Thursday, 27 January 2011
"Yes, but is it art?" EU says no
Back in 2006, an oddly-named London modern art gallery called Haunch of Venison decided to display Flavin's 1973 work Six Alternating Cool White/Warm White Fluorescent Lights Vertical and Centred along with Bill Viola's 1995 work Hall of Whispers. Both of these works had to be imported from the United States. They were shipped with the customs classification of 'works of art,' which benefit from a special EU value-added (sales) tax of 3.7%.
But when the works arrived at the UK border, Her Majesty's Revenue and Customs decided that the assortment of fluorescent lights and projectors that made up the installations were not art but rather light fittings and audiovisual equipment. They were charged the normal tax rate of 17.5%. But bizarrely, while classifying the materials as 'not art' for the purpose of their tax rate, they decided to assess the value of the components based not on their worth as light fittings and video equipment but on their market value as works of art - a huge amount of money.
The gallery, saying it couldn't afford this astronomical fee, appealed the case to the UK's tax tribunal. The tribunal ruled for the gallery in 2008, saying the works should have been assessed at the art rate. HMRC chose not to appeal the decision. But for some reason the European Commission decided to get involved – perhaps in order to set an EU-wide precedent for an issue that had been coming up frequently in other member states. Last month the commission quietly issued its decision – these materials were not 'art' when they entered the UK because they were not yet assembled. Individual fluorescent lights and video equipment cannot be considered 'art' just because they will be assembled into something artistic later.
The European art world has reacted furiously, saying that many large installations are disassembled as they are transported and the commission's decision will have huge tax ramifications for any art gallery in Europe wishing to import large works. They've also been incensed by the hypocrisy of classifying the objects as 'art' when assessing their value but as 'not art' when choosing their tax rate.
But there seems to be an added element that has really gotten the art world stirred up, one that is evident in the art press – the idea that "Brussels bureaucrats" are so power-hungry that they've now decided they shall be the arbiters or artistic merit. The British tabloids haven't yet gotten ahold of the story, but I'm sure it's only a matter of time till they do. For now it's been mainly restricted to the art world press.
But some kind of authority needs to take a decision on what qualifies. As the guarantor of the EU's common VAT policy (no member state can have a standard VAT rate less than 15%, with exceptions for things like artwork) it's the commission's responsibility to ensure that EU tax policy is not being abused. I wonder, if the UK's tax tribunal had ruled this way instead of the European Commission, if there would have been the same claims of "illegitimacy" from the art world press as we're seeing now. Or, what if the IRS had made this decision in the United States? Would the art world have challenged the IRS's authority to make tax decisions about art in quite the same way, or would they have stuck to the merits of the decision?
Art galleries probably have a good case to make against the financial implications and hypocrisy of this decision. But challenging the commission's legitimacy in having the authority to make the decision may not be the best strategy. This is, after all, indisputably the commission's call to make.