Tax Incentives for the Art Market

Abstract

Several countries apply tax incentives to promote the sale of certain works of art, such as works of contemporary artists and works of national importance. Examples include deductions for taxpayers who buy contemporary artContemporary art, sometimes on the condition that the art be made accessible to the public. Although these incentives are not specifically designed to incentivize art dealers, the incentives can have that effect by reducing net or gross prices. If the price of art is reduced as a result of tax incentives, art dealers have a competitive advantage. Other examples include deductions that reduce the net price of works of significant cultural heritageCultural heritage. Tax incentives can also directly influence the gross price. Examples of such incentives include reduced VATVATrates and customs duties, which are used in the European Union. However, the definition of ``art'' is problematic in this respect. Even bigger incentives are provided in so-called free portsFree port, which have no customs duties or transfer taxes on works of art. However, these free ports may also provide opportunities for money launderingMoney laundering, tax evasionTax evasion, and the fencingFencingof stolen goods.