Europe’s Art-Tax Mystery


By Roger Armbrust
Special to the Clyde Fitch Report

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Has the European Commission (EC) classified the material components of art as utensils of commerce? Has it really slapped a value-added tax (VAT) of 20 percent (as opposed to 5 percent) on Dan Flavin’s and Bill Viola’s makings for cultural experience — their unplugged visions, so to speak? That’s Europe’s current art-tax mystery.

Here’s how it unfolded:

On Dec. 16, carried an alarming story with the headline “Europe Rules That Dan Flavin and Bill Viola Artworks Are Not Art.” As a result, according to the story, the EC had allegedly — greatly — raised the VAT on the artworks.

According to Artinfo, in 2006, the Haunch of Venison, a gallery in London’s West End (as well as Berlin and New York), imported a Flavin light sculpture and Viola’s six disassembled video installations with the idea, of course, of displaying them. The British customs office, rather than applying the accepted 5 percent tax rate on art, whopped a 20 percent tax — $66,000 in U.S. currency. The British VAT and Duties Tribunal, in 2008, sided with the gallery in its appeal, overturning the higher tax.

But in its mid-December article, Artinfo reported that the European Union’s commission had tossed the Brit verdict, reversing it in favor of the higher tax, which now will apply to all member countries of the EU.

“In its decision, the European Commission describes the Flavin work as having ‘the characteristics of lighting fittings… and is therefore to be classified… as wall lighting fittings,'” explained. “In a discussion of Viola’s work that really split hairs, the commission stated that Viola’s video-sound installation cannot be considered sculpture ‘as it is not the installation that constitutes a ‘work of art’ but the result of the operations (the light effect) carried out by it.’ ”

The same day as the story, The Art Newspaper carried Georgina Adam’s article also revealing the EC’s decision to up the tax on Flavin and Viola’s work. Then, that same day, Felix Salmon’s blog on Reuters headlined “Europe goes mad over art.”

As a supporter of the arts, Salmon, too, was mad:

I hope this story gets picked up widely, and that the people responsible for the ruling get identified, and asked all the obvious questions over and over again. (Update: as well as the UK bright sparks who appealed the ruling to the EC in the first place, of course.) Meanwhile, a large portion of the European art industry is likely to be in panicky disbelief right now. The ruling can’t stand — but how is it going to be overturned?

Seeing these things, Peculiar Progressive researched the EC’s website, but couldn’t find the ruling on Flavin and Viola. So we emailed the EU’s press office, asking for a copy of the decision as well as any press release that might accompany it.

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Then, believing it might be a while before we heard back, if at all, we started a column questioning the ruling, and whether taxing artwork isn’t, in fact, discouraging it’s dissemination — in other words, censoring art.

Then an interesting turn occurred. On Mon., Dec. 20, an email arrived from Francois Head of the EU Council press office, which said:

We are not aware of any such decision, especially given the fact that VAT is charged by the member states, not by the European Commission.

Decisions taken at EU level relate to the general features of a VAT system that is common to all member states. These include the minimum levels of both the standard rate of VAT and the reduced rate, which are currently set at 15 percent and 5 percent respectively of the value of goods and services.

So when you speak of VAT at 20 percent as against 5 percent, you are doubtless referring to a member state that applies a standard rate of 20 percent and to a decision that has been taken to no longer apply the reduced VAT rate to works of art.

Admissions to ‘museums…exhibitions and similar cultural events and facilities’ are on the list of goods and services which may be subject to a reduced rate.

So, on the one hand, we have arts-friendly news sites reporting that the EU’s commission has socked a high tax on artwork, and even declared it’s not art. On the other hand, the EU’s press office says no such decision exists, and even that member states, not the commission, levy the VAT.

How do we solve this mystery? Head suggested we contact Emer Traynor in the EU’s spokesman’s office. She handles issues involving taxation. We emailed her, but, alas, she had already left for the holidays, scheduled to return Jan. 6.

Hopefully we can contact her soon after that, and see if we can uncover the puzzle of whether or not the EC imposed the tax hike, and if the rulemaking body considers art to be art. That should prove simple enough in Flavin and Viola’s cases:

New Yorker Flavin, who died in 1996, has over 100 pieces distributed in collections in the U.S. and internationally. His artwork first became prominent in the 1960s. The National Gallery of Art in Washington, D.C. honored his work with a three-month retrospective in 2004-05.

Viola, who grew up in Queens and will turn 60 on Jan. 25, has exhibited his video artistry at the National Gallery in London, the Guggenheim and Metropolitan Museum in New York, the Whitney, the Getty in L.A., and beyond. He began displaying his artwork in galleries in the late ’70s.

