Perhaps we are facing one of the questions most questioned in recent months by many artists, gallery owners and collectors, who use the London city as the main center of their transactions, and that is ... how will Brexit affect which it is currently being one of the most important art markets within the European Union?
The questions of Brexit
According to an article published in the Financial Times newspaper, many international companies, especially those dedicated to the world of art, feel increasingly frustrated at the lack of information provided by the British government regarding Brexit, and it is that they are afraid of what can happen, mainly, with tariffs in the market, non-existent in the European Union, in favor of free trade.
Until now, the United Kingdom has always been the one who has led the ranking in the world art market, be it for the numerous auction houses that are based here, for the galleries and professionals in various disciplines related to collecting, as well as for the attractive tax and legal regime, devoid of excessive bureaucratic burdens both in the export and import of works of art.
We are talking about the market share in the United States being 44%, and 21% for the United Kingdom, followed very far by France with 6%.
Where is the truck?
Very simple. London benefits from its low tariffs to import artistic merchandise, and its VAT is barely 5%, which is attractive to merchants from many parts of the world to introduce their works into the European Union.
Proof of this is the Spanish art market, whose collectors or fans have always seen the United Kingdom as a potential place to sell their works given the lack of animation of the Spanish market.
Consequences of Brexit on the art market
To this day, it is still unknown how Brexit will affect the customs situation and the free movement of goods. Although it is being said that there will not be any type of tariff regarding the import of works of art to the United Kingdom, it is true that, to send a work from the European Union to the United Kingdom, give an export tax, which is what has not happened so far with free movement within the EU.The question then is, how will future art sales be affected from the UK?
Well, a priori everything indicates that the costs of the Value Added Tax (VAT) are going to increase, so, and we give an example, in the event that a work arrives in London from New York, first, it will pay a VAT of 5% (or more), plus another, for entry to the member country of the European Union to which said work is destined.
As a consequence, many galleries and art collectors in the country are already withdrawing their works and taking them to other European venues, at least until everything is clarified. Likewise, Alan Sloan, director of the art exchange company Momart, supports this solution and has even recommended "to act quickly in order to avoid last minute delays at ports and other implications in case the rules of the market change from one moment to another. ”And is that the deadline for Brexit is at the end of this month.
Based on this, the only question now is to distinguish whether or not there is an opportunity for the rest of the EU member countries to attract the art market as London has been doing so far, and among the possible candidates. is Paris.
However, we are still waiting for Prime Minister Boris Johnson to deliver. A hard Brexit will undoubtedly have a significant impact on the future of art in London, because if sales are taxed with the export rates they want to impose, they will exceed 150,000 euros.