Indirect taxation is another area of importance for the live performance sector. With optional reduced or exempted VAT rates, culture is, as such a policy choice by public authorities to favour it.
The stricter tax treatment of performing artists is often leading to situations of double taxation when there is a tax credit option in the residence state. The OECD decided to keep this special taxing rule in 2014 when it revised the model tax treaty which is the basis for most of the industrialised countries in the world.
Artists subject to artist taxation include musicians, singers, conductors, actors, dancers, circus artists, and any other performer on stage. In other words, those working off-stage, such as the technical crew and those in the administration are (in principle) not affected. Together with the individual artists, the enterprises (including the touring companies as well as the local organisers) are affected by artist taxation as they employ or hire them.
Cross-border performing artists who are on the payroll (and are comparable in terms of labour contract with other employees) or who earn below a certain threshold (17.000€) should not fall under the artiste taxation rules that the OECD has set out.
Concerning VAT, depending on the EU country, reduced VAT rates or exemptions are in place for ticketing and cultural services. Live performance organisations sometimes struggle with VAT in the context of cross-border cultural cooperation. For that reason, Pearle* & EFA, issued a publication and an infographic explaining the rules of VAT and steps to take. Find also the Cookbook and infographic on artist taxation.
With the Covid crisis, as performances could only be shown online and streamed, it was observed that the VAT on tickets for streamed performances was to be charged at full VAT rate. Pearle* managed to convince the Council to extend the option for low VAT rates also on tickets for streamed performances as this ensures equal treatment on ticketing for audiences, whether they attend a performance in person or online.