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 imposing additional claims and late payment penalties 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 used 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.