From performances at the Edinburgh Festival to the lending of items between museums, the UK’s withdrawal from the EU and changing landscape for the movement of art in all its forms will have some impact on the creative industries.
For some, Brexit causes concerns over ‘cultural isolation’ (such as the proposed exclusion of British cities from the European Capital of Culture 2023 initiative, or reports of visa issues at Edinburgh this year for the Book Festival). For others, Brexit provides an opportunity for a new wider internationalism.
In this update we take a closer look at some legal issues that Brexit raises for the creative industries. It has been said (by K. D. Lang) said that “art knows no boundaries”, but will it have to after Brexit?
The creative industries thrive on intercultural exchange. International cultural activity covers a broad spectrum of cross-border actions that are potentially affected post-Brexit. The freedom of movement provided by the European single market is of significant importance for the creative industries. The concern is that the expected reduction in freedom of movement that comes with Brexit could have widely felt adverse effects for the UK’s creative industries. Any new restrictions would affect employing EU workers, bringing artists and organisations to the UK, advancing cross-border projects with EU partners and touring or working within the EU.
Brexit creates a twofold issue for ‘artistic humans’: what will the future look like for UK citizens wanting to work in an EU Member State and what will happen to the ‘creative flow’ from the EU into the UK? (For more detailed information about free movement of people after Brexit, visit Brodies’ Brexit Hub).
While the UK is still part of the EU, UK ‘artistic humans’ can enjoy the freedom to work in and travel to any other EU Member State without restriction. Subject to any agreement to the contrary, free movement into EU territory will end on 29 March 2019 and UK citizens’ rights to work and live in an EU Member State would depend on the respective national laws and would not extend to the whole of the EU. For the UK’s creative industries, this means that international activity, be it touring or organising exhibitions within the EU etc. could potentially become more difficult.
It is not just UK citizens who could face significant changes to their free movement. EU citizens are currently able to work and live in the UK without any restrictions. So, in the UK: 58% of dance organisations, 36% of organisations within the music industry, 34% of museums/libraries, and 32% of theatres in the UK employ EU citizens, as well as half of the bigger organisations in the creative industries (above £250,000 income) and half of London-based organisations. There are also understood to be significant numbers of EU citizen art professionals working in the art trade. Post-Brexit, with the right to free movement lost on both sides (on 29 March 2019 or a later agreed date), the flow of EU ‘artistic human’ potential into the UK’s creative industries will no longer be facilitated through the EU but subject to the much more formalised UK immigration laws.
Equally important to the creative industries as the free movement of people is the free movement of goods. Cultural objects are regularly moved between countries. This can be museums lending and borrowing from museums abroad, exhibitions travelling from country to country, dealers or private collectors selling and buying artwork abroad, or simply the transportation of private property to another country. As well as there being a wide range of reasons for cross-border movement there is also the diverse range of objects labelled ‘cultural’ on the move. The items that have attracted recent particular attention include a tapestry, a wedding coronet, a ring, a panel and even a car. But it could be anything that is impacted by any future restrictions on the movement of goods: whole productions or scenery, props and costumes, museum artefacts, antiques, artwork, or the content of a library - the list is endless.
For the movement of items the question is twofold: what will the future look like for cross-border movement between the UK and the EU, and between the UK and third countries?
Each time a cultural object crosses a border, the parties involved need to be aware of the regulations, charges and other restrictions that may apply. Within the EU, cultural objects can be ‘despatched and received’ with minimal customs control and generally without special customs documentation; however, certain types of cultural objects (generally based on age and monetary limits) require an export licence even for transport to another EU Member State. Subject to rules on the movement of these certain items, the European single market und customs union provides a closed system where goods can circulate freely between the Member States. Indeed, the UK operates different systems of licence including ‘Open Licences’ which operate with a view to assisting exporters in the movement of items. Some ‘Open Licences’ are designed to facilitate intra-EU movement such as for museums and galleries or fairs.
