European Commission – Austria VAT infringement

The Commission requests AUSTRIA to amend its rules on the VAT treatment of resale rights of works of art.

The Commission has requested Austria to change its rules on the value-added tax (VAT) treatment of resale rights on works of art. Resale rights – which give rise to what are commonly known as ‘royalties’ – constitute an intellectual property right which allows an artist to receive a percentage of the sale price of a work of art when it is resold.

In Austria, VAT is charged on the resale of works of art. As there is no contractual relationship of any kind between the buyer and the artist, the Commission considers that such a provision is an infringement of Article 2 of the VAT Directive (Council Directive 2006/112/EC).

This is also in line with a judgment of the Court of Justice of the EU (C-16/93, Tolsma) which held that there must be a legal relationship between the provider of a service and the recipient for that service to be taxable. A letter of formal notice was sent to Austria on 17 October 2014.

The request takes the form of a reasoned opinion. If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the EU.

Read more: European Commission – PRESS RELEASES – Press release – The July infringements package: key decisions

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