Art has been born, and it is no longer limited to pure aesthetics. Even if it is poor in liquidity, it has been turned into a financial asset by the omnipotent human beings and a part of the rushing financial system. The June issue of "Art Business" will take you to "interpret the finance of artworks".
▌On May 31, according to the decision of the 10th Standing Meeting of the State Council, the Tariff Commission of the State Council issued the "Announcement on Reducing the Import Tariff of Daily Consumer Goods (Tax Committee Announcement [2018] No. 4)", and reduce import tariffs on daily consumer goods, including artworks, from July 1, 2018. There are 1,449 tax items involved, and the average tax rate has been reduced from 15.7% to 6.9%, with an average decrease of 55.9%.
▌ Among them, the tentative tax rate of 3% will be cancelled and lowered to 1% of "hand-painted oil paintings, pink paintings and other paintings other than Thangkas (97011019), ", "the originals of engravings, printed paintings, and lithographic paintings (97020000)" and "original sculptures made of various materials (97030000)" will be reduced to 1%; "Thangkas (97011011) will be reduced from the current 12% most favorable tax rate to 6%"; "replicas of hand-painted oil paintings, pink paintings and other paintings (97011020)" and "collages and similar decorative panels (97019000)" will be reduced from the current 14% most favorable tax rate to 6%".
▌For collectors and buyers who are keen on art, "art" The word taxation is never unfamiliar. It is a hurdle that must be overcome in the transaction and transaction of art. So how does art tax work? Putting aside the fixed import and export tax ( customs duty ) and transaction tax, what are the troublesome art value-added tax in the world?
▌First of all, start from Europe, one of the continents of art trading. Europe has always had a traditional reputation to support art. What is the situation of the EU's art tax policy?
▌The EU's tax on art is different from setting a single tax standard, but is more complex. It is generally aimed at 3 There are different tax quotas for taxpayers - artists, galleries and buyers, and import and export transactions. For independent artists, the EU has a protective attitude. If artists directly buy and sell art works to collectors and institutions, the tax quota is the smallest. In addition, the quota for galleries and buyers and import and export tax quotas are different.
▌EU trade was once calculated based on a unified VAT quota. In 2006, the EU's VAT was 15%, but countries within the EU can basically reduce VAT to below 5% by redeclaring the types of goods and categories of goods. The types of goods source classifications of these goods have gradually expanded from 2 to 3 categories to 2 More than one type, these 21 types do not include art.
▌Value-added tax on EU art, from the highest 25% of Sweden to the lowest 5% of Malta, the tax value of each EU country is different. Not only that, the first sale and last purchase amount of an art also affect the government's tax judgment on the item. This is very inconvenient for EU collectors and buyers. In addition, EU member states had unclear definitions of art, especially contemporary art, which did make jokes. For example, in 2006, a British gallery imported the works of two famous American conceptual artists— Dan Flavin's lighting installations and Bill However, the British government gave a 20% import and export tax on Viola's audio works, which is much greater than 5% of artworks. The reason given by government staff is that Flavin's works contain a large number of nylon lamps, and Viola's works contain a large number of images and projectors, and the import and export tax on these devices is very high.
▌For this reason, the EU issued the "Import and Export Tax/VAT Adjustment" Act in September 2010. This bill regulates the originally chaotic art market and regulates the differences in tax revenues between EU member states in a small scale. The previously mentioned lighting and audio installation works imported by British galleries, after two years, after the lawsuit between the British government and the EU Association, the tax rate was finally revised and adjusted, but the difficulties and obstacles were also imagined. The amendment of this bill is also to avoid similar problems from happening again.
