The tax universe of works of art is a complex but crucial area for purchasers and retailers (galleries, dealers,...). This article aims to shed light on the significant changes that have occurred in the VAT regime, in particular since the adoption of Directive EU/2022/542.
Current Margin VAT Regime
Fundamentals
The margin VAT regime, as currently applied, is specific to works of art and is applicable in the following cases:
- Purchases from persons not authorized to charge VAT : This includes transactions with other purchasers resellers or individuals who are not subject to VAT.
- Additional options : Art market players can also opt for this regime in various situations, in particular when importing into France (with a VAT rate of 5.5%), intra-community acquisitions, purchases from taxable users (10% VAT), and acquisitions from artists or their beneficiaries (5.5% VAT). To benefit from this regime, it is necessary to file an option letter with the tax department (10% VAT), and acquisitions from artists or their beneficiaries (5.5% VAT). competent, and this option takes effect on the first day of the month concerned.
Changes Expected in 2025
Impact of the 2022 Directive
Directive EU/2022/542 has made substantial changes, by removing the possibility of combining a reduced purchase rate with the resale margin regime.
Main Changes
- End of the optional profit margin regime : It is no longer possible to combine a reduced rate with this regime.
- Introduction of a general reduced rate of 5.5% : This rate now applies to the resale of objects acquired at a reduced rate or when the margin regime is not applicable.
- Elimination of the 10% rate for certain deliveries : Deliveries by taxable users benefiting from the right to deduct are no longer subject to this rate.
Two hypotheses to identify
Two main scenarios emerge:
- Application of the rate of 5.5% : This rate applies if the products were purchased at a reduced rate. In this case, the taxable dealer benefits from a right to deduct.
- Application of the 20% rate : This rate is applicable if the product was purchased at 20%, unless an option for the total price is exercised. By choosing this option, the rate of 5.5% will apply to the total price.
Conclusion
The changes introduced by the 2022 Directive and the Finance Law are significantly changing the tax landscape for art resellers. It is essential for professionals in the sector to become familiar with these new rules to ensure optimal fiscal management of their activities.
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