As March 29th, 2019 approaches, with no Brexit deal in sight, it’s still unclear what will actually happen if the UK leaves the EU as planned.
Since the referendum in 2016, we have heard the phrases “Brexit means Brexit” and “leave means leave” over and over with no real explanation of what they actually mean. So here I will look into the possible effects of Brexit on the music industry, as best as I can given all the uncertainty around the massive change.
Many of the revenue streams available to independent artists, touring, merchandise sales and royalties from performing rights and neighbouring rights, could be adversely affected by Brexit.
Researching this has been no small task, there is an exit guide on the Gov.uk website, after entering my business information it suggested 111 different documents for me to read to prepare my business for Brexit. The FAQs for VISA requirements for UK residents wanting to visit the EU for anything other than a holiday after Brexit is 48 pages long.
So this is by no means an exhaustive study of Brexit (if such a thing is even possible), but I’ve done my best to look into the most important aspects.
The most obvious effect will be the freedom of movement, currently a UK artist touring Europe can go to any EU country, perform for a fee without the need for any work permits and can sell merchandise without any additional duties or taxes applied (as long as you are a registered tax resident in an EU member state).
That will change when the UK leaves the EU, at least one work permit would be required, you will more than likely need to obtain a work permit for each member of the touring party for each country on the tour. Which means if you have 6 people travelling on a tour that goes to 5 EU countries, 30 visas would be required which will take time and money to arrange. It currently takes about 6 weeks to obtain a visa, this may be longer if demand for these visas greatly increases after Brexit.
Likewise, artists from EU will be required to obtain permits to tour in the UK, this will affect the number of shows in the UK performed by EU artists, which on one hand may increase the opportunities for local acts to headline events, but on the other hand, will reduce the opportunities for up and coming bands to support established EU acts at their UK gigs.
2. Import/Export Tax (on the sale of records and merchandise)
The EU is a customs union, which means that goods can be supplied freely within the EU (and European Economic Area) without the imposition of customs duties. This includes CDs (and other merchandise) you may sell online and ship to your fans in Europe, these sales will likely be affected by any Brexit deal that doesn’t keep us in the Customs Union and/or European Economic Area, and will have duties and taxes applied making them more costly to buyers in the EU than records originating in the EU.
This means either dropping the price, and reducing profitability, or selling them at a higher price but at the risk of losing sales.
Unless the UK negotiates a trade agreement with the EU, exports and imports of goods between the UK and the EU will be hit by customs duties and import VAT after Brexit, so as well as affecting merchandise you sell in Europe it will also affect stock you buy or have manufactured in the EU.
My last 7″ release was pressed in the Czech Republic and then shipped to me in the UK, I sold copies via my Bandcamp and then shipped the copies from the UK. After Brexit, the stock would be taxed as it leaves the Czech Republic on its way to me and then be subject to tax again when I ship the individual units to the buyers. With vinyl prices already quite high this would make it almost impossible to make a profit selling vinyl in the EU after Brexit without increasing the price way beyond the market value.
The only workaround to this would be to work with an EU company who would press and distribute the recording within the EU for you, this will reduce the loss of profit somewhat but still involves a middle-man who will naturally take their cut.
3. Tax on Income.
For most independent artists the revenue made from music comes from all over the world. Depending on which borders the money crosses various different taxes can be applied to the money.
Currently, there are double tax treaties (DTT) in place with most EU countries to avoid paying tax on the same income twice.
After some research, it seems these treaties are bilateral deals that were organised directly with each country so are extremely unlikely to be affected at all, by any kind of Brexit.
Currently, you are considered a tax resident of a country if you make all or most of your income in that country and/or spend 6 months or more there. It is in that country that you need to pay tax and the various DTTs in place will protect you from double taxation. This will be the same after Brexit.
4. Copyright and Intellectual Property.
If the UK leaves the EU with no deal then we would be forced to trade under the World Trade Organisation (WTO) rules, fortunately for musicians and people in other creative industries, many of the protections and rights we have over our creations are laid out in two agreements that are not affected by EU membership. The Berne Convention (for the Protection of Literary and Artistic Works) and the Rome Convention (for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations).
The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated during the 1986-94 Uruguay Round, introduced intellectual property rules into the multilateral trading system for the first time, and these rules remain.
During the Uruguay Round negotiations, members considered that the standards for copyright protection in the Berne Convention were largely satisfactory.
Any country seeking to obtain hard access to the numerous international markets opened by the World Trade Organization must enact the strict intellectual property laws mandated by TRIPS, this means that in or out of the EU the protections provided by the Berne Convention will remain in place for UK artists.
Deal or no deal?
In summary, it’s clear that Brexit will not improve the music industry for independent artists, or anyone else in the industry for that matter. The ”positives”, if they can be described as such, are that some things won’t change regardless of whether or not we leave the EU with a deal. However, as most independent artists get a large portion of their revenue from live shows a no deal Brexit or a deal that doesn’t include freedom of movement is going to make a huge negative impact.