LONDON – “You could just get in a van, drive to Europe and cross all borders to buy decorative antiques. You would go straight back through French customs. It was perfect, ”said Andrew Hirst, a British dealer specializing in antique textiles, who in 2018 moved his family to Ireland after Britain’s vote to leave the European Union.
Hirst’s business is still based in London, and he said he fears that the combination of Brexit and the coronavirus pandemic will end its specialized trade.
Britain left the European Union in January 2020, but followed EU rules until a new trade agreement negotiated with the bloc entered into force on January 1. But British companies in a number of sectors, including art and antiques, are now finding that trade is not as free as they expected.
Value added tax, or VAT – a tax on goods and services that is usually paid by consumers – is now due when importing works of art from the European Union into Britain and vice versa. Resellers at all levels of the trade are also facing unforeseen administrative and transportation costs that are hurting their profitability.
“I will not go to Europe to buy antiques like this again,” said Hirst.
Britain was the world’s second largest art and antiques market in 2019, after the United States, with $ 12.7 billion in sales – 20% of the total global market, according to 2020 Art Basel and UBS Art Market Report. But due to “turmoil with the launch of Brexit,” the report added, Britain’s market fell 9 percent in 2019, while sales in France, Europe’s next largest market, grew 7 percent.
Since January 1, collectors based in the European Union, where member countries set their own tax rates, now face VAT rates ranging from 5.5% (France) to 25% (Denmark) on art or collectibles imported from Britain. (Britain charges 5 percent for items coming from the block.)
“Brexit has made the UK a distant country,” said Andre Gordts, a Belgian collector who is among an unknown number of international buyers who quietly changed their collections after the Brexit referendum to avoid paying VAT.
“It just makes things extremely difficult, increasing the trade in bureaucrats and punishing hardworking artists and honest traders in their galleries,” said Gordts. In 2016, he sold his apartment in London and moved permanently to Brussels. “The only way out for British galleries, I think, is to open a branch in the EU”
Ursula Casamonti, London director of Tornabuoni Art, a major Italian gallery specializing in modern and contemporary art, with branches in Britain, France and Switzerland, said the dealership would now have to pay thousands of euros in administrative expenses when moving works from art. to set up exhibitions.
“Administrative, tax, shipping and schedule costs for doing business in the UK have now increased,” she said. “Although we still love the city, we now have a more negative view of London as an international center for modern and contemporary art.”
Victor Khureya, chief operating officer at Gander & White, one of Britain’s largest art brokers, said there had been a “very significant” increase in transportation costs since Brexit.
“There is a lot of administration, a lot of documentation and a lot of initial problems,” said Khureya.
“This results in delays, which are expensive,” he added, noting that a recent shipment was delayed by 24 hours by a French customs official who misinterpreted the relevant forms.
Khureya said that a shipment that before Brexit cost about 250 pounds, or about $ 340, now cost almost 1,000 pounds.
If a work of art is worth many thousands of pounds, these shipping costs represent a relatively marginal increase. But Brexit has also resulted in punitive cost increases in shipping less expensive items.
In January, Thomas Heneage, a longtime London dealer specializing in art books, sold an item for £ 75, or about $ 100, to a client in France, he said in a recent interview. The courier added charges that add up to more than $ 60, including a “fuel subsidy”, “Brexit adjustment” and “fees and taxes” that were almost four times what they normally charged, he said.
The customer canceled the order, Heneage said.
Disturbance at the upper end of the auction market, however, appears to be minimal, said Sebastian Fahey, managing director of European operations at Sotheby’s.
“For the vast majority of Sotheby’s buyers and sellers, there is no change, post-Brexit,” said Fahey, adding that private individuals in the European Union represented only a “small minority” of buyers at his company’s London auctions. He said the new VAT charges for importing items from Britain into the bloc “will not be different from the situation they faced previously when shopping in places outside the EU, such as New York or Geneva”.
Some dealers and collectors in European Union countries with high taxes on the art trade, such as Germany, see Brexit as an opportunity.
“In terms of trade between Germany and the UK, it actually has some advantages,” said Johann König, a leading contemporary art dealer in Berlin who also has a gallery in London. König pointed out that art purchased in Germany could be imported into Britain relatively cheaply and that pieces purchased in Britain would be subject to a 7% import tax, while Germany charged 19% on domestic transactions.
“I believe that in the long run, once a period of adaptation, and Covid, has passed, London will maintain its importance in the European and global landscape as a major cultural center,” said König. “We are continuing our activities in the UK and we will probably even build it further.”
Hirst, the British textile dealer who now lives in Ireland, said he also saw opportunities in post-Brexit Britain – as long as he can stay in business.
Until December, when the government imposed a stricter blockade in England, he flew from Cork, Ireland, to London every week to negotiate every Friday and Saturday from an outdoor stall at the popular antiques market on Portobello Road.
Hirst said he expected thousands of small businesses to crash, creating jobs for those who survive.
“There will be a lot of failed actions,” said Hirst. “I may have to sell contemporary fabrics, instead of the beautiful old products I used to buy in Europe.
“It’s adapting or dying.”