Examples of France and Spain
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.
Source: The Ultimate Cookbook for Cultural Managers: VAT in an International Context, EFA/Pearle, 2016.
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.
4 RATES APPLY FOR THE PERFORMING ARTS SECTOR:
Organisations of general interest may be exempted from VAT.
Sometimes, it is economically more interesting for a venue of general interest to be subject to VAT (and to deduce VAT from what they buy). This depends on the activity of the venue. A venue's restaurant or bar might be more interested in being subject to VAT, while it might be less interesting for the mediation department. In France, it is possible to "sectorise" your activity: be subjected to VAT for part of your activity, and be exempted from VAT for other parts of your activity.
In order to establish if an association needs to be submitted to VAT, the organisation needs to be of "disinterested managment" (ie the executive board is volunteer or unpaid) and the organisation compete with the commercial market.
Then, fiscal institutions apply the "rule of the 4 P": Product, Price, Publicity and Public. These 4 criteria make the difference between a commercial organisation and one of general interest.
The service given by the organisation is considered of social utility if it takes into account something not provided by the commercial market.
The organisation must put efforts in ensuring financial accessibility to its services, notably by offering a lower price of entrance than of lucrative sectors.
The communication around the organisation's activity must not consist in commercial publicity.
The organisation should also focus on "unprivileged audiences" in its activities, who do not usually or easily have access to such services.
In 1998, several music federations, including FEDELIMA, joined forces to make the government take into consideration the specificity of the cultural sector.
In collaboration with the French Ministry of Economy and Finance, the organisations developped technical sheets on the not-for-profit criteria of live music venues.
These technical sheets helped venues to see clearer in this system,
and sensitized fiscal institutions in recognising specificity of cultural organisations, which are not in the commercial market.
The organisations who worked on the VAT technical sheets then created the UFISC, a French representative organisation for the cultural sector.
UFISC has expanded this collaborative thinking to encompass employment, then management methods particular to this sector, to finally arrive at the claim for a specific socio-economic space, around shared values such as solidarity and general interest.
UFISC's slogan: "Art is public"
Stéphanie Gembarski - FEDELIMA
In September 2012, the Spanish government increased the VAT on concert tickets to 21% (it was at 10% before).
In reaction, the music sector started a campaign to protest against this increase. The campaign lasted several years where ACCES was in dialogue with public authorities.
The 20th of May 2015 was the "Día sin música" (Day Without Music) in Spain: a day where venues closed down and artists did not perform to raise awareness on the VAT increase.
In June 2017, the music sector suceeded in making their voice heard as government decreased VAT on concert tickets back to 10%.
ACCES protesting for Día Sin Música
The venue Hell Dorado "closed because of VAT"
Spanish artists campaigning for Día Sin Música
Armando Ruah - ACCES