The rules governing the artists tax exemption scheme are set out in section 195 of the Taxes Consolidation Act 1997 and in the related Guidelines drawn up under that section. These Guidelines are drawn up by the Arts Council and the Minister for Arts, Sport and Tourism with the consent of the Minister for Finance. The current Guidelines have been in place since 1994.
The scheme provides an exemption from tax for the profits or gains arising to a person from the publication, production or sale of an original and creative work which has artistic or cultural merit in any of the five categories set out in the legislation, namely, a book or other writing; a play; a musical composition; a painting or other like picture; or a sculpture. The legislation does not include a definition of the term ‘the arts'.
Under the legislation, the Revenue Commissioners are required to make a determination as to whether or not a work has artistic or cultural merit before the exemption can be awarded. The Commissioners are specifically required by the legislation to make their determination having regard to the Guidelines. The Guidelines set out definitions of the terms original and creative, artistic merit and cultural merit. They also set out specific criteria to be taken into account in making determinations relating to works of non-fiction and provide for exclusions from what is to be regarded as original and creative in respect of certain works (e.g. textbooks, works of journalism and functional or utilitarian works). The Guidelines are available on the Revenue website at www.revenue.ie.
In addition to the Guidelines, the legislation allows the Revenue Commissioners to consult as necessary with expert bodies, such as the Arts Council and the Heritage Council, to assist them in determining whether a work meets the criteria set out in the legislation and the Guidelines. Persons seeking the exemption are entitled under the legislation to appeal determinations made by the Revenue Commissioners to the Appeal Commissioners.