros, but the author would maintain his income.
Generally, the percentage corresponding to the author in the sale of a book is around 10%, although successful authors can negotiate better percentages or negotiate a different remuneration for sections of copies sold. If a book costs 20 euros, an author gets two euros: you have to sell many books to earn significant amounts, which is why it is difficult to live off sales alone and most writers have to combine other jobs related (or not) to their creative work. Collaborations in the press, courses, conferences.
The income from the Planeta, or any prize given as an advance, would therefore be subject to the usual taxation in personal income tax. In the case of one million, it would represent around 45% of what was entered in the next income tax return. But here there is a peculiarity: the Balcells decree, Royal Decree 439/2007, of March 30, which takes the name of the famous literary agent Carmen Balcells (famous for her connection with the authors of the Latin American boom; many of whose representatives won the Planeta award), who was the one who promoted it until it was implemented.
A possibility that, as Carlos Muñoz Viada explains, many writers are not aware of, nor are many tax advisors, due to its peculiar and niche nature. “The Balcells decree allows payment to be deferred as sales are made,” says the lawyer. That is, the author does not have to pay taxes for the entire prize/advance at once, but can do so as the books are sold. “Let’s say you won the Planeta award in October but at the end of the year you have only sold a few thousand copies: in that case you will only be taxed on those sales, and not on the entire million,” says Carlos Muñoz Viana.
The case of the Aena award is different: as it is an award for work already published, it is not considered an advance on sales. It is a pure and simple prize. And it has standard taxation. “The financial amounts of the Aena Prize for Hispanic American Fiction are subject to the tax withholdings that correspond according to current legislation, an exemption from personal income tax is not recognized,” reports from Aena. In this case, following the company, the withholding for the prize in Spain is 15%. If the winner resides outside, it is 19% for residents of the EU and 24% for other countries. Samantha Schweblin resides in Germany, so her taxation will be governed by that country’s tax system.
But assuming that in future occasions the winner resides in Spain, even if the withholding is 15%, that does not mean that only that percentage is paid, as happens with the payroll or invoices of any mortal, whether he writes or is dedicated to plumbing. When filing the income tax return, the Aena million would be added to the taxable amount, that is, to the total income obtained, and would be taxed according to its bracket. One million can be taxed up to 45% in Spain: a lot of money has a lot of tax. Of the million there would be about 550,000 euros left. It is also a good peak, although with the way prices and homes are, it is surely not enough.