Artists Tax Exemption

• We have undertaken research and constructed strategic arguments as to why the exemption should stay in full.
  
• We have made written submissions to the Department of Finance in line with the formal review procedure. Our Submission. Click here to view all submissions made as part of the review.
  
• We have addressed the Joint Dail Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs. See:  http://debates.oireachtas.ie/DDebate.aspx
  
• We have met with representatives of the Social Partners including Jimmy Deenihan TD - Fine Gael; Fiona O’Malley TD – Progressive Democrats; Jack Wall TD – Labour; Paul Gogarty TD – Green Party; The Chambers of Commerce of Ireland and others.
  
• We have produced an information leaflet for artists to inform them of the facts figures and issues surrounding the exemption in order to encourage them to speak up with more confidence about why the exemption should be retained. See brochure
  
• We have encouraged a select number of critically acclaimed and high earning/selling artists to make personal appeals to the Minister for Arts Sport and Tourism.
  
• We have worked closely and productively with the Arts Council to share information and ideas and to co-ordinate our campaigns.
  
• We have liaised with the press to try and encourage a more informed and considered approach to coverage of the issue.
  
  Through our membership of international artists representative organisations we have facilitated letters to be sent on behalf of those organisations to key representatives in the Irish Government.
  
  We have initiated an email campaign to encourage artists to register their concerns with their TDs. You can download a draft letter see. See also a list of TD's here.

We believe our efforts have had some success. The Minister has recently made very strong public statements in favour of retaining the scheme in full and press coverage of late has been much more positive and much more balanced and informed.

A statement is expected in the budget in early December which will decide the future of the scheme.

Visual Artists Ireland welcomes the retention of the Artists Tax Exemption scheme. It also welcomes the fact that no cap was placed on the scheme. The widely reported cap of 250,000 on the Artists Tax Exemption Scheme is in fact untrue.

The figure of €250,000 is in fact being used to define a ‘high earner’. High earners whether they be artists or anyone else will have to pay some tax, this is not the same as a cap being placed on the artists exemption scheme. High earning artists can in theory continue to claim an unlimited amount of tax relief on their creative earnings.

Throughout its campaign to retain the artists tax exemption Visual Artists Ireland and its partners argued not that high earning artists should not pay any tax but that high earners already do pay tax, typically on two thirds of their total income and that the exemption on creative earnings should thus remain in place.

In his budget statement Brian Cowan announced that – “It is necessary not only to eliminate some incentive relief’s but also to regulate the use that can be made of those that remain. We cannot stand over a situation in which some high-earning tax residents, through the use of incentive relief’s, can reduce their taxable income to nil. This is simply not a fair situation.”

The new measures, which will come in to play from January 2007 place an annual overall cap on the extent to which various specified tax relief’s can be availed of. This cap will operate by reducing by half the amount of income that can be relieved from tax through any of the various tax relief schemes. The measure will apply to those with income over €250,000 per year.

The scheme therefore does not represent a cap of €250,000 on the artists exemption scheme but rather a cap on the percentage of total income that can be exempted from tax which applies to those who earn over €250,000. High earning artists whose total income is comprised of up to 50% of creative earnings and 50% of non creative earnings (from performing or merchandising for example) will not be effected by the new proposals no matter how much they earn. This is a significant difference to the implementation of a straight cap that was initially reported.

Research carried out earlier this year by PWC on behalf of the Arts Council revealed that most high earning artists only availed of the artists tax relief on 35% of their total income. The new measures will therefore mean no change for the majority of high earning artists as they already pay tax on a significant portion of their income.

Visual Artists Ireland sees this as very important as the scheme will therefore continue to operate as an incentive to successful Irish artists to stay in Ireland. We believe it is important for successful high earning artists to remain resident in Ireland because they are direct exemplars and role models for other Irish artists; their international success raises the reputation of Irish art in general and opens doors for less established artists; they pay considerable amounts of tax in Ireland, typically on two thirds of their total income; they generate substantial business in Ireland – production companies, recording studios, management offices etc; they generate considerable employment in Ireland and they contribute hugely to the international reputation of Ireland as a society which values and respects creativity.

Overall we see the campaign that we ran in conjunction with the Irish Playwrights and Screenwriters Guild and the Association of Irish Composers as being a great success. It was our fear that in a pre election budget the Government may have been tempted to score easy points with the tabloid press by announcing a scrapping or capping of the artists exemption while ignoring the real issue of implementing a fair and equitable tax system. This has not been the case. The Artists Tax Exemption scheme is still operating and there is no cap attached to it. The new measures that have been introduced apply across the board and not just to artists. They are aimed at introducing what must be seen as a fair system in which no one who is a high earner gets away with paying no tax at all.

Visual Artists Ireland would like to express its thanks to all those that supported its campaign by writing letters or emails to TDs and Ministers. We would also like to thank Minister John O’Donoghue for his strong and outspoken support for retaining the scheme during the review process. The strong role played by the Arts Council in advocating the retention of an uncapped scheme was also crucial.

Further details of precisely how the new measures will work will be revealed in the Finance Bill in early 2006. You can download the Financial Statement and the Summary of Measures to see more details of what Brian Cowan actually announced in his budget 2006 statement. See also the Departments' Revenue Examples document which illustrates how the relief will be calculated.