High VAT makes Estonian theatre tickets more expensive

Estonia’s 24 percent value-added tax on cultural events makes tickets more expensive and puts local organisers at a disadvantage, ERR reported. Cultural organisers are proposing a reduced VAT rate of 9 percent to keep culture accessible and viable.

Unlike Estonia, several European countries apply lower rates to cultural events. Latvia, Denmark and Iceland have a zero VAT rate, while Finland applies a 13.5 percent rate to culture despite having a standard rate of 25.5 percent. Sweden charges 6 percent for the cultural sector, compared with a standard rate of 25 percent.

VAT on cultural events is also lower in Germany, at 7 percent, and France, at 5.5 percent. In Estonia, the higher rate affects the prices of theatre, concert, cinema and museum tickets, as well as books and periodicals. It also makes it more expensive and difficult for festivals and other organisers to bring international artists to the country.

Festival organiser Tarmo Sikk said this summer’s events had gone well, but high VAT meant that even apparently successful festivals could break even or end in losses. Sikk organised the travelling Võnge festival for the 13th time and the new Tartu Punch festival. Võnge made a profit for the first time in more than a decade, while Tartu Punch did not.

“Organising festivals in Estonia is not a particularly profitable undertaking or business project for anyone, although naturally the aim is to make a profit,” Sikk said. He added that when international festivals book foreign artists, organisers effectively pay up to 24 percent more.

Vanemuine, a theatre, recently performed in Latvia, following the visit of the Estonian drama theatre’s production “Rahamaa”. Vanemuine director Aivar Mäe said that earning a profit is not the aim of international cooperation, but the different VAT rates create a clear competitive gap between Estonian and Latvian cultural organisers and audiences.

“If Vanemuine earns 4 million euros in ticket revenue a year, 1 million of that goes to VAT. If the Latvian opera earns 4 million euros, it pays zero euros in VAT,” Mäe said. He added that tickets for regular performances in Latvia cost between 15 and 55 euros, while in Estonia they cost between 25 and 69 euros, which he attributed to VAT.