Movement within the EU is not only facilitated but also made more attractive economically: ‘despatches’ within the EU between VAT-registered businesses are not subject to VAT. Goods from outside the EU for which import duties have been paid are equally released from VAT when they subsequently circulate within the EU. Subject to agreement this fiscal fluidity will end as far as the UK is concerned. Art dealers might also be faced with added bureaucracy and red tape on movement around Europe. Of course, the UK has, and perhaps will continue to have, the most attractive rate for items coming into Europe from outside the EU.
Import and export of cultural objects from and to third countries are subject to different rules. Unlike in intra-EU trade and transportation, EU exporters are usually required to have the appropriate licences and make export declarations to customs if the objects are destined for a non-EU country. The UK has its own laws on the import and export of cultural objects into and from UK territory (relevant UK legislation includes the Export Control Act 2002, the Export of Objects of Cultural Interest (Control) Order 2003 and the Dealing in Cultural Objects (Offences) Act 2003). For example, there is an export ban of cultural objects to Syria and North Korea; however, export to third countries is mainly regulated by EU law. EU laws heavily affect how the UK deals with export and import of cultural objects to and from third countries. The EU rules in many ways protect items from leaving the EU that should not leave without further scrutiny. The EU rules also work to prevent a Member State granting a licence for objects which have been unlawfully removed from another EU Member State.
When the UK is leaving the EU, any cultural object leaving or entering the UK into or from the EU will be subject to stricter rules as the UK ceases to be part of the single market. This development is likely to increase transaction costs on both sides. The concern is that the industry would face increased tax expenses and would generally become less attractive globally (the UK is sometimes referred to as the ‘Clearing House’ of EU art trades). On the up side however, the UK would be free to make its own legislation on import and export of cultural goods and build on the shift over the last 50 or so years in art trade from Paris to the UK and US. Mobility and flexible regulation (e.g. is the Resale Rights Directive a protection for artists or hindrance to the market?) could be positive aspects that the post-Brexit UK art sale market seeks to harness.
The cross-border movement of cultural objects is vital for the industry, but, at the same time it harbours risks. The illegal trafficking of cultural goods is known to be linked to terrorism financing, tax avoidance and money laundering and is damaging a country’s cultural heritage.
Within the EU there are common rules subjecting the export of EU cultural goods into third countries to prior authorisation as well as common rules on the return of cultural objects that were unlawfully removed from the territory of another Member State. There is, however, no common European legislation covering the import of cultural goods from third countries entering the EU, with the exception of EU import bans for objects from Syria and Iraq. National legislations within the EU diverge as well.
To enhance protection against illegal trafficking of cultural goods, the EU has put forward a proposal for a new regulation on the import of cultural goods which is expected to entry into force on 1 January 2019, just before the UK is expected to withdraw from the EU. Consequently, the EU Regulation will apply in and to the UK and would be incorporated into UK law under the EU (Withdrawal) Act 2018. The UK does not depend on the EU providing legislation to fight illegal trafficking of goods for it has its own licencing system. Indeed, the planned UK Ivory Ban is supposed to go beyond the protection currently provided within the EU. Nevertheless, it remains important to keep an eye on developments and to make sure that exiting the EU does not lead to gaps in legislation or indeed protection gaps.
The UK’s creative industries are the fastest growing sector of UK economy. Last year, the UK’s Secretary of State for Digital, Culture, Media and Sport Karen Bradley said: ‘This [the industry’s growth] is a testament to the talent and drive of its workforce and we are working closely with them to make sure this fantastic success continues.’ Will art continue to be without boundaries literally, legally and philosophically post-Brexit? No doubt there will be change. No doubt there will be regulatory and legal challenges. Movement of people and items will be different and for some more difficult and less free and ‘free-ing’. The UK might also take an opportunity to look further afield for artistic opportunities. Art trade will no doubt continue to build itself in a global playing field. We just need to wait and see and be ready to be able to participate in the new era for the various facets that make up the creative, cultural and artistic industries and community.
Eccles Alan Eccles is a Partner in the Private Client Department of Brodies LLP, solicitors, his work covers charities, private client and parliamentary matters.
VALUATIONS NEWS | ISSUE 7