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What is Art?

TAX LAW ON THE LOOKOUT FOR ANSWERS.

THE AUSTRIAN SALES TAX LAX FAVOURS THE SALES OF ARTISTS AS WELL AS THE SALES OF OBJECTS OF ART. CONVERSELY, THE CONCEPTS OF ‘ART’ AND ‘ARTISTS’ ARE INSUFFICIENTLY REGULATED.

The sales tax is a transaction tax and encompasses all performances and related services which an entrepreneur carries out nationally for a fee; the regular tax rate is 20% and causes, basically, a rise of the sale price for clients. To develop ‘art’ and ‘culture’, the tax rate for the sales of an artist as well as the sales from the trade with art objects is reduced to 13%. The gross purchase price paid by the purchaser is reduced with the aim of boosting demand at the expense of tax revenues.

For the concepts of ‘art‘ and ‘artist’, tax law only partially identifies the correct definitions.

Based on the pertinent ruling by the Supreme Courts, an entrepreneur, seen from a fiscal point of view, is to be considered an artist when he develops a personal and creative activity in an extensive area of art due to his artistic talent and doesn’t limit himself to replicating what can be learnt or he himself has learnt. This implies activities where his individual view and force of creation reflect each other and reach an artistic creative apex; this isn’t the case if the entrepreneur plucks shapes and patterns from a common repertoire of ideas, uses wellknown role models or if he’s so limited by the wishes of the client who commissioned him that he can no longer develop his skills. Based on these general principles from the legislature, the only thing left to decide is if we’re dealing with an artist or if an object was created by an artist.

These rather general definitions of the concepts of ‘art’ and ‘artist’ are underpinned by numerous Supreme Court rulings. To shed light on the current uncertainty of both activities, the following excerpts have been selected:

The suitability of use of an object doesn’t exclude that the activity carried out to create said object isn’t an artistic one; the practical value cannot therefore be automatically assigned to an object as a work of art.

Only the created work can provide information on whether it’s a work of art or not; when assessing the artistic value of the object, elements such as the city and venue of the artist’s training, copyright of the work, membership in a trade association of artists in training or an official document from the relevant Federal Office responsible for culture and art for the means of legal social insurance and other information should be considered; however, what’s decisive is for the Fiscal Authorities to deeply tackle the targeted works.

Asuccessfully completed artistic training is only an indication of artistic activity; even in this case the relevant authority has to assess the object created by the entrepreneur minutely. The authority has to base its exam on a representative cross-section of the work of an artist.

The fact the work of art is an original and unique piece isn’t enough to make an object into a work of art.

Ultimately, the Fiscal Authority won’t have the necessary expertise in many instances to assess the cases presented by the legislature. Consequently, the qualification of the entrepreneur as an artist or the categorisation of a work as a work of art and the resulting recovery of fiscal advantages lies in the assessment of experts. If this fact can be united with the principle of freedom of art and science is a matter which is being questioned yet again.

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Written by

Steuerberater, Certified Public Accountant, Universitätslektor, Prüfungskommissär der Kammer der Wirtschaftstreuhänder.

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