Learn how and where to find out what you need to know about VAT
for: artists and art teachers, art exhibition and competition organisers, museums and galleries, 

PLUS VAT on art supplied or sold by artists in UK and/or EU

VAT for Artists - Contents

Who needs to know about VAT?
​
ABOUT VAT
  • VAT Basics - What is VAT; VAT Tariff Rates
  • VAT on Art
  • VAT on exemptions
​
ABOUT VAT AND THE ART BUSINESS
  • artists' business activity
  • art education
  • art museums
  • commercial art galleries
  • online galleries
  • open exhibitions and art competitions
  • digital art services and art supplies
  • selling art supplies and art across borders 
  • Distance Selling of Art
  • digital products and ecommerce platforms
Value Added Tax (VAT) is a topic of interest to:
  • professional artists living in the European Union (EU)
  • artists selling art online in the EU
  • anybody selling digital goods and services relating to art in the EU
  • Non-established taxable persons (e.g. international artists who do not live in the EU who are importing art for exhibitions in the EU);
  • art societies and competitions wanting to hold exhibitions involving international artists
  • galleries wanting to sell work by international artists in the UK and by UK artists to customers within the EU.
  • art schools charging for tuition and employing tutors
FACT: In the UK the VAT rate on art is 20% if
  • you are in business to sell art (e.g. a gallery or art dealer or an artist selling direct to the public)
  • your turnover (gross sales - not profit) in a rolling 12-month period exceeds the VAT threshold for mandatory registration and charging of VAT.
  • your business activities are within the scope of VAT irrespective of turnover e.g. sales of digital goods and services relating to art
This means that if you ever get your liability for VAT wrong you could find yourself with (1) a sizeable tax bill and (2) facing penalties.

Most leisure artists and those who are not successfully pursuing art as a professional full-time business are unlikely to be affected if their turnover or activities do NOT exceed the threshold for VAT registration.
FACT: Antiques, works of art or similar (as assets of historic houses) sold by private treaty to public collections are EXEMPT from VAT

Works of art which are private assets (i.e. not business assets) are outside the scope of VAT but only IF they are disposed of:
  • by private treaty sale, or disposed of in a way not involving a sale, to a specified public collection or other body and estate duty, capital transfer tax, inheritance tax or capital gains tax is not chargeable on the disposal
  • for acceptance in lieu of estate duty, capital transfer tax or inheritance tax
See VAT Notice 701/12
This page is a work in progress for the foreseeable future
​- VAT updates all the time!
HOWEVER I am not a VAT specialist and you MUST NOT assume I'm up to date with all the updates!

IMPORTANT DISCLAIMER: Those who need to know about VAT need to start somewhere.....

None of the information on this page is definitive, comprehensive or complete. 
None of the advice on this page should be treated as professional. 
Information and advice may also be out of date. 
That's because it's absolutely impossible to keep up with all the changes unless you are a qualified professional practitioner who is doing VAT full-time and there's no way I'm going to do that!  
However I do reference relevant government and EU guidance where I can.
This page also references advice and guidance from one firm which does appear to know what it is talking about in relation to the EU regime in different countries and cross border sales- and I have found few equivalents. I'm not averse to hearing about more!

Find out about VAT
​

What is Value Added Tax?

Value Added Tax (VAT) is a form of sales tax. 
​
VAT is a tax applicable to all goods and services in all countries within the European Union. It is applied in ways which are defined by both the EU and the government of individual countries in the EU.

In summary - for artists:
  • you must charge VAT on art you sell (as a business) if your turnover of taxable supplies is over the VAT Threshold and you MUST be registered for VAT (see VAT Thresholds for direct sales and distance selling) 
  • if you do not generate enough sales you don't need to register or charge VAT (which is why leisure artists don't charge VAT)
  • If you sell digital goods and service you must register for VAT in the countries where your customers live - and the threshold is zero (i.e. it applies to all sales)
  • You can reclaim VAT charged and paid on the supplies you buy  if you opt to register for VAT 

VAT in the UK: REFERENCE
​

REFERENCE: HM Revenue & Customs (UK) - FAQs and VAT Notices

How do I find out more about VAT?Why register for VAT?
Below you will find the relevant VAT Publication for frequently asked questions relating to VAT.

