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Über dieses Buch

This book combines insights from cultural economics, public finance, and tax law, providing an accessible and comprehensive introduction in the application of tax incentives for the creative industries. It does not have a single-country focus, but instead uses the perspective and examples of various countries around the world. The book starts with a theoretical part, introducing the concepts of creative industries and of tax incentives: how can the creative industries be defined, why do governments support the creative industries and how can tax incentives be applied as policy instrument. In the globalized and digitalized world in which the creative industries operate, restrictions imposed by guidelines on harmful tax competition and state aid and regulations influencing the (im)possibility of applying tax incentives in cross-border situations have a great impact. For that reason these legal concepts are discussed as well in the theoretical part. Globalization also gives rise to questions on the cross border application of tax incentives. The example of cross border giving is discussed in this respect. The theoretical part is followed by a part that focuses on tax incentives for specific sectors of the creative industries: museums and cultural heritage, the audiovisual industries (film, tv and videogames), the art market, copyright and artists. This part uses insightful examples from various countries to illustrate the application of these tax incentives. As the book takes both an academic and a practical approach, it is of relevance to researchers, students, policy makers and readers involved in the creative industry who seek an in-depth and up-to-date overview of this alternative way for governments to support the creative industries.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract
This chapter explains the background and structure of this book.
Sigrid Hemels

Theoretical Context of Tax Incentives for the Creative Industries

Frontmatter

Chapter 2. Defining Creative Industries

Abstract
This chapter explores various categorizations and definitions of creative industries and develops a definition for the purposes of this book: to discuss tax incentives governments have implemented for the creative industries and explore their rationale and effects. This definition characterizes creative industries by three features. First, creative industries contain cultural and economic aspects relating to cultural policy goals such as cultural diversity and access to culture, as well as economic policy goals. Second, creative industries are a combination of art, in the narrow sense, and commerce: the combination of a specific form of creativity, cultural content creation, and its delivery. Third, creative industries are defined to include both nonprofit and for-profit organizations.
Kazuko Goto

Chapter 3. Why Do Governments Financially Support the Creative Industries?

Abstract
This chapter discusses the reasons why governments financially support the creative industries, both from the point of view of cultural policy and economic theory. Cultural policy reasons for financial support of the creative industries include the furtherance of excellence, innovation, and access; recognition and celebration of national, regional, or local identity; promotion of continuity; and furtherance of diversity. Economic policy reasons include the contribution of the creative industries to the economy; perceived positive externalities; the desire to redress free rider behavior; the difficulties some creative industries face for increasing productivity when costs increase; and the desire to reduce the negative effects of the cost structure of many creative industries, where there is a combination of high sunk and fixed costs and low marginal costs.
Kazuko Goto

Chapter 4. Tax Incentives as a Creative Industries Policy Instrument

Abstract
The primary function of tax legislation is to raise a budget for government expenditure. Tax incentives can also be used to achieve creative industries policy goals. This book defines tax incentives as a provision in tax legislation that departs from the benchmark tax structure and favors creative industries, resulting in a reduction or postponement of tax income for the government. Tax incentives must be considered relative to alternative policy tools such as spending programs, regulations and information campaigns. Many tax experts are not in favor of tax incentives. Some of their arguments apply to direct subsidies as well, but others are more specific to tax incentives. Even though tax incentives are not without fault, the OECD has formulated conditions for successful tax incentives. Not only fiscal policy arguments but also creative industries policy objectives are of importance when deciding on the most appropriate instrument. From the latter perspective, tax incentives have several benefits. A prerequisite for the effective and efficient use of tax incentives is that they are accounted for, controlled and evaluated in the same way as direct subsidies. As this is currently not always the case, tax incentives are, in that respect, inferior to direct subsidies.
Sigrid Hemels

Chapter 5. Tax Incentives, Harmful Tax Competition and State Aid Considerations in the EU

Abstract
The creative sector is affected, like any other industry, by measures to avoid harmful tax competition when shifting taxable profits between countries. While those measures ought to be aimed at curtailing tax avoidance practices, they may also affect genuine business activities to some extent. Because research and development may play an important role in the creative process, special attention should be given to proposed OECD/G20 regulation concerning taxation of royalties. Within the European Union, state aid rules restrict the options of EU Member States with respect to providing aid to culture or to the creative industry at large. Certain incentives may require approval from the European Commission.
Raymond Luja

Chapter 6. Tax Incentives Crossing Borders

Considering the Example of Tax Incentives for Charitable Giving
Abstract
Many countries grant tax incentives for charitable gifts. These incentives, however, are not unambiguous in the case of cross-border gifts. Yet, potential donors to the creative industries have expanded across countries, providing fundraising opportunities outside the arts organization’s country of residence. Although this provides opportunities for the creative industries, governments often have not anticipated this. In many countries, tax incentives for gifts to arts organizations remain a domestic issue. This creates tax barriers to raising funds abroad for arts organizations, as they face unequal competition with domestic arts organizations. Governments and private initiatives can overcome the tax barriers for cross-border charitable gifts. This chapter provides an overview of the current solutions that have been initiated by states and solutions initiated by private organizations in accordance with legislation. Furthermore, the crucial factors that influence the effectiveness of these solutions are indicated. The solutions are applicable to cross-border situations in general, but are illustrated through examples derived from the Netherlands.
Renate Buijze