Dan Flavin's 1977 work "Unt Title 3"
(In Honor of Harold Joachim)
His works contain a large amount of nylon lamps, resulting in the British government giving an import and export tax of up to 20%
▌But this overall adjustment has both advantages and disadvantages. Take Germany, a country with a great purchasing power of art, for example. Before Germany adjusted its value-added tax, in order to promote the national purchasing power of art, Germany's art value-added tax was 7% before 2010 (except photography). However, after the art tax policy was adjusted, in order to unify the VAT rate of European member states, the EU forced Germany to increase the VAT to 19%. This has brought great impact to the German art market. In 2014, the German Parliament learned that in recent years, France's art VAT remained at 7%, and the EU did not respond or urge to do so. To recover the art market and turn the tables for unfair tax judgments, the German Parliament passed a bill to collect only 19% of the price of a piece of art. German independent artists sell artworks themselves (not through gallery and buyer agency) with only 7% VAT, which the government believes will ensure that young artists or independent artists who have not signed up for a gallery can survive and create better.
▌The tax adjustment routes of other EU member states have also been ups and downs. In 2014, France increased the 7% VAT to 10% while maintaining 5.5% customs duties in non-EU member states. But just one year later, France reduced the VAT for independent artists to 5.5%, and the reason is worth pondering. Meanwhile, Spain increased its previous 8% VAT to 21% in 2012 because its government believed art was culturally related, but in less than a year, the Spanish government reduced its tax revenue back to 10%. Italy's VAT tax has remained at around 22%.
▌In the EU's recent VAT adjustment bill of 2015, VAT for purchases of artworks depends on the country where the transaction is completed. For example, when a German buys art in Spain, although he does not have to pay customs duties within the EU member states, he must abide by the Spanish regulations on the value-added tax of art, which brings a certain degree of inconvenience to European local galleries in Europe. These tax policies also directly led to a result: the volume of art transactions in Europe fell by 3 percentage points compared with the previous one.
▌The United States is a country without art value-added tax (although there is art sales tax). If it is original works of art, customs duties will also be zero, which can also explain why the United States has become one of the powerful countries in art sales. The art sales tax in the United States also varies according to the big states. There is no need to pay art sales tax in Oregon, Montana, , New Hampshire, and Tedward Delaware. Art lovers in New York must pay an 8.875% art tax, the highest tax rate among all major states in the United States.
▌However, artworks are part of private property in the United States (such as real estate), so this means you have to pay taxes every year for the artworks you buy, and the more you buy, the more you pay. At first glance, it may not be a big deal, but every year, even the super rich man should think twice. However, American collectors still have their brains on this. Since in the United States, the taxes for individual purchases, companies purchases, or donations to art galleries after purchase are different, those American collectors have opened their own or private art galleries, private art galleries, , and collection galleries, mainly to reasonably avoid taxes. After opening a private art gallery, they donated their collections to their art gallery, so that the annual tax on artworks can be exempted because the US government is very supportive of the art gallery cause. This can also explain why many private art galleries in the United States have a short time to open to the public, mostly with an appointment system. In this way, the collector has the title of respected "curator", and he can have a lot of time to slowly appreciate his collection. If he wants to play with it carefully, he can also see the style of the collection. It is a good choice for more than one bird with one stone.
▌ Back to China, the art tax check storm that year affected many people. Many gallerists and dealers who were once dark horses in the Chinese art world were all down. China's art tax is a very sensitive topic. Over the years, with the gradual maturity of the art market, China's art tax system has also gradually improved. The tariffs on artworks, which were complaining so much back then, have been adjusted twice: the first time, from 12% to 6%; and in the "Tariff Adjustment Plan for 2017", the tariffs on the three tax numbers , tax numbers , were reduced to 3% again; starting from July 1, 2018, the tentative tax rate of 3% for these three tax numbers has been cancelled and lowered to 1%, which can be said to have reached an affordable range. The 17% VAT is a pain for collectors. Many articles and posts about collectors calling on the country to reduce VAT for art can also be found on various social and official media. However, after previous statements and comparisons, objectively speaking, the tax on Chinese art is not the heaviest compared with other countries and even developed countries.
text/Huangmei
▌Original text "About International Art Taxation" is selected from the June issue of "Art Business". The article has been deleted
"Art Business" June issue