​What VAT records do I need to keep?​How do I get a refund?
REFERENCE: Other sources

The VAT Registration Thresholds - in the UK
​

The Threshold relates to TURNOVER - that is gross sales of all VATable goods and services. It's not about profit and it applies even if you're not making a profit.
The threshold is based on your VAT taxable turnover - the total value of everything you sell or supply that isn’t VAT exempt.
Below are the turnover thresholds defined by the UK government for (1) mandatory registration for VAT from 1 April 2016.There are also thresholds for joining a VAT accounting scheme 

​REFERENCE: Government Publications

The VAT Registration Thresholds - in EU Countries

The VAT Registration Thresholds vary VERY SIGNIFICANTLY from country to country in the EU.

For example, as at 1 April 2016 these are the 2016 VAT registration annual thresholds for resident companies in....
  • France €32,600
  • Netherlands €1,345
  • Spain €NIL
  • Italy €60,000
  • Germany: €17,500
  • Ireland​: Goods €75,000 | Services €37,500

The VAT Thresholds for anybody selling art in a country they are not resident in may be completely different. For example, if you sell art in France the threshold is NIL i.e. you need to be registered for VAT if a Non-French resident before you sell any.
​REFERENCE - EU Guidance
REFERENCE - EU Distance Selling Thresholds
REFERENCE - Ireland
  • VAT and Artists | Visual Artists Ireland Artists - this text is a simple guide to VAT general rules and administration. Professional advice is advised for all large sums.

The VAT Tariff Rate
​

The different VAT Rates

The tariff is the rate at which VAT is levied.
​
There are three different basic rates and then a class of exempt goods and service. The principle is that the default standard rate should always be charged unless approval has been given by the EU to vary it or the country has raised the standard rate above the default.
  • The Standard Rate - applied to most goods and services unless they are eligible for a reduced or zero rate. The default minimum rate across the EU is now 15%. In the UK the standard rate of VAT increased to 20% on 4 January 2011 (from 17.5%). ​
  • The Reduced Rate - applied to some goods and services where the case has been made for a reduction for the public good
  • The Zero Rate - reserved for defined essentials including books (but not digital ebooks)
  • Exempt - goods and services on which no VAT can be levied
  • Outside the scope - these are items on which VAT will not be levied
UK Example:
  • ​The standard rate of VAT on most goods and services in the UK is 20%. This is mandatory for all businesses selling art who are above the VAT threshold i.e. must be VAT registered
  • The VAT Rate on art IMPORTED into this country is 5%
  • The zero rate is reserved for essentials such as food and books (but NOT digital e-books).
  • Art can be exempt in specific circumstances - see VAT on Works of Art section below
REFERENCE: UK Government Guidance
  • VAT Rates - this is the government website which states the VAT rates
  • Businesses and charging VAT - the rates a business charges depends on the hature of the business and the goods and services produced (see Is an artist a business? below)
  • VAT rates on different goods and services - A government list of different goods and services showing which rates of VAT apply in the UK and which items are exempt or outside the scope of VAT. The VAT Rate on art IMPORTED into this country is 5%
REFERENCE: Other Advice
Different VAT rates in different countries
​
The reality is that the VAT tax tariff rate - and what it is chargeable on - can vary from country to country within the European Union. 

The intention was that a single rate would be applicable across all countries. The notion was that harmonisation of tax regimes would make trade easier and enhance bonds between countries.

