- Directive 2022/542, implemented on April 5, 2022, prohibits the combination of a reduced VAT rate and the VAT margin mechanism on works of art. In France, only works listed in article 98 A II of the General Tax Code can benefit from advantageous VAT arrangements.
- These works include paintings, drawings, original etchings, handmade tapestries, wall textiles, and photographs taken by the artist.
- The reduced VAT rate of 5.5% applies to works of art purchased directly from an author or imported by a trader of goods.
- The reduced VAT rate of 10% applies to the occasional sale of works of art used for business purposes.
- The VAT margin mechanism allows art galleries to apply VAT on the margin realized from the resale of works of art acquired under specific conditions.
- However, the reform prohibits the application of reduced VAT rates and the VAT margin mechanism on works of art.
- Currently, galleries and other taxable dealers who benefit from a reduced rate of 5.5% on the purchase of works of art will be impacted by this reform.
Source Mathez Formation
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