Nella maggior parte degli Stati membri, la cultura è generalmente una questione di politica statale. La questione può essere spiegata analizzando la natura delle attività culturali, estranea alla legge del mercato. Un altro motivo è che la politica culturale è concepita come al servizio dell’“interesse pubblico”. Il diritto dell’UE tiene conto di queste particolarità, consentendo l’intervento finanziario degli Stati membri me­diante sussidi o incentivi fiscali. Pertanto, la disciplina europea riconosce la promozione della cultura come un obiettivo legittimo. Tuttavia, la libertà di intervento lasciata agli Stati membri è bilanciata dai vincoli che impediscono l’alterazione del funzionamento del mercato unico.

SOMMARIO:

1. Introduction - 2. Member States’ freedom in promoting cultural activities by means of taxation - 2.1. The specific status of cultural activities - 2.2. A wide margin of appreciation for Member States’ cultural policies - 3. Member States’ constraints in conducting cultural policies by use of taxation - 3.1. The need for consistency in implementing favourable tax treatment for cultural activities - 3.2. A tax treatment revealing the “unconventional” nature of cultural activities - 4. Conclusion - NOTE

1. Introduction

In most European countries preservation of cultural heritage is considered an important part of state policies. As a result, cultural activities enjoy a form of institutionalization which, in turn, reveals the central role of the state in managing and enforcing policies designed to promote culture and ensure the sustainability of national heritage. Various constitutional arrangements stress the importance of public policies in the field of cultural activities. First, in some countries, cultural activities are state-managed. For instance, in France, a Ministry of Culture has been exi­sting for sixty years and has been designed to promote and fund cultural acti­vities. The consequences of the Notre Dame Fire express the crucial function of the State in managing, financing and coordinating its rebuilding. In the German Bundesland of Thuringia, the task of funding cultural activities is entrusted to the Cultural Department of the State Chancellery. Second, some Constitutions openly leave to the State and/or local governments the promotion of culture. Article 117 of the Italian constitution assigns the State the exclusive right to legislate in the field of preservation of heritage while article 117 and 118 provide the participation and coordination of both central State and local governments in promoting cultural activities. Article 62 of the German Bundesland of Hessen’s Constitution grants the protection of historical monuments and the promotion of culture to both Land and municipalities. Articles 15 et 16 of the Greek Constitution go further in that regard in exclusively assigning to the State the function of promoting and protecting culture. Those are telling examples of how culture is perceived as a mainly state-ma­naged field and a public policy as a whole [1]. At the heart of cultural policies lays the issue of funding. The very nature of funding can vary from state to state and therefore is not uniform: for instance, in the Netherlands funding revolves around a mix between state grants and self-financing while in France, public funding is mostly used. Generally speaking, State intervention in culture often relies on subsidies and tax advantages. For example, states finance cultural events by allocating a share of tax incomes or by levying taxes specifically designed to subsidise cultural activities (e.g. France). States can also grant specific treatment, such as tax incentives or exo­nerations, to cultural bodies. The [continua ..]

2. Member States’ freedom in promoting cultural activities by means of taxation

As previously explained, EU Policies in culture tend to enhance Member States’ freedom of action while securing the proper functioning of the internal market. As such, State aids rules as well as VAT Directive provide a specific status for cultural activities (2.1) which enables Member States’ intervention (2.2).

2.1. The specific status of cultural activities

State aids rules as well as VAT Directive share the aim of ensuring an undistorted competition on the single market. In either case, EU Law seems to adopt an ambiguous stance towards cultural activities. Even though EU Law does not answer the question whether cultural activities as a whole can be considered an economic activity, it somehow acknowledges cultural activities’ singular nature. As a result, both State aids rules and VAT Directive provide with particular rules dedicated to cultural activities. Ÿ State aids rules: Article 107 TFEU has been a key component of competition rules but provides a specific regime for cultural activities. Article 107(1) TFEU provides: “Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market”. As such, State aids provisions prohibit “selective advantages”, whatever their form granted to “certain undertakings or the production of certain goods”. Since its scope includes taxation [11], State aids rules has become a tool for monitoring national tax systems [12]. In addition, according to Article 108 TFEU, Member States have to notify the European Commission about aids they plan to grant to economic operators. In that regard, 2016 State aids Notice has helped to strike a distinction bet­ween those cultural bodies which cannot be equated with economic operators and thus are not under State aids’ scope and the other entities which are deemed to exert an economic activity and, as a result, are subject to provisions related to State aids [13]. As such the 2016 Notice has helped to better define the State aids rules’ scope in the field of culture. State aids granted to undertakings (or whichever body considered as such) operating in the cultural field may be compatible with the internal market as Article 107(3) TFEU expresses it. This provision reads as follows: “The following may be considered to be compatible with the internal market: (...) d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest (...)”. The [continua ..]

