Spanish promoters welcome cultural VAT cut

The Spanish government has made good on its pledge to cut value-added tax (VAT) on live entertainment to 10%, in a move welcomed by a relieved Association of Music Promoters (APM).

VAT on “cultural shows” (espectáculos culturales) has stood at 21% since September 2012, when prime minister Mariano Rajoy increased the tax, which previously stood at 8%, in an effort to plug a hole in Spain’s public finances. The tax hike was catastrophic for the Spanish live industry: revenue from ticket sales fell 27.5% between 1 September 2012 and summer 2013 alone, and the value of the market only recovered to its pre-2011 levels last February.

The new rate of VAT – 10% – was signed into law in Spain’s state gazette (Boletín Oficial del Estado) yesterday.

“The confirmation of the lowering of cultural VAT demonstrates the importance of associations such as APM, because it means that when we unite and work together, we achieve our objectives,” comments APM president Albert Salmerón, adding that the tax cut comes after a “long period of lobbying by the music industry”.

“When we unite and work together, we achieve our objectives”

Despite welcoming the VAT cut, Salmerón (pictured) points out that 10% is still higher than in several other live music markets – and says APM will continue to lobby to secure “super-reduced VAT”, as is charged on books and newspapers, for the live business. (Most books and papers are taxed at 4%.)

According to a statement from APM, the new rate of VAT “continues to exceed the tariff of countries like Norway (0%) and Switzerland (2.5%), as well as several EU member states, such as Germany (7%), France (5.5%) and the Netherlands (6%). For this reason, the next objective is to obtain super-reduced VAT, at least [as low as that] applied to newspapers and books.”

Salmerón also warns that high VAT is just one of many challenges faced by the music industry, with “the legal recognition of music, the professionalisation of the sector, the promotion of a Ley de Mecenazgo (‘patronage law’, which would give tax breaks to private companies investing in arts and culture) and the regulation of secondary ticketing all needing to be tackled the ensure the health of the sector.

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