High-profile trade figures in the French art world have welcomed the government’s decision to cut the rate on tax for works imported in to France from outside the European Union. French députés (members of parliament) voted last Friday (18 October) to reduce the VAT import tax from 7% to 5.5%. The move is a major reversal as the government initially proposed raising the import tax rate earlier this year from 7% to 10%.
“This [bill] amendment means that the French art market remains dynamic,” Bernard Cazeneuve, the French Budget Minister, told Agence-France Presse. “Without this amendment, Paris’s place in the art market would be under threat in light of other import tax rates in other European countries.” The rate in the UK, for example, is 5%.
A tax rise, due to come into effect in January 2014, would have had “disastrous consequences for the French art market in its entirety”, according to a report published this summer 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.
Prazan tells The Art Newspaper that the tax cut is “essential” for the French art market, especially on the eve of Fiac, the country’s premier modern and contemporary art fair that opens its VIP preview at the Grand Palais in Paris on Wednesday (24-27 October).
However, capital gains tax on art, known as taxe forfaitaire, which is applied to the total resale price, has risen from 5% to 6.5% to offset the VAT import reduction.