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Brazil’s taxes keep foreign galleries cautious

Brazil’s taxes keep foreign galleries cautious

Posted by Laura Zúñiga on April 02, 2014

When it launched a decade ago, SP-Arte was a low-key fair in what seemed a far-flung place. Today, it has grown from being a local event with 41 galleries to a fully-fledged international affair, with 136 dealers, including some of the world’s leading traders, such as Gagosian, David Zwirner and Pace, in a space more than four times its original size.

“We have a great situation here,” the fair director, Fernanda Feitosa, says. “Galleries like Gagosian, David Zwirner and now even Kurimanzutto, from Mexico City, don’t convene at any other fairs except the big ones, like Art Basel and Frieze. I can safely say we have the most significant fair in the southern hemisphere.”

Chequered history

A lot has happened since 2004, when the fair opened its first edition. The bonanza leading up to the record-breaking deals of 2007 was followed by the recession that rocked the world of finance in 2008. Ironically, it was perhaps this setback that fuelled much of the fair’s current success, as collectors and galleries went looking for new markets in the wake of the economic meltdown.

Although Brazil has a solid collector base that attracts major galleries, the country’s heavy taxes are a burden. Amounting to over 50% of a work’s asking price, the duties have long been a turn-off for blue chip dealers. But Feitosa and her main competitor at ArtRio managed to secure tax exemptions for the duration of the fairs (in 2012 and 2011 respectively), which was a turning point for the events.

Only then did the likes of Gagosian, White Cube, David Zwirner and Hauser & Wirth decide to test the Brazilian market. But the exceptions didn’t go far enough for some: the Swiss gallery Hauser & Wirth decided to pull out this year after disappointing sales, hampered by continued tax hurdles (only São Paulo-based collectors benefit from the exemptions at the fair).

Others, like Gagosian and David Zwirner, are still taking part, but have adjusted their booths in response to what they perceive as a moment of limited spending power in a year of economic deflation, the World Cup and elections in Brazil.

“It’s very expensive to come to Brazil with huge masterpieces,” says Victoria Gelfand-Magalhaes, a director at Gagosian’s New York branch. “We did it initially to show the strength of the gallery, but I think a focus on the primary market is what makes sense in light of the current dynamics.”

In other words, works above the $10m price tag, such as pieces by Picasso and Lucian Freud that hung in the Gagosian stand previously are out. Prices will this year top out at around $1.5m, with works by Takashi Murakami, Cecily Brown and Georg Baselitz. David Zwirner has also lowered its price points and will bring pieces by Oscar Murillo and Adel Abdessemed.

But for local dealers, SP-Arte is still a major event. Top galleries such as Fortes Vilaça, Luisa Strina, Galeria Millan, Nara Roesler and Vermelho are accustomed to selling out their booths within the first hours of the fair. And specially-curated sections are now bigger than ever before with Rodrigo Moura, the director of art at Brazil’s Inhotim Museum, in charge of a new area for young galleries from around the world.


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