Germany slashes VAT on artwork gross sales to 7%

The German authorities will minimize value-added tax (VAT) for artwork gross sales to a lowered charge of seven%, assembly a long-standing demand of sellers who mentioned they suffered a drawback relative to rivals in different international locations underneath the present charge of 19%.

The cupboard accredited the discount, which takes impact from January 2025, as a part of a bundle of tax legislation adjustments at a gathering yesterday.

“The lowered charge is a vital sign, notably in troublesome instances, for the artwork market and the cultural contribution made by galleries,” mentioned the tradition minister, Claudia Roth, in an announcement.

Germany had a lowered VAT charge of seven% on artwork gross sales till 2014 however was compelled to scrap it and impose the overall VAT charge of 19% on sellers as a result of artwork was excluded from an inventory of products and providers eligible for lowered charges in a European Union directive. Solely artists may apply a lowered charge of seven% on direct gross sales.

A brand new directive handed in 2022 permitted lowered charges of VAT—no decrease than 5% of the total value of an merchandise—for specified items and providers deemed to “pursue goals of common curiosity,” amongst them “provide of artworks, collectors’ objects and antiques”. Nations are required to align nationwide legal guidelines with the brand new directive by the tip of 2024.

The Bundesverband Deutscher Galerien und Kunsthändler (BVDG), the sellers’ affiliation, has been pushing for the reintroduction of the lowered 7% charge for the previous 10 years. It says the imposition of the 19% charge brought on the artwork market to stagnate and galleries to shut, and deterred folks from opening new ones. The tradition ministry mentioned the discount within the charge “eliminates imbalances in taxation and strengthens Germany’s artwork market, together with on a global degree.”

The BVDG welcomed the change, saying it is going to assist the German artwork market. “It will increase its competitiveness and makes it match for the long run,” the affiliation mentioned.