2.2. A wide margin of appreciation for Member States’ cultural policies

State aids rules and VAT Directive also grant Member States a comprehensive freedom of action in the field of culture. This freedom is made necessary by the diversity of cultural policies as well as the variety of sources of funding across the European Union. Ÿ State aids rules: the Commission has tried to streamline State aids scope regarding cultural activities in a new General Block Exemption Regulation (GEBR) [17]. This latter has created a dedicated box for all cultural aids. In this Regulation, the Commission tries to solve the issue of whether cultural activities can be viewed as economic activity which is of particular importance since the scope of competition rules (of which State aids are a part) depends on the scope of “economic activity”. The GEBR openly recognizes that some cultural activities cannot reasonably be qualified as “economic”. It operates a distinction between some cultu­ral activities which are per se deprived of any economic character such as the promotion and preservation of national heritage (Museums, Archaeological Sites) and culture (artistic and cultural centres, operas, theatres) and other activities which are more tainted with economic purposes (video games, fashion). According to the GEBR, grants to the former are not to be considered as State Aids since the recipients of the aid are not supposed to carry out economic activities (as such they fall outside State aids rules’ scope) or the aids given are not likely to affect Intrastate Trade (as such they seem to fall under de minimis rule). In this regard, its Article 53 includes a comprehensive list of cultural activities that benefit from an exemption and of measures allowed from a State aids rules perspective. As such there is no need to notify them to the EU Com­mission. The Commission’s regulations more or less explicitly acknowledge the non-economic character of cultural heritage. In some way, its content matches the general perception of cultural activities across Europe and reconciles EU Law with the somewhat institutionalized status of cultural activities [18]. Retrospectively the GEBR must be read in close relationship with the 2016 Notice regarding State aids rules. Both assert the need to articulate both Article 107(1) TFEU and Article 107(3) TFEU with each other. Article 107(1) TFEU relates to undertakings: grants to cultural bodies which are not consi­dered as such are not under State [continua ..]

3. Member States’ constraints in conducting cultural policies by use of taxation

The discretion left to Member States in pursuing cultural policies of their choice must be exerted in accordance with single market’s objectives. In a two-stepped control, both the CJEU and the EU Commission check whether mea­sures taken by Member States in the cultural field are consistent with their alleged cultural aim (3.1). For that reason, cultural policies should be understood as a legitimate goal whose tax treatment reveals the unconventional nature of cultural activities (3.2).

3.1. The need for consistency in implementing favourable tax treatment for cultural activities

he first step involves the study of the measure’s consistency with the cultural aim it purports to have. This step is designed to control whether the content of the measure is likely to reach its cultural objective. Such a step implies an examination of the genuinely cultural nature of the disputed measure. Ÿ State Aids: a State aid granted to an undertaking in order to achieve a cul­tural aim may be considered as compatible with the internal market if it fulfils conditions provided for by Article 1047(3) TFEU. The EU Commission checks whether the tax measures in litigation effectively promote cultural activities while not endangering the functioning of the Single Market. On the basis of Article 107(3) TFEU, the EU Commission controls whe­ther tax measures designed to favour cultural activities effectively serve this purpose. Examples of such a methodology are given by two decisions [21] by the Com­mission regarding French tax measures regarding a tax credit for video ga­mes [22]; and a tax scheme designed to subsidize theatre, opera plays and theatre shows [23]. In both decisions, the Commission carefully checks whether the measures’ design could reach its cultural purpose. This review is of particular importance given that the related activities (video games, theatre shows and opera plays) might be considered genuinely economic. As such they fall under State aids scope [24]. According to Article 107(3) TFEU, their compatibility actually depends on their cultural substance. This review is also a way of preventing Mem­ber States from circumventing State Aids Rules by relying on Article 107(3) TFEU. For instance, the Commission notices that the tax credit dedicated to video games serves to promote video games with a cultural character and openly excludes those with pornographic or ultra-violent contents. Subsidies financed by the tax on shows are expected to fund and thus favour the development of opera plays, staged shows or dramatic performances as well as concerts. Consequently they are actually pursuing a cultural purpose. Another part of Commission’s control consists in verifying that disputed measures do not discriminate between operators according to their location. It aims at controlling whether Member States deprive freedom of circulation of their effectiveness. The last step in the EU Commission control consists in verifying that State aids do not abnormally affect [continua ..]

