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Austria Referred To ECJ Over VAT On Art Resales

by Ulrika Lomas, Tax-News.com, Brussels

08 December 2017


The European Commission has said that Austria is incorrectly applying VAT to royalty payments paid to artists for the resale of works of art.

The Commission has referred Austria to the European Court of Justice, after Austria failed to respond satisfactorily to the Commission's July 2016 request that it amend its legislation.

Under Austrian law, royalty payments to an artist, or to those entitled to royalties for the resale of an original work of art, are subject to VAT.

According to the Commission, this violates EU law, under which VAT is due on goods or services "provided for consideration" – namely, for payment, whether in cash or kind.

The Commission regards the resale right (which gives rise to royalties) as an unassignable and inalienable property right enjoyed by the author of an original work of art, to an economic interest in successive sales of the work concerned.

The Commission pointed to a previous Court of Justice judgment that when a person provides services without receiving a direct consideration, there is no basis of assessment or amount on the basis of which VAT can be applied. The Court ruled that such services are not subject to VAT.

The Commission said that, as royalty payments for resale rights are not paid in consideration for goods or services supplied by the artist, they should not be subject to VAT.

TAGS: compliance | tax | artists | European Commission | value added tax (VAT) | interest | royalties | VAT legislation | law | legislation | Austria | European Union (EU) | services | VAT compliance matters | Europe

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