The severe economic crisis that affected the country led, in July 2012, to the increase of “general” and “reduced” VAT rates, from 18% (general) and 8% (reduced) to 21% and 10% respectively, together with new classifications of which goods were to be taxed at reduced rates.
Cultural goods got taxed at the “general” tax rate of 21%, VAT on admission tickets for the performing arts (cinema, theatres, music, circus, etc.) went from 8 to 21%, and tickets to libraries, archives, documentation centres, museums and art galleries stayed reduced with the new rate of 10%. Printed books, newspapers and magazines remained at 4%, while electronic books went to 21%. The services produced by individual artists, digital television services and the acquisition of works of art went from a 8% VAT rate to 21%.The services of writers, composers or visual artists, which are linked to copyright, continue to be exempt from VAT.
Measures that deter cultural consumption were met with strong opposition from the cultural sector, already heavily affected by public cuts. The first reduction took place in January 2014, with VAT rates for the acquisition of works of art reduced from 21% to 10%, following constant pressure from the representatives of art galleries in Spain. During the following years, the rest of the cultural industries claimed that the rise in taxation was leading to a big audience crisis. In response to this, the Culture Plan 2020, passed in 2017, introduced as one of its strategies the reduction of indirect taxes to increase cultural consumption. To this end, the government reduced the tickets to live performances (theatre, dance and music) and the cinema from 21% to 10% in 2017 and 2018 respectively. The 26/2018 Royal Decree-Law, passed in December 2018, also reduced the VAT rate for the services provided by performers, artists, directors and technicians from 21% to 10%.
There are tax exemptions available for institutions from the “third sector”, i.e. foundations and associations considered to be of public interest, international development and aid agencies, and non-profit making bodies falling within the terms of the 49/2002 Act on Tax Exemptions for Non-profit making Organisations and on Sponsorship, later on modified by the 62/2003 Act. This piece of legislation establishes detailed exemptions on national and local taxes, including rates, local duties levied on businesses, and the municipal tax charged on capital gains from the sale of urban property (the latter refers to non-profit making bodies). Individuals and companies can also claim an income tax exemption on the amount of money donated to or invested in certain organisations such as those mentioned above and public administrations.
One of the great challenges and normative projects of the last years is a new Sponsorship Act that promotes greater participation both from individuals and companies in the financing and promotion of culture. Beyond the social debate, governments of the Popular Party included this strategic change in their programmes and it was one of the main objectives of the General Strategic Plan 2012-2015 and the Culture Plan 2020. After several years of drafting a possible Act of Patronage and Sponsorship, during which the lack of coordination with the Ministry of Finance and Public Administration was remarkable, at the end of 2014 the government approved a fiscal reform that included some measures to foster patronage and other fiscal incentives to culture. Those measures were fully implemented in 2016.
More precisely, fiscal benefits for patronage and sponsorship were adopted in the Personal Income Tax (IRPF), and in the Corporation Tax (IS). In the IRPF, the percentages of general fiscal benefits increased from 25% to 30% in 2016. In the IS, the loyalty of private investors was acknowledged with an additional fiscal bonus of 5 points (up to 40% from the ordinary tax rate of 35%) if the contributions to the same beneficiaries increase or remain the same for at least 3 years (for 2016, the bonus was 2.5 points). All those fiscal benefits increased in 5 additional points if the expenditure is done in an activity that is a priority patronage activity, as defined each year in the Act of General State Budget.
For crowdfunding, the Spanish fiscal reform of 2014 established a special regime and defined two tiers for deductions in the Personal Income Tax (IRPF): the first EUR 150 are to receive a deduction of 75%, and the additional contribution a deduction of 30%. For contributors that fund the same beneficiary for three or more years with constant or increasing funding, there is an additional bonus of 5 points (reaching the 35% deduction to be applied to any quantity above EUR 150).
Apart from the fiscal benefits for patronage, the fiscal reform also established some additional benefits for performing arts, music and the audiovisual sector. Performing arts and music enjoyed a 20% deduction in expenditures on production and exhibition of life performances. For the audiovisual sector, there was an increase on deductions of 20% for the first invested million EUR, and 18% for quantities above that threshold (with a limit of three million EUR). In an attempt to attract shooting of films to Spain, there was a new deduction of 15% of the expenditure done in Spain by great foreign productions, with a minimum and a maximum expenditure of 1 and 2.5 million EUR respectively per production. The 26/2018 Royal Decree-Law, passed in December 2018, has improved these conditions: increasing the maximum expenditure from 2.5 to 3 million EUR per production, as well as the deduction from to 15% to 20%.
As a part of general strategy to promote the cinematographic sector, during 2017 deductions increased to 25% for the first invested million EUR and to 20% for the second and third million. Deductions to attract shooting of films to Spain also increased to 20% and the maximum expenditure to 3 million EUR.
During this period in which the central government appeared to be unable to design and pass the patronage and sponsorship national act, several Autonomous Communities took the challenge, and started debating or passing their own acts. Navarre (8/2014 Act) and Valencia (9/2014 Act recently modified by the 20/2018 Act) approved their respective Acts in 2014 and Balearics, in 2015 (3/2015 Act).
In the field of culture, the Historical Heritage Act (16/1985 Act) establishes some exemptions for the temporary importation of certain cultural products, in particular, movable assets that are included in inventories or recognised as being of cultural interest.