October 26th, 2012 / Insight posted in

VAT rules for dealing in art

HA writes: I have started dealing in art, including the import and export of antiques. What are the VAT rules on importing and exporting such items? I am interested in any exemptions and special schemes that may apply and what the position is with respect to donations to a museum.

Sales of art will be subject to Vat, either on the full selling price or on the margin. A “secondhand” scheme exists that allows Vat to be calculated only on the margin between the buying and selling price rather than on the full selling price as long as certain conditions are met. The Vat rate for art imported from outside the European Union is effectively 5% in respect of goods imported after July 27, 1999. The reduced rate covers imports of art created after April 1973, limited editions of tapestries, ceramics, enamels and photographs and older imported works of art that previously attracted an effective rate of only 2.5%. Disposals of works of art by gift or by private treaty sale to a public collection or other body are exempt from Vat if inheritance tax or capital-gains tax would not thereby become chargeable. The government has advised museums etc that in general the seller should receive 25% (10% in the case of real property) of the benefit of the capital-tax exemption. To qualify for capital-tax exemptions an object must be of national, scientific, historic or artistic interest. As regards the export of art, you need not charge Vat on goods you export subject to the normal export rules, if they are sold outside the EU, or within the EU but outside the margin scheme. Vat on art transactions is complicated so you should seek help from a professional adviser.