The Culture Department supports VAT reduction for art, but the Treasury Department refuses to give the green light.
Since 2022, a new European regulation allows for a reduction in VAT on art sales to a minimum of 5%. Neighboring countries such as France, Germany, and now Italy have been doing so. But Spain has yet to make a decision, despite the deadline to do so ending in December 2024. The purpose of the law, which covers a wide variety of goods and services, from footwear to live plants, is to harmonize the different tax systems within EU member states. Although some countries equal and even surpass Spain (Sweden at 25% or Portugal at 23%) in VAT on art sales, the impact on their art scenes is lower, as these are less significant markets, while Spain ranks fifth after the United Kingdom, France, Switzerland, and Germany.
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Last March, coinciding with the brief closure of Spanish stands at the Arco fair to draw attention to inequality compared to their European counterparts, Culture Minister Ernest Urtasun informed gallery owners of his intention to lower VAT on art purchases from 21% to 10% (the rate applied since 2018, for example, to cinema and concert tickets, while the rate on books is a much more advantageous 4%). The announcement sparked a storm of criticism online, with questions about whether it was necessary to lower "the cultural VAT for the rich." Once again, silence fell, to the despair of gallery owners, many of whom are considering stopping attending international fairs due to their inability to compete. This would represent another blow to Spanish artists, who would lose visibility.
Spain is the fifth largest European art seller after the United Kingdom, France, Switzerland, and Germany.The Ministry, in response to questions from La Vanguardia , recalled that Urtasun met with various cultural stakeholders upon arriving at the ministry, and that the gallery owners then shared their position on VAT on the sale of works of art. After listening to them, they explain, Urtasun decided to support their request and submit it to the Ministry of Finance, but María Jesús Montero's Ministry has not yet given the green light.
The Ministry of Culture argues that they support the gallery owners' request because, in the case of a common European market, competition must be on a level playing field. Currently, what exists is an inequality that makes what gallery owners sell in Spain more expensive than if they sold it abroad, and this also negatively impacts the sales of new artists. For now, the Treasury has not responded affirmatively, they emphasize, but, they recall, there are new developments and movements in other countries, for example, Italy lowered VAT on sales of works of art to 5% a month ago, which they hope will ultimately lead to a positive decision. But for now, the Ministry of Finance indicates that there is currently no decree-law or measure in progress on the matter, and they point out that any measure would require a majority in Congress.
"It's curious how difficult it is to raise any issue that might improve the art world, but when there's a NATO meeting, everyone rushes to the Prado."The VAT reduction is the necessary, vital measure on which gallery owners rely for their survival, but it is not the only comparative grievance they face compared to other areas of culture. Both Idoia Fernández and Carlos Duran agree in denouncing the exclusion of the visual arts from the tax mechanisms in force since 2021, which allow 120% deductions in income tax returns for self-employed individuals and companies from any sector and social type that invest in cultural projects, be it film, TV series, theater, dance, and all types of performing arts... except those related to the visual arts. "I find it curious that it's so difficult to raise any issue that might improve the art world, which is the main attraction of this country, and then when there's a NATO meeting, everyone rushes to the Prado," Fernández quips.
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