However some countries chose to have a lower standard rate and this has distorted the market eg Amazon is based in Luxembourg because its 3% tax rate on ebooks helped make Amazon prices very low across all the EU

In recent times the EU has been tackling issues of differentiation and trying to harmonise VAT across the EU e.g. the minimum standard rate of VAT is now 15% everywhere and matters relating to digital transactions are being brought into line.
REFERENCE: Government Guidance
  • VAT: European Law on VAT Rates | House of Commons Library - this covers the history of the EU's VAT Strategy over the years and different moves made to improve harmonisation

LATEST NEWS

EU Commission May 2016

VAT on Works of Art
​

VAT on artwork and paintings - new and old
​

In general the presumption is that art is exempt
UNLESS its supply is related to business activities.
See sections BELOW relating to:
  • VAT and Artists' Business Activities
  • VAT and Commercial Art Galleries
  • VAT for Organisations holding art competitions, juried exhibitions 
  • etc

UNLESS art is imported - VAT is paid @5% on all art IMPORTED into the UK. VAT is payable at differing rates on imported art in other countries within the European Union.
see section BELOW relating to VAT - Cross-border supplies and sales of Art and Distance Selling of Art
Official Exemption from VAT on ART 
Sales of paintings which are not related to generating income as a business activity can mean that certain artworks are exempt from VAT:

​EXEMPT Art Disposals
  • Exempt VAT Notice 701/12 - Antiques, works of art or similar (as assets of historic houses) sold by private treaty to public collections
  • Exempt VAT Notice 701/12 - Antiques, works of art or similar (as assets of historic houses) used to settle a tax or estate duty debt with HM Revenue & Customs

VAT and Artists' Business Activities

Is an artist a business?
​

Artists are a business when they supply goods and services e.g. try to sell their art and earn an income from it

Those pursuing their art entirely as a leisure pursuit and/or making no sales have no cause for concern about VAT.

An artist is "a business" IF:
  • it is an occupation generally regarded as a trade, profession or vocations (i.e. Yes - an artist can be a business)
  • an artist's activities involve involve supplying goods (e.g. paintings) or services (e.g. workshops) for money. This definition should include most artists - even if their supply is irregular and/or 'not for profit'.
EXEMPT FROM VAT
  • ​Artists' Resale right
REFERENCE:
  • Artquest | Vexing Art Toll - discusses how VAT applies to artists - however this is a seriously old article
Do I supply 'goods and/or services'?
Supplies include sales, free gifts, loans, barters, exchange of services (but not given free of charge) made in the course of a 'business'. Artworks, art books and publications, lectures on or about art given for profit, will all be supplies for VAT purposes.
Vexing Art Toll | Artquest
The Artist’s Resale Right is exempt from VAT, so there are no VAT consequences of receiving a resale royalty. Any resale royalties you receive should not be included on your VAT return.
DACS | FAQs

VAT Margin Schemes - Art
​

You can use a VAT Margin Scheme if your gross turnover normally exceeds £79,000 (i.e. the threshold for registration) AND
  • You are eligible to use the Margin Scheme. VAT Margin Schemes are available to those who sell second-hand goods, works of art, antiques or collectibles on which no VAT was paid when you bought them. Hence there is no VAT to reclaim.
  • you account for VAT via A VAT Margin Scheme by charging the standard rate only on the difference between the price paid for an item and the price at which you sell it i.e. the margin. If you don't make a profit you don't pay any VAT.
  • However, standard VAT accounting must be used for all other sales and purchases such as overheads.
REFERENCE:
Most items normally described as ‘works of art’ are eligible. There are some exceptions, eg technical drawings, scenery for theatres and hand-decorated manufactured items.
VAT Margin Schemes: Eligibility

VAT on Art Education
​

EXEMPT FROM VAT - specific Education activities. These include:
  • Art education courses delivered by ‘eligible bodies’ (but not teachers employed by an Art School unless ‘eligible’)
  • Private art tuition – including any delivered online
  • Earnings from the Artist's Resale Right

VAT should be charged on the supply of teachers employed by Art Schools which are not designated as eligible bodies

VAT should be charged on all supplies that are not closely related and/or used in courses by eligible bodies
REFERENCE - UK Government Guidance

VAT and Art Museums
​

Admission Charges

EXEMPT from VAT:  Admission charges by public authorities or eligible cultural bodies to certain cultural events such as visits to museums, art exhibitions, zoos and performances. 

