How design income is classified
Design work is generally treated as service income when you create custom work for a client. However, if you sell templates, stock graphics, or license designs for ongoing use, that income may be classified as royalty or licensing income — which is often taxed differently and may qualify for treaty benefits.
Work-for-hire vs licensing
The distinction matters for taxes. Work-for-hire (client owns the design outright) is straightforward service income. Licensing (you retain rights and charge for usage) may qualify as royalty income with lower tax rates in many countries. Structure your contracts deliberately — the tax difference can be significant.
Stock design and passive income
Income from stock design platforms (Shutterstock, Adobe Stock, Creative Market) is typically royalty income. If you earn from multiple stock platforms in different countries, each may withhold taxes differently. Claim foreign tax credits to avoid double taxation on these earnings.
VAT on digital services
In the EU, digital services (including design files delivered electronically) are subject to VAT in the buyer's country. If you sell directly to EU consumers, you may need to register for the One-Stop Shop (OSS) VAT scheme. B2B services typically use the reverse charge mechanism.
Deductions for designers
Common deductions include: Adobe Creative Cloud and design software subscriptions, hardware (drawing tablets, monitors, computers), stock photo and font licenses, printing and proofing costs, portfolio hosting, professional development, and coworking or studio space.