Works of art and VAT on margin: questioning of the reduced VAT rate of 5.5% for art galleries

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.

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