Tax incentives as a measure to support the arts in a globalizing world ACEI 2014 Tax incentives as a measure to support the arts in a globalizing world Renate Buijze buijze@law.eur.nl 27 June 2014

Art in a globalizing world Common good: “the goods that are shared by a group of people in consumption and possession” (Klamer, 2004) Art, being a common good, can be shared by communities spread across boundaries With the common good a high degree of loyalty, altruistic- and cooperative behavior are involved, thus members of the community are potential donators Culture no longer shared within one nation, but among communities across countries

New opportunities to finance art Communities that share a good expand across countries Therefore the opportunity arises to attract foreign donators Q: Larger group of potential donors or same size but spread across countries?

However….tax barriers Tax incentives are often only granted to resident arts organizations, making it more costly for donors to contribute to a foreign arts organization Arts organizations thus face unequal competition when fundraising abroad This creates a tax barrier to raise funds abroad Solution: applying tax incentives in cross-border situations

Government support for the arts In most Western countries the arts receive government support in the domestic situation Q: Do the arguments underlying government support for the arts also hold in cross-border situations? Q: Can arts organizations finance their international activities by relying on the domestic support system?

Existing solutions State solutions: Unilateral solution: removal of geographical restrictions Bilateral solution: bilateral tax treaties Multilateral solutions: Treaty on the Functioning of the EU as enforced by European Court of Justice Proposal for a Statute for a European Foundation Private solution: Networks of charities to channel donations with tax benefit from one country to the other

Conclusion Arts organizations and their audiences function across borders, resulting in art that is shared in communities across borders Government support, however, mainly focuses on arts in the domestic situation This hinders arts organizations when wanting to raise funds among their foreign audiences Several solutions exist, but which one is best from a legal and/or practical viewpoint? Evaluation of solutions necessary

Questions & comments? E-mail: Buijze@law.eur.nl SSRN: papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2249634 Are there any more questions? Thank you for the attention.

Discussion points Larger group of potential donors or same size but spread across countries? Do the arguments underlying tax incentives for the arts also hold in cross-border situations? Can arts organizations finance their international activities by relying on the domestic support system?