Austria's Art Market at a Crossroad: Calls for a Reduction in VAT
Interest groups representing the Austrian art trade are concerned that Austria may fall behind in the international art trade due to significant market shifts and substantial reductions in VAT in neighboring European countries.
Austrian art trade faces potential loss due to market shift and VAT reductions in neighboring countries, urging for competitive VAT reduction to prevent cultural drain. / Picture: © Wikimedia Commons; C.Stadler/Bwag, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0/deed.en)
The Austrian Gallery Association is urging politicians to quickly reduce VAT on art sales to a competitive level to prevent an exodus of trade and a cultural drain. Geopolitical crises, economic uncertainty, and the decline of London as a central European trading hub have set the global art market in motion. This dynamic is leading to a repositioning of many countries, which are creating targeted incentives to attract the art trade. Austria is lagging far behind with an unchanged high VAT rate of 13% on art sales.
European comparison: Austria lagging behind
While Austria is sticking to its rate, leading art markets in Europe have already adjusted their tax rates:
- France applies a reduced rate of 5.5%, especially for direct sales by artists and imports, thereby consolidating its position as an important art hub.
- Germany has reduced its VAT rate on works of art to 7%.
- Italy recently made a groundbreaking decision in June 2025 to reduce VAT on art sales from 22% to a drastic 5%. This is currently the lowest rate in the European Union and has immediate and serious implications for the closely intertwined Austrian-Italian art trade.
Other EU countries such as Belgium (6% for artist sales) and the Netherlands (9% reduced rate) also use lower tax rates to promote their art sectors. These adjustments are often possible under EU Directive 2022/542, which gives member states leeway to reduce VAT rates on works of art.
Existential threat to Austria as a location
The consequences of this tax disparity are already being felt by the Austrian art market. The board of the gallery association warns urgently: “Sales to Italian collectors will in future be invoiced directly to Italy, with 5% VAT, which will no longer be paid in Austria but via the EU-wide OSS procedure.” This means not only direct losses in sales for Austrian galleries and losses in income for the artists represented here, but also reduced revenue for the state and an irreversible cultural drain.
The current situation is leading to a “systematic exodus of buyers and sales – and thus to a loss of cultural and economic substance,” according to the association. In order to ensure the competitiveness of the Austrian art market and to preserve its cultural diversity and economic contribution in the long term, a swift political response is essential.
Headwinds: Fiscal concerns and distributive justice
Despite the urgent demands of the art sector, a reduction in VAT on art sales also faces potential counterarguments, particularly from a fiscal policy perspective. The main concern is the loss of revenue for the state budget. Any tax reduction potentially means less money for public services and infrastructure, which is critically questioned in times of already tight budgets. The question arises as to whether the expected gains from a revival of the market can compensate for these losses.
Another point concerns distributive justice. Critics argue that a tax cut in the art sector primarily benefits high-priced objects and wealthy buyers or established galleries, while the hoped-for benefits are only limited to the broad mass of artists or smaller players. A debate could arise as to whether other, more direct support measures for artists or the cultural education sector would not be more effective than a broad tax cut that could be perceived as “luxury promotion.”
Furthermore, it could be argued that the volatility of the art market makes such a fiscal measure risky. A tax cut alone does not guarantee a sustainable revival if global economic uncertainties or other factors continue to weigh on the market. These concerns reflect the complexity of balancing the interests of the cultural sector with overall national financial interests.