Brexit...Art

From 1 January 2021, the effective rate of UK import value added tax (‘VAT’) on imports of art from Italy will usually be 5%. There is generally no customs duty charged on imports of mainstream categories of art to the UK (eg original oil paintings or original pencil drawings) under the UK’s new customs law.

A special one-year time limit to the UK returned good relief scheme applies to works of art which are currently in Italy but that were located in the UK at some point before 31 December 2020 when the Great Britain was still part of the EU Single Market. As a result, such works of art may be returned to the UK free of tax under the returned goods relief rules until 31 December 2021, provided that the general eligibility criteria are met. These specific rules apply only to Great Britain, as opposed to the UK as a whole, although art which enters Northern Ireland from Italy should still be treated as attracting Single Market treatment after 31 December 2020 and so specific import relief is unnecessary in that context.

Works of art which are exported to Italy from the UK from 1 January 2021 are likely to be subject to 10% Italian VAT import tax, unless a relief applies such as under the temporary admission regime. Art is usually exempt from Italian customs duty.

The UK’s normal returned goods relief regime would then potentially apply to works of art which are subsequently returned to the UK within 3 years so that there should be no further UK tax charge.

The UK Government has announced eight chosen regional Freeport sites for England which is part of its overall post-Brexit economic strategy. Commercial operations at these sites will potentially begin in late 2021. The UK Government has emphasised that the new freeports in the UK will benefit from simplified tax procedures and duty suspensions on goods. Such facilities will be designated as ‘tax sites’ with special tax privileges where goods including valuable works of art, cars or jewellery, can be imported and stored without incurring customs duties or sales tax.