Taxation and customs: VAT Exemptions for the Cultural Sector
The EU legal framework allows for the possibility to grant a special status for cultural expressions, but the extent and modalities fall under the competence of EU Member States. While other aspects of taxation policy may simplify rules applicable for artists (ie. rules on the place of supply), one area is worth mentioning in the context of the Convention: VAT.
Certain cultural services are exempt from VAT. This is the case for cultural services and the supply of goods closely linked thereto supplied by bodies governed by public law or by other cultural bodies recognised by the Member States. The activities, other than those of a commercial nature, carried out by public radio and television bodies are also exempt.
The Commission manages legislation that provides for control over the export of cultural goods such as paintings, sculptures and photographs from the EU, thereby contributing to protecting the cultural diversity and identity of the EU Member States.
Special conditions are possible for certain cultural expressions in the EU since 1992 and they have been specified following the adoption of the Convention. Member states may apply a reduced VAT rate to certain cultural products and services that are listed in the VAT Directive. The VAT rates on cultural services differ across the EU Member States because, first, the VAT Directive only fixes minimum levels for the VAT rate (15 % for the standard rate and 5 % for reduced rates) and, second, the application of a reduced rate is optional for EU Member States. As a general rule, Member States may have a maximum of two reduced rates set no lower than 5 %, which they may apply at their discretion to goods and services listed in the VAT Directive (Annex III). In the case of cultural expressions, this includes publications; admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities; reception of radio and television broadcasting services; supply of services by writers, composers and performing artists, or of the royalties due to them. Member states may also apply a reduced rate to the importation of works of art, collectors' items and antiques (Article 103 of the VAT Directive). The category concerning publications covers the supply, including on loan by libraries, of books (including brochures, leaflets and similar printed matter, children’s picture, drawing or colouring books, music printed or in manuscript form, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or predominantly devoted to advertising. The precision "on all physical means of support" to books was added by the adoption of a Directive on reduced VAT rates (2009)62. All these supplies are thus eligible for a reduced VAT rate.