This article presents:
- An overview of VAT rates in 17 countries part of the Live DMA network;
- A slides presentation of national campaigns on VAT in France and Spain;
- The Ultimate Cookbook for Cultural Managers: VAT in an International Context (updated in 2021), a resource guide created by the European Festivals Association and PEARLE* giving clear comprehension of VAT rules for the performing sector in an international context, as for a live music European tour for instance.
WHAT IS THE VAT
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services.
- A general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. However, if the annual turnover of this person is less than a certain limit (which differs according to the Member States) the person does not have to charge VAT on their sales.
- A consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses.charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain.
- Collected fractionally, via a system of partial payments whereby taxable persons (i.e., VAT-registered businesses) deduct from the VAT they have collected the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved.
- Paid to the revenue authorities by the seller of the goods, who is the “taxable person”, but it is actually paid by the buyer to the seller as part of the price. It is thus an indirect tax.
Source: European Commission
The live music sector is international. It can thus be difficult to grasp all the VAT requirements of each country and to understand what is submitted (and what is not) and in which national fiscal system, like in the context of a European tour for instance.
European Festivals Association (EFA) and PEARLE have released a clear and simple guide to VAT in the live music sector in an international context, giving resource and knowledge on VAT systems to live music professionals.
UPDATE MAY 2021 – VAT & COVID
- With the rise of broadcasted live music events during lockdown, PEARLE* have issued a statement for an equal treatment of physical and online performances for low VAT rates: “As regards online performances, given the type of the organisations and companies, which are SMEs, often with a non-profit legal status, given the similarity between an online and physical performance, the role of culture and access to all people in society, the minimal risk of distortion of the market, the potential administrative burdens, the high labour-intensity of the sector, the strong need for support towards the recovery of the sector, there are cleararguments for anequal treatment of physical and online performances in the frame of Council Directive 2006/112/EC as regards rates of VAT”. Read PEARLE*’s statement here.
- The national recovery plans for culture in the context of the COVID-19 crisis have had in some countries an impact on some VAT rates. Decreasing VAT rates, even only for a certain period of time, can help financially the sector and encourage audiences to come back to see live music events. For instance, in the UK in the March 2021 national budget, the reduced 5% cultural VAT rate on tickets (reduced from 20% for rock/pop/commercial music in July 2020) was extended until 31st September 2021, then it will rise to 12.5% for six months until April 2022. Similar measures were adopted in Norway where the submission deadlines for paying the VAT were delayed in 2020 and 2021, allowing live music organisers to better manage their liquidity in this time of crisis.
Download the Overview of VAT per country
CAMPAIGNS ON VAT REGULATIONS FOR THE LIVE MUSIC SECTOR
When governments work on VAT schemes, live music venues or representative associations are not necessarily part of the negociations. This can result in unfitted laws for a sector that is economic as well as social and cultural. Through public campaigns, open letters to policy makers, dialogue with territorial and fiscal institutions or protests, there are various way of starting a discussion on VAT policy.
Have a look at the slider to know more about the French and Spanish campaigns.