3.2. A tax treatment revealing the “unconventional” nature of cultural activities

Cultural policies should be seen as a ground for justifying tax policy. Although Member States are left with a somewhat large freedom of action, the scope of it might appear limited. To put it another way, in tax matters, although cultural policies per se are not deemed to be contrary to the internal market, they should be conducted in line with single market’s objectives. That being said, the European Union’s approach to cultural matters seems to be quite ambiguous. In this regard, the margin of appreciation left to Member States in taxation can be explained by the “unconventional” nature of cultural activities [28]. Two main reasons explain why there may be talk of the “unconventional” dimension of cultural activities: – first, cultural activities are “unconventional” by their very nature. At both European and National levels, a general assumption prevails that culture is not part of a genuine market in the way education could be for instance [29]. As such, they cannot be considered real economic activities since cultural organi­zations do not supply services or goods the same way an economic operator would do. This nature-based analysis is taken into account by EU Tax Law. As the example of State aids reveals, the choice has been made by the EU authorities to formally acknowledge the specificity of cultural activities and, more gene­rally, to allow Member States to use taxation and public funding to pursue cultural policies. The Commission’s GEBR and 2016 Notice both recall that some cultural entities can escape State aids provisions because their nature as well as their management make them alien to any commercially-oriented pur­pose. As a result they do not take part in any market process and, consequently, are not subject to Competition Law; – second, cultural activities may be “unconventional” by the function they fulfil. This function-based analysis refers to the “cohesive” dimension of cultural activities. More broadly, they are deemed to serve a “general interest” shared at both EU and state levels. As such, promoting culture is considered as a legitimate aim. That is why the EU Tax Law allows State interventionism in cultural matters by the means of taxation. As a result, even though cultural activities may be carried out by “undertakings”, they can be granted tax incentives or tax-funded [continua ..]

4. Conclusion

EU Tax Law accounts for the difficulties encountered in considering cultural activities as obeying the law of supply and demand featured in any market. It implicitly acknowledges that cultural activities cannot be merely mana­ged on market lines. Promotion of culture and preservation of tax heritage require State intervention where Market cannot be relied on. At the same time, both VAT Directive and State Aids Rules formally acknowledge that culture constitutes a legitimate aim. Consequently Member States are allowed to financially support cultural purposes as long as this support does not threaten the Single Market. Tax law example highlights the important role played by national cultural policies for the cultural achievements pursued by the European Union. The European Union gives Member States the tools they need to pursue a cultural policy tailored to their own traditions, constitutional arrangements and circumstances. On that score, EU cultural policy and national cultural policies should not be read as opposing terms. Rather they seem to be complementary in accordance with the logic of subsidiarity which characterizes EU policy in cultural matters. The treatment of cultural activities demonstrates that culture is now part of the European Union’s objectives as Article 167 TFEU provides for. Tax issues exemplify the decentralized and flexible policy which seems to characterize European governance in cultural matters. Choices made by the European authorities reconcile Member States’ domestic arrangements with European Union’s objectives, meaning that the functioning of the market does not run counter to Member State-defined policies designed to promote culture on the state level. By taking cultural activities’ specificities into account, the EU Law underscores that promoting culture is a legitimate aim which justifies Member States’ intervention.  

NOTE