France just made it a little easier for artists to sell their work directly to collectors. On January 1, the French Senate and Parliament passed a law reducing the tax on sales made directly by artists, the Art Media Agency reported. The VAT (as the tax is known) fell from 10% to 5.5%.
The bill was proposed by Socialist Party member David Assouline, who claimed the earlier 10% VAT rate on direct sales “penalized the French scene and did not correspond to any economic logic.” The new tax now matches that applied to imported artworks. The 10% VAT applied to gallery sales remained unchanged after its increase from 7% in 2014.
The policy echoes one already instated in Germany, which imposes only 7% tax on works sold by artists or imported, versus the 19% tax on those sold in galleries (which matches the rate for other goods and services in the country). Such policies could encourage more artists and collectors unhappy with the gallery markup to bypass dealers altogether, as Damien Hirst did in 2008 when he sold his work unmediated at Sotheby’s. Photographers Annie Leibowitz and Mario Testino have pulled similar moves. Naturally, some dealers feel it’s unfair.
“It is especially hard since we have to pay [insurance] on top of the purchase price from an artist (5.2 percent) plus [a royalty] on top of the net selling price,” the Berlin dealer Aurel Scheibler told Artnet News, claiming that 80% of German galleries are operating at or close to a loss. “The politicians here do not understand our problem.”
Another German dealer told The Art Newspaper in 2013 that “gallerists are worried about this point because the difference in price is notable. However, they hope the artists will show solidarity. Moreover, collectors usually buy from galleries because they are guarantees of quality, value, and the importance of the artists on the market.”
In France, the move comes amid a larger reversal of policy that has decreased taxation. On December 31, a 50% tax on income earned above $1.22 million expired and was not renewed. And last year, the government rolled out a plan to cut payroll taxes by up to $49 billion by 2017. “My government is pro-business,” Prime Minister Manuel Valls said. Now, it seems, it’s also making a concerted effort to be pro-artist.