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23% standard rate leaves Portugal priced out
For years, galleries and collectors have faced a steep 23% VAT on art transactions, one of the highest rates in Europe. By contrast, some neighbouring countries apply reduced rates, giving their markets a competitive edge. France, for instance, slashed its VAT on art to 5.5%, while Germany applies 7%. Spain remains higher at 21%, but still lower than Portugal’s current level.
A new European directive, introduced to harmonise VAT systems across the EU, has given freedoms for governments to lower VAT rates on items such as artworks, antiques, and collectibles. Portugal partially adopted this directive earlier this year, but so far the benefits have not been extended to art galleries. Currently, the reduced 6% VAT rate only applies when artists themselves sell their work directly.
The government has acknowledged the need to ensure that Portugal’s art sector remains globally competitive and attractive to buyers. However, any tax cut requires broader financial approval and cannot be introduced solely at the ministry’s discretion.
While the most recent State Budget proposal did not include the requested VAT reduction, cultural leaders remain optimistic that the government will eventually align taxation with broader European trends. Advocates point out that lowering VAT would not only support gallery owners but also improve earnings for artists, encouraging more sustainable careers in the sector.
Read more in our Portugal VAT guide.
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