France Changes Art Tax Rules To Benefit Artists
Artists based in France and hoping to sell their work directly from their studios without the aid of a gallery, have gotten a boost from the government. As of January 1, the value added tax (VAT) rate on artworks purchased directly from artists is only 5.5 percent. This change marks a significant reduction from the previous rate of 10 percent. The reduction of the VAT rate comes only a year it was raised from 7 percent to 10 percent for those wishing to buy works from commercial galleries. The new VAT paid on works purchased from their producers is equal to the 5.5 percent tax rate paid on art imported into France.
“This [bill] amendment means that the French art market remains dynamic,” Bernard Cazeneuve, the French Budget Minister, told Agence-France Presse. “Without this amendment, Paris’s place in the art market would be under threat in light of other import tax rates in other European countries.” The rate in the UK, for example, is 5%.
This particular model is similar to that of Germany, which provides a reduced 7 percent tax rate for both art imports and artworks purchased from artists directly. Responded to pressure from within the culture industry, that argued a high VAT and import taxes were hurting its business; the French government backed down from their original plan of raising that rate to 10 percent, or equal to the pre-January 1, 2015 rate on works purchased from artists themselves. The import tax was dropped in time for FIAC.
Taxes on art purchases from galleries and auction houses are completely non-standardised between countries, in the EU ranging from a VAT rate of 21 percent in Italy, to France and Austria's 10 percent rate and (non-EU member state) Switzerland's 8 percent VAT. Due to a mandate by the EU Commission, the VAT on the sale of art and other cultural goods was raised to 19 percent in Germany one year ago; VAT for visual art, excluding photography, was previously 7 percent in line with the country's import rate on art.
Political gridlock is mostly to blame for these discrepancies - on top of a lack of over all regulation. In Brussels, a failure to include art in the EU provision that allows countries to charge lower VAT rates on music and books, has created a near impossible situation for countries that would, all other things being equal, subsidise their art industry with lower taxes.