Brexit Outcomes II

In our first Brexit Outcomes blog post, we considered the preparations for Brexit in the UK, EU and beyond. In this final part of our two-part post, we will discuss the aftermath, from the first days of Brexit to present day, looking at how our agents are operating and looking ahead to how we expect the fine art shipping industry to move forward in the coming months.

Teething Problems

The first art shipments following the end of the Transition Period were uncertain experiences for ICEFAT members on either side of the EU-UK divide. Oliver Howell, European Managing Director of Gander & White Shipping and based in London, reports that the company’s very first shipment to the EU passed through the Port of Dover without a hitch but was held up for almost a day by French customs in Calais. “We were aware of all newly required customs formalities and prepared the necessary paperwork, but our shipment was not released as a French customs officer did not believe the correct documentation had been completed. There was almost an entire day’s delay to the shipment before the original document we had given them was approved and the piece was able to continue on its journey to its destination in Germany.” Since then, however, delays have been minimal, but it remains to be seen whether the end to the coronavirus restrictions and the (assumed) subsequent increase in shipping will test the system more rigorously. Crown Fine Art have not experienced any major delay when shipping art into the EU, besides “an additional check of papers in Calais and Belgium causing a 15-minute delay,” according to UK & Ireland Director, David Preston. Customs officers have had a lot to learn in an extremely short space of time, so occasional hold-ups are inevitable for the time being.

Similarly, for Maurice Ward Art Handling shipping between Ireland and the UK has not become significantly more challenging. The company has experienced “no delays in transit or during any shipment as we work closely with both Shipper and Consignee before vehicle departure to ensure a problem free transport.” Educating clients on the required administration and procedures has been vital to ensuring a trouble-free art shipping process, relates Operations Manager, Teresa Brehony. For Crown Fine Art’s Netherlands operation, one example that Customs Declarant Arno Brons cites is the complexity of the British Returning Goods Claim Form completed by private lenders in the UK. “The UK lender needs to complete this 7-page document to get their goods returned without paying import tax, and this has been a challenge,’ says Brons. Motet de la Panouse, Director of Sales and Business Development at Andre Chenue in France, points to similar administrative hurdles that need to be jumped by the shipper. De la Panouse provides another example relating to when a French loan to a UK exhibition in 2020 comes back, “we need to justify to customs when they left France to the UK with paperwork and proof of export and show it to customs to make sure we will not get stopped at the border or get a fine from French customs.” Complex situations like this most likely will not occur in coming years, but are certainly difficult now, when loaned items are still located in the UK, and may be held up due to COVID-19 restrictions.

Future Adjustments

Many ICEFAT members expect adjustments to the UK-EU art market in the coming years. Paris already has a functioning art ecosystem so appears ready to take the mantle from London as the preeminent art capital in Europe. Its import VAT is 5.5%, almost matching the UK’s 5%, which could make France the new springboard into the free circulation of the EU as the UK once was. Gander & White Shipping New York’s Director, Paul Cannon, is seeing that “Paris undoubtedly is gaining a lot of business thanks to Brexit,” echoing expectations by many of our members. Prior to the end of the Transition Period, when free circulation was still possible between the EU and UK, many ICEFAT members offered their UK clientele storage options in the EU. Gander & White Shipping and Crown Fine Art both have fine art storage facilities in the UK and EU so offered all clients the opportunity to switch their storage. Paris-based Andre Chenue also offered options for storage in the EU. Motet de la Panouse says they offered “all our UK contacts storage in France, Germany or Switzerland, in case there would be an issue with taxation [if keeping stock in the UK].” However, de la Panouse reports that they “only had a few requests.” Sonja Kappenburg, Director of Gander & White Shipping Paris, reports a similar situation, saying “some of our UK clients transferred their stock, or part of it, from the UK to France or other EU countries.” Gander & White Shipping London experienced a rush at the end of 2020 but not the expected exodus, aligning with the experience of many agents over in the EU.

Post-Brexit UK: the new Switzerland for the European art market?

There are still opportunities in the UK art market created by Brexit, and David Preston of Crown Fine Art UK points one of these out: “to buy and transport an artwork in the UK or EU can, in some cases, now be cheaper when objects exceed £3,000 in value due to lower import tax rates.” When in the EU, UK buyers had to pay the VAT rate for the country in which the work was purchased, usually around 20%, before importing the work for free. Now outside the EU, UK buyers do not pay VAT at purchase and instead pay the reduced VAT rate for importing artworks into the UK, which is 5%. This works the same in reverse, where an EU buyer would be able to purchase a work in the UK and import it to their EU country for their country’s reduced rate, between 5.5% (France) and 27% (Hungary). This therefore makes the UK desirable for art collectors as they will benefit from the favourable import tax rate. Prior to Brexit, Switzerland was the only non-EU country in Europe with this arrangement, so the UK’s new designation as a third country “will enable individuals and businesses domiciled or operating in the UK to import art from EU states at a lower rate than they would have previously in many cases, so we are confident that London’s status as a European art capital will remain unchanged,” says Business Development Director, Alexander Bradford of Gander & White Shipping London. While London looks to continue its leadership in the European art market, Switzerland is still predicted to continue its place of prominence in the European art eco-system and several ICEFAT agents are considering increasing groupage art transport services to Switzerland as restrictions lift, Gander & White Shipping included.

Brexit has undoubtedly been a stressor for the supply chain that keeps the EU-UK art market running. Despite a lack of clarity in the lead up to the end of the Transition Period owing to negotiations continuing until the eleventh hour, ICEFAT agents prepared as thoroughly as possible for the outcomes. Through bolstering workforces and educating clients, it seems the feared worst-case scenarios have been avoided. Although there were some teething problems at borders in the early days following the end of the Transition Period, it seems now that operations are running smoothly. But the market is currently much quieter than normal because of the COVID-19 pandemic, and the true test will be when normality hopefully returns in the second half of 2021 and shipment levels recover. Our ICEFAT agents in the EU and UK are equipped for this, and through diligent preparation and cooperation between our membership agents, we are confident that our membership can continue to service this important connection within our global art world.