Frieze will not only be a test for Seoul’s art scene, but also for the hordes of dealers who travel to the city to participate, many of them for the first time. And while the Korean art market is booming and remarkably mature, it also contains a number of unique and lesser-known facets not found in other regions. Here are four things to consider before you go.
It is well known that South Korea does not charge VAT on works by living artists worth less than 60 million Korean won ($45,000), which has been a driving factor in sales. But this does not apply to photographs, editions and multiples (and anything that can be considered easily reproducible or distinct from a single work of art).
Although the 10% tax levied on photography, etc. is not excessively high, it complicates matters for foreign dealers. This is because sellers who import and then sell taxable goods in the country need a Korean business number or a local agent who can pay the tax on their behalf (for a fee). If they don’t choose one of these options, they can pay the import tax themselves. But if the work sells, they will have to export and then re-import the work, which will incur additional shipping costs.
Light at the end of the Turrell
The same goes for works that include LEDs or other electric lights, which Korean customs classify as “lighting equipment” rather than art, and on which they impose a heavy duty tax. 30% import on the value of the work, including shipping costs.
This happened last year when Pace Gallery imported a number of works by James Turrell from Los Angeles to Seoul. While the gallery refuses to disclose prices for these works, Turrell’s light works can fetch up to $2 million at auction, meaning those taxes could easily run into the six figures. According to a spokesperson for Pace, the gallery was able to convince customs to categorize the works as art.
Real Estate and Crypto Restrictions Boost Art Sales
To curb an overheated housing market, the Korean government last year tightened regulations on home loans and began levying higher capital gains on property purchases. More recently, capital gains taxes were introduced on cryptocurrency this year and will be imposed on stock transactions from next year. All of these measures are driving wealthy Koreans — especially those under 50 who are rapidly building, rather than maintaining, their fortunes — to seek art investments instead.
Fierce competition from auction houses
Seoul gallerists face increasingly fierce competition, not only from other dealers, but also from auction houses, especially from the duopoly K Auction and Seoul Auction. Both houses sell primary works by young artists at a much higher rate than their Western counterparts, which has spawned a lot of animosity between the two sectors. The Korea Gallery Association, which organizes the Kiaf fair, says the two auction houses breached a 2007 agreement that neither can hold more than four ‘major auctions’ a year, selling works created within three years or buy works to sell later. their.