Cases: Focus on Specific Tax Incentives

Frontmatter

Chapter 7. Tax Incentives for Museums and Cultural Heritage

Abstract
Museums and cultural heritage are a specific sub-sector of creative industries. Usually, legal entities in this sector operate as an NPO or charity. Many countries apply tax incentives for charities, benefitting this sector. The best-known example of such incentives is probably tax incentives for donations. It is often stated that the USA’s incentive is most generous in this regard; however, as this chapter will show, this assumption does not seem to be correct. Other incentives are tax exemptions for charities and tax incentives for volunteers. Important incentives for museums and archives are the ability to pay taxes with art and heritage objects as well as the wealth tax exemption of objects given on loan. A specific sub-sector of the cultural industries, businesses specialized in restoring and maintaining heritage, benefits from tax incentives that several countries provide to private owners of heritage buildings and objects.
Sigrid Hemels

Chapter 8. Tax Incentives for the Audio Visual Industry

Abstract
In this chapter, various tax incentives for the audiovisual industry are discussed. Especially in the Americas and Europe, tax incentives for film and television production are the most prominent incentives. For that reason, these will be discussed extensively, using various examples and showing the incentives in relation to the specific features of this sector of the creative industry. Incentives aimed at producers, investors and consumers of these products are discussed separately. Notwithstanding the dominance of the incentives for film and television, tax incentives for developing video games, which are provided for by several countries, are discussed as well, as is a special French incentive for phonographic recordings and music videos.
Sigrid Hemels

Chapter 9. Tax Incentives for the Art Market

Abstract
Several countries apply tax incentives to promote the sale of certain works of art, such as works of contemporary artists and works of national importance. Examples include deductions for taxpayers who buy contemporary art, sometimes on the condition that the art be made accessible to the public. Although these incentives are not specifically designed to incentivize art dealers, the incentives can have that effect by reducing net or gross prices. If the price of art is reduced as a result of tax incentives, art dealers have a competitive advantage. Other examples include deductions that reduce the net price of works of significant cultural heritage. Tax incentives can also directly influence the gross price. Examples of such incentives include reduced VAT rates and customs duties, which are used in the European Union. However, the definition of “art” is problematic in this respect. Even bigger incentives are provided in so-called free ports, which have no customs duties or transfer taxes on works of art. However, these free ports may also provide opportunities for money laundering, tax evasion, and the fencing of stolen goods.
Sigrid Hemels

Chapter 10. Tax Incentives for Copyright

Abstract
Copyright belongs to the creative industries as the legal result of the creative process. It can be sold or licensed and often creates income. By its nature, copyright is highly mobile and can easily cross borders, because it can be split off from normal business activities and held as a separate asset. States are interested in stimulating or attracting copyright, as they believe this has a positive effect on their economic activities or because they want to support their artists. States may implement a broad range of tax incentives, which may focus on low-earning creatives, major companies with high copyright income, or anything in between. Copyright income can easily be taxed twice in cross-border situations, a situation that states try to prevent through the use of tax treaties. This leads to opportunities for international structuring. Limits on this structuring are currently being set internationally with the Anti Base Erosion and Profit Shifting (BEPS) program. However, this should not necessarily affect well-intended copyright tax incentive schemes.
Dick Molenaar

Chapter 11. Tax Incentives for Artists

Abstract
Artists are key players in the creative industries who create and perform the work. Many of them are in an economically vulnerable situation and some countries prefer to have more artists than the market would otherwise allow. This desire leads those countries to enact financial support measures, such as tax incentives. In addition, goals such as preserving national culture and stimulating the economic impact of artists may also be reasons for these tax incentives. This chapter examines several examples of tax incentives, including the value-added tax exemption and reduced rate in the EU, the Theatre Tax Relief and Orchestra Tax Relief in the UK, the Theater Tax Benefit in the USA, the option for artists to pay taxes with artwork in Mexico, and the income tax exemption for authors, composers, painters and sculptors in Ireland. In the conclusion, these tax incentives are compared with the criteria for fairness, effectiveness, complexity and visibility outlined in Chap. 4 and for state aid in Chap. 5.
Dick Molenaar

Conclusion

Frontmatter

Chapter 12. Conclusion

Abstract
In this chapter, the theoretical framework presented in Part I of this book is discussed in relation to the cases presented in Part II to arrive at some general conclusions regarding tax incentives for the creative industries.
Sigrid Hemels

Backmatter

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