§ Dawn Primarolo
I have received representations from the British Art Market Federation and from members of the art trade, and am aware of concerns about the effects of harmonisation of VAT on imports of works on the UK art market.
Goods imported into the UK normally bear VAT at the standard rate (17.5 per cent.). Under the terms of EC law introduced in 1995, certain works of art, antiques and collectors' pieces imported into the UK are eligible until 30 June 1999 for an effective rate of VAT at importation of 2.5 per cent. After that date, the UK is obliged to increase the VAT rate to at least the normal minimum effective reduced rate of 5 per cent. No import VAT is due in the UK on works of art that are temporarily imported for auction and are re-exported.
This year, the European Commission will review the effects of the relevant EC legislation on the competitiveness of the Community art markets compared to third countries' art markets. The relevant Government departments are working with the British Art Market Federation to evaluate those effects, and will be closely involved in the Commission's review to ensure that the position of the UK's fine art market is properly represented.