CURRENT DEVELOPMENTS

Standard tax rate applying to works of art, gold and silver coins in Germany from 2014

From January 1st, 2014, the reduced rate of value-added tax (VAT) at 7% on works of art, including paintings, watercolours, drawings and collages, is to be abolished. The delivery, importation and purchase of works of art and collectibles within the European Union (EU) will thereafter be liable to the standard rate of value-added tax (VAT) at 19%. The change particularly affects commercial art dealers.  However, deliveries made by the artists themselves remain liable to the reduced rate of value-added tax (VAT).

In order to at least partially offset the abolition of the reduced rate of value-added tax (VAT), a provision has been introduced for the margin scheme, already in existence, under which  only 30% of the purchase price is to be liable to value-added tax (VAT) at 19%.  The said scheme only applies if the purchase price is not assessable or  is “insignificant”. The phrase “insignificant” has hitherto not been defined. However, the deduction of input tax is not possible under this provision.
 
Moreover, from January 1st, 2014, transactions involving collectors' coins, which have hitherto been liable to the reduced rate of of value-added tax (VAT) in accordance with certain criteria, shall be liable to the standard rate of 19%; only the importation of collectibles will continue to be taxed at the reduced rate.

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