Tax Incentives for Private Support of Cultural Heritage: Why and When
Posted: 10 Mar 2015
Date Written: March 10, 2015
Historically, the private initiative has always been of great significance for the arts. Emperors, kings and wealthy citizens were important patrons of the arts. In most European countries the government took over from the private initiative after World War II. However, the private initiative was never completely gone, also not in the second half of the 20th century in which government subsidies were the dominant factor in the funding of the arts and cultural heritage. The private initiative remained very important for cultural heritage such as monuments: it would be impossible for the government to take responsibility for all monuments. Another reason why the private initiative never fully disappeared, was that individuals and companies still collected art.
At the end of the 20th and the beginning of the 21th century, budget constraints of national and local governments obliged cultural and heritage institutions to look for alternative sources of funding. This brought companies and private individuals who might have operated in the shadow until then, in the spotlight again as important an important source of funds for the arts and cultural heritage. In the Netherlands at the end of the 1990s, the economist Rick van der Ploeg introduced the term 'cultural entrepreneurship' when he was State Secretary of Culture. Cultural entrepreneurship required more focus on the audience and private support and less focus on governmental support. Tax legislation was mentioned as a possible instrument to support cultural entrepreneurship. Several countries, such as Spain, France and the Netherlands introduced special legislation on cultural patronage, which included tax incentives, in 2002, 2003 and 2012 respectively.
In this paper I will analyse how tax legislation can be used to support private patronage of the arts and cultural heritage. I will discuss best practices in several European countries. However, first I will introduce the notion of a 'tax incentive' and how it functions in comparison to direct subsidies.
Keywords: tax incentives, art, philantropy, private patronage
JEL Classification: E61, E62, K34, L31, Z10
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