Last month, reports BLN FM, several Berlin clubs received bills for unpaid taxes going back for years. Here’s why: According to German law, proceeds from “dance parties” must be taxed the full 19 percent VAT (Mehrwehrtsteuer), while tickets to “concerts” are only taxed seven percent – in effect, a kind of cultural subsidy for musicians.
Now the Finanzamt is asking clubs to cough up the 12 percent difference, in some cases going back to 2005. For bigger clubs this could mean hundreds of thousands for euros – for smaller places, tens of thousands! Either way, it could potentially spell the financial death for some of Berlin’s greatest “underground” venues.
The problem in Berlin club culture is clear – the line between a party with DJs and concerts is a very fine one. Through his or her artistry, a good DJ “plays” the turntables to shape the musical output not unlike a musician using more conventional instruments or equipment. Five years ago, the Finanzamt actually told a number of clubs that this was “in Ordnung” – that “DJ events” could be taxed at seven percent.
But now the Finanzamt, always eager to tap into every last potential revenue source (this isn’t Greece, after all!), has recently rediscovered this “loophole” and has sent staff to clubs to investigate the nuanced differences between parties and concerts.
I say: give the clubs a break. As ludicrous as it might sound to the city’s elders, in my view, not a single sector of the local economy has contributed to the revival of Berlin in the past 20 years as much as club culture. Since the 1990s, the city’s underground nightlife has attracted an ever-growing flow of “creatives”, artists, designers, entrepreneurs and tourists of the iPhone-wielding type.
And yet, unlike the three operas which receive around €150 million in federal cash annually, the clubs get virtually nothing, save the occasional digital arts festival, along the lines of CTM. The clubs are entirely dependent on door fees and booze sales. The seven percent was the only “subsidy” they got, if you can call it that. In other cities, like Hamburg, the state even pays the clubs’ GEMA fees.
Mayor Wowereit – always keen to evoke the “creative scene” in Berlin – should just intervene and tell the Finanzamt to keep their hands off…