ECJ C-433/24 (Galerie Karsten Greve) – Judgment – Article 316(1)(b) allows art supply by dealers via legal entities if properly attributed

On August 1, 2025, the ECJ issued the judgment 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

Background of the Case: The case involves a request for a preliminary ruling regarding the application of the VAT margin scheme under Article 316(1)(b) of the VAT Directive, specifically addressing whether a legal entity can be considered the “author” of an artwork for VAT purposes.
Questions to the Court: The referring court asked if Article 316(1)(b) allows for a supply of art to be classified as a margin scheme delivery when the art was delivered by a legal entity rather than the individual artist, and what criteria should apply for such recognition.
Court’s Decision: The Court ruled that the exemption applies to supplies made by resellers of art delivered by authors through a legal entity, provided that the delivery can be attributed to the author and constitutes the first introduction of the artwork into the EU market.
Justification for the Decision: The Court emphasized that the interpretation should promote fiscal neutrality and avoid excessive proof burdens, allowing for a broader understanding of “author” that includes legal entities when they are established for the commercialization of the artist’s works.
Implications for Future Transactions: The ruling clarifies that for VAT margin scheme applicability, the key factors are the attribution of the delivery to the original author and the status of the transaction as the initial market introduction of the artwork, ensuring compliance with EU VAT principles.

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.

Decision

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 that provision covers the supply by taxable dealers of works of art which have been supplied to them by the author or by his successors in title acting through a legal person, provided that, first, the supply by the legal person is attributable to the author or his successors in title, which is the case where the author or successors in title have founded that legal person for the purpose of marketing the works of art which the author has created, and, secondly, the supply of those works of art to the taxable dealer constitutes the first introduction of those works of art on the EU market.

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