Economics Market France

French trade warns of VAT ‘disaster’

Proposed hike on tax for works of art imported into France would undermine the country's standing in the global market

A trade report describes how French fairs such as Fiac (the Foire Internationale d’Art Contemporain) held in Paris, would lose out to rivals such as the Frieze Art Fair in London

High-profile trade figures in the French art world have warned the government that a proposed rise in VAT affecting works of art imported into France from outside the European Union will seriously undermine the country’s standing in the global art market.

A report compiled by Guillaume Cerutti, the chief executive of Sotheby’s in France, the Paris dealer Franck Prazan and Georges-Philippe Vallois, the president of the French galleries association, says that the planned increase—a hike from 7% to 10%, due to come into effect in January 2014—would “have disastrous consequences for the French art market in its entirety”.

In unusually candid terms, the report describes how French fairs such as Fiac (the Foire Internationale d’Art Contemporain), held in Paris every October, would lose out to rivals such as the Frieze Art Fair in London. The UK’s VAT rate of 5% for imported works already makes France a more expensive destination for dealers and collectors.

“An international American gallery that is weighing up participating in either Frieze or Fiac would be tempted to invite clients to its stand in London, rather than in Paris,” the report says. “A Swiss collector who owns a work by Nicolas de Staël may well favour London over Paris if he chooses to sell the piece.”

France would continue to lose ground in the global art market, warn the co-authors, risking further falls in its percentage share of international sales (in 2012, France trailed in fourth, on 5%, after China, the US and the UK). The proposed bill goes before the Conseil des Ministres (the French cabinet) this month.

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