Planning for Brexit: the art world’s challenge

Given its international nature, the art world will be affected by the UK’s departure from the European Union. Artists, their agents, art dealers and galleries exporting art need to start planning for Brexit now.

Understanding what Brexit means is a bit like interpreting a Jackson Pollock. Its real meaning and impact depends on the eye of the beholder. Nothing will change immediately, of course. When Theresa May finally triggers Article 50, a two-year countdown begins – and it almost certainly will take those two years for the UK to separate itself from EU institutions. During that period, UK artists and galleries can continue acting as they do now. When important and exporting artworks to EU member states they will still benefit from the system of ‘acquisitions’ and ‘dispatches’ as opposed to imports and exports. They can still benefit from EU exemptions of VAT rather than having to pay duty VAT at importation or export.

In other words, if Article 50 is triggered in March 2017 – the Prime Minister’s own latest deadline – paintings and sculptures can be shipped to exhibitions and trade fairs in Paris, Berlin, Venice and any other EU city with no change in VAT or duty costs, almost certainly until March 2019.

2019 onwards?

What happens then depends on whether any agreements on trade – specifically sales of artworks between the UK and EU member states – have been reached, and the UK’s place in the ‘single market’. Realistically, finalising such details is likely to take much longer than two years. As a result, some default model, such as that of the World Trade Organization, is likely to come into force from the date the UK formally leaves the EU. This could well result in the need to charge VAT and incur export duty on sales of artworks from the UK to the EU (and vice versa). And that means increased costs. It remains to be seen whether a gallery incurring such increased expense will seek to pass it on to consumers.

For established artists with an international name whose works already command high prices, this is not the best news but should not necessarily cause a collapse in international sales. Up-and-coming artists trying to break through may have more to fear, however. Additional VAT and duty costs could create new barriers sufficiently high to frustrate their ambitions.  Would they receive less as dealers absorb costs and charge higher commission or would new artists be restricted more to the UK market?

What can you do?

So what can artists, agents, dealers and galleries do to protect their interests? The first step is simply to try to keep up with Brexit developments and stay alert for any early indications of what the implications could be for sales of art from the UK to EU member states after the UK leaves. It remains to be seen whether any cultural exemptions will be written in to any treaty arrangements.

Secondly, mid-term planning should be undertaken with care. Decisions are already being made about exhibitions and trade fairs in 2018 and 2019. Given that the UK is likely to be operating outside the EU from March 2019 at the latest, can the same levels of commitment to send art out to EU events be sustained? Are the potential additional costs bearable? How might prices be affected?

Galleries might consider altering their strategies. Some, for example, may consider showing artworks already located in continental EU states, continuing to move them freely across intra-EU borders. Others might look to bring in works by US artists, for whom the import costs may be more predictable.  We may even see galleries ‘stocking up’ on art from the UK before the rules change.

The challenge at the moment is the huge uncertainty about what Brexit will bring. There are a lot of ‘known unknowns’. Making plans is therefore a difficult challenge. Nevertheless, it is not too early to start considering the potential implications for international art sales and assessing your options.

Please contact a member of the Culture, Entertainment & Media team to find out how we can help.

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