ECJ C-433/24 (Galerie Karsten Greve) – AG Opinion – AG supports VAT margin scheme for art via legal entities

On June 12, 2025, the ECJ issued the AG Opinion in the case C-433/24 (Galerie Karsten Greve).

Context: Reference for a preliminary ruling – Taxation – Value added tax – Directive 2006/112/EC – Special arrangements for second-hand goods, works of art, collectors’ items and antiques – Article 316 – Taxable dealers – Margin scheme – Concept of ‘creator’ – Legal person

Summary

Case Background: The case involves Galerie Karsten Greve (GKG), which purchased paintings from Studio Rubin Gideon (SRG), a legal entity where artist Gideon Rubin is a partner. GKG applied a VAT margin scheme upon resale, but tax authorities contested this, arguing the paintings were not supplied by their creator.
Key Questions: The main questions are whether a legal person can be considered the “creator” of a work of art under Article 316(1)(b) of the VAT Directive and, if so, what criteria apply.
Advocate General’s Interpretation: The Advocate General opines that a legal person can be regarded as the creator if the artist has significant decision-making power and the sale proceeds benefit the creator’s assets. This interpretation emphasizes the personal involvement of the artist in the creative process.
Legal Framework: The opinion references various articles of the VAT Directive, highlighting that the margin scheme aims to promote the sale of newly created works of art without imposing undue restrictions based on the legal form of the creator’s entity.
Conclusion: The Advocate General proposes that Member States should allow the application of the margin scheme for works of art supplied by creators through legal persons, provided the outlined criteria about decision-making and financial benefits are met.

Articles in the EU VAT Directive

Article 311(1)(2) and 316(1)(b) of Council Directive 2006/112/EC

Article 311
1. For the purposes of this Chapter, and without prejudice to other Community provisions, the following definitions shall apply:
(2) ‘works of art’ means the objects listed in Annex IX, Part A;

Article 316
1. Member States shall grant taxable dealers the right to opt for application of the margin scheme to the following transactions:
(b) the supply of works of art supplied to the taxable dealer by their creators or their successors in title;

Facts & Background

The French tax authorities audited Galerie Karsten Greve, an art gallery business, and questioned their application of the margin taxation scheme to the resale of artworks acquired from Studio Rubin Gideon, a UK-based company. As a result, additional assessments for VAT were issued for the period from January 1 to December 31, 2014. The case revolves around the interpretation of provisions in the VAT Directive and the French General Tax Code. The key issue is whether Studio Rubin Gideon, as a legal person, can be considered the “creator” of the paintings for the purpose of applying the VAT margin scheme. The Court of State has referred the case to the Court of Justice of the European Union for a preliminary ruling to clarify these questions.

Questions

(1) Must the provisions of Article 316(1)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, combined with those of Article 311(1)(2) thereof and those of Part A of Annex IX thereto, be interpreted as precluding a legal person such as a company from being regarded, within the meaning and for the purposes of those provisions, as the ‘creator’ of a painting?
(2) If the first question is answered in the negative, which criteria must be taken into account to allow a legal person such as a company to be regarded, within the meaning and for the purposes of those same provisions, as the ‘creator’ of a painting (such as, in the case of a company, the company being subject to a particular legal regime, the fact that the natural person who painted the painting holds some or all of the company’s share capital, the exercise by that person of management functions within the company, and so on)

AG Opinion

Article 316(1)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as meaning that Member States must grant taxable dealers the right to opt for the application of the margin scheme to supplies of works of art which have been supplied to them by the creator acting through a legal person, provided that, first, the creator has sufficient decision-making power within the legal person to have the decisive vote on the sale of the work in question and, second, the proceeds from the sale of that work, or at the very least a substantial part of it, directly or indirectly forms part of the creator’s assets.

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