In the meantime, we see two areas of EU’s involvement which the government should pay attention to when dealing with artwork being transported throughout Europe, and whether or not it should even be taxed:

The EC, on Dec. 1, launched a public inquiry into how the VAT can be “strengthened and improved.” Within its announcement, the Commission admitted, “The complexity of the current VAT system creates unnecessary costs and burdens for taxpayers and administrations, and obstacles to the Internal Market. Moreover, certain weaknesses within the VAT system leave it vulnerable to fraud and evasion.”

This from the EC, the EU’s executive body which implements the EU’s legislation.

Meanwhile, at the same time, the union’s European Council, which defines its general political direction and priorities and also appoints the members of the EC, is espousing a Work Plan for Culture 2011-2014. Its intent: To implement “strategic objectives, namely the promotion of cultural diversity and international dialogue, the promotion of culture as a catalyst for creativity in the framework of the Lisbon strategy for growth, employment, innovation and competitiveness, and the promotion of culture as a vital element in the Union’s international relations.”

If the EU takes these positions to heart — one citing the repressiveness of the VAT, the other the vital need for nurturing culture — this should seem clear to the government: Taxing art, including its packing and shipping, is detrimental to nurturing the European soul and the EU’s valued efforts at maintaining an international union. Its boundaries house the cradle of Western art, including its Renaissance. So art’s central place in the European psyche, and its economy, should be honored and fostered.

Roger Armbrust is editor-in-chief of Parkhurst Brothers, Inc., Publishers, and its Our National Conversation book series. Armbrust’s views do not necessarily represent those of The Clyde Fitch Report.

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  • julianne honey

    Declaired not art? Says who? Excelent ,provacative topic . Must read many times to fully understand .Thanks Roger . jmh

  • Charlie Smith

    you go, boy

  • Julianne

    I fear the Dec. 16 article “Europe Rules That Dan Flavin and Bill Viola Artworks Are Not Art.” is dangerously misleading. They have their story wrong. They are using EC comments from the 2006 Flavin/Viola appeal which do not apply this case.

    Author Roger Armbrust, with a bit of actual fact checking (which the AI apparently did not do) has unveiled a much more significant factor affecting the EU art world. According to EU press council Francois Head, “…when you speak of VAT at 20 percent as against 5 percent, you are doubtless referring to a member state that applies a standard rate of 20 percent and to a decision that has been taken to no longer apply the reduced VAT rate to works of art.”

    The recent decision to tax the artworks at a standard 20% VAT rather than the reduced 5% has to do with the 2010 expiration of a reduced VAT for works of art. This is a situation where I would love to be proven wrong, but as I understand it, in 2011, ALL imported works of art will lose their eligibility for the reduced VAT.

    Essentially, Flavin and Viola’s works, along with all goods categorized as works of art, retain their “art” categorization. What they lose is their eligibility for the reduced VAT rates. In this situation, arguments about what constitutes “art” are irrelevant.

    “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing”
    -Jean Baptiste Colbert.

  • john walker

    Mr Armbrust
    Thank you , Has any further clarification been forthcoming?

    In Australia the GST is applied at a uniform, across the board rate of 10% (some things like basic foodstuffs are simply exempt)

    ‚Ä¢ Within the UK , Is the rate of VAT levied on ‘art’ different to the VAT levied on for example, a car?
    ‚Ä¢ Are there any other special ‘cultural categories’ that are levied at a concessional rate?

    In Australia GST replaced a previous very complex system of varying rates of sales taxes , taxes that were levied by both the 6 individual state governments and by the federal Commonwealth government (there are still special extra excises on things like cigarettes and sweet flavoured alcohol products aimed at teenagers)
    • Is this not the case In the UK, dos the UK have sales tax/levies additional to VAT ?

  • john walker

    Julianne— Am I right in understanding that are you saying that EU is moving to a flat uniform rate (of VAT) over the whole of the EU?

    When we introduced the nationally uniform GST , A major sticking point was that for some State Governments, the replacement of the existing rag bag of special state based transaction levies/excises with a single national transaction levy, could have resulted in a net loss to those same individual state governments.

    Whilst I am an professional artist and like being paid , art is a fairly optional purchase, art is mostly bought by the better off , and at the higher end it is often bought through tax effective vehicles.
    I am a bit shocked by the attitude that buying art should be more favorably treated than the buying of the many other things that are necessities ,
    ; housing/rents , transport tickets, clothing and so on.

  • john walker

    Rodger, has there been any clarification offered in the past month?