How VAT applies to Museums and Galleries depends on:
  • whether or not the cultural body is defined as eligible (there is a list!)
  • whether they are national museums or galleries that make no charges for entry and that are eligible for refunds under the VAT Refund Scheme
  • the extent to which activities are categorised under business, educational or charitable purposes.
All business activities by museums and art galleries and public bodies are always vatable.
OFFICIAL VAT NOTICES (UK)

VAT and art auctions
​

VAT can vary when charged at auctions depending on:
  • whether the art is imported
  • whether the dealer operates the Dealers Margin Scheme or not
  • whether there is VAT charged on online live auctions
OFFICIAL VAT NOTICES (UK)
  • VAT Notice 718/2: the auctioneers' scheme - This notice is about the Auctioneers’ Scheme, which is a variation on the VAT Margin Scheme for second-hand goods, antiques, works of art and collectors’ items. It tells you when you may use the Auctioneers’ Scheme to account for VAT on the supplies you make.
REFERENCE:

VAT and Commercial Art Galleries
​

VAT on artwork in Gallery Exhibitions and Gallery Sales
​

One aspect of VAT which many artists find confusing is how VAT applies to works sold via a gallery. 

Galleries by the very nature are in the business of showing and selling art - therefore VAT is applicable

A commercial art gallery or a gallery selling art should be registered for VAT (i.e. if if they are a viable business they should be meeting the registration threshold for turnover). This means all artwork sold via the gallery MUST have VAT added to the price.

Questions about VAT tend to revolve around whether the Gallery is acting as Principal or Agent.
  • The Gallery can act in the name of its principal i.e. the artist (as a disclosed agent)
  • The Gallery as an Agent can act in its own name (as an undisclosed agent) .
  • The VAT treatment of the sales depends on the type of agency applying as described in HMRC’sVAT Notice 700: The VAT Guide at sections 22.5 (disclosed agent) and 22.6 (undisclosed agent).
Problems that arise

Often problems arise because
  • Galleries and/or their artists don't understand VAT
  • and/or don't understand what can be done to reduce the VAT bill and increase the net benefit for artists.

BEFORE entering into a contractual agreement with a gallery

​If an artist is entering into a contractual relationship with a Gallery the artist is recommended to
  • get the Gallery to put in writing to the artist exactly how the VAT is dealt with.
  • this creates a record in the event of any dispute.
  • plus it provides a written statement that can be checked out independently with somebody who knows how VAT is supposed to work in Galleries (for example HMRC).
REFERENCE: Government Guidance

VAT Notice 700:​
REFERENCE: Other Articles

  • Is there a VAT liability when a gallery sells art on behalf of the artist? | Taxation (December 2014) - This relates to an artist renting space from a commercial VAT registered art gallery. The gallery does not purchase the artist’s work and is acting as her agent for the sales to the customers. The artist paid VAT on the rent but did not intend for VAT to be added to the sale of the artwork
  • Taxation - VAT on Paintings A Q&A article about how VAT should be charged and may be avoided.
  • VAT Revisited | ArtQuest - this covers 'When should galleries charge VAT on sales?' and 'When should galleries not charge VAT on sales?' and 'What happens if the gallery gets it wrong?'
  • VAT on paintings | Taxation Newsletter (7 November 2012) - comments on the vagaries of who owns a painting when an artist sells via a gallery and who has to raise VAT on what

VAT and Online Galleries
​

The situation of online galleries will revolve around:
  • whether or not they meet the VAT registration threshold on the basis of their annual turnover.
  • whether the online gallery acts as Principal or Agent for any sale
  • whether the artists are registered for VAT
  • whether they are using a VAT Margin Scheme - see above
REFERENCE: 
  • VAT for (Online) Galleries | UK Business Forums - note that this is a Forum Q&A which means it is not definitive - but also that the person asking the question has had conflicting advice from HMRC. The question revolves around the galleries role as Principal or Agent (i.e. they don't see the artwork but they do handle the sale)

VAT - Cross-border supplies and sales of Art
and Distance Selling of Art
​

From 1 December 2012, if you make any taxable supplies in the UK, you must register for VAT here, and account for any UK VAT to HMRC.
If you supply or sell art and trade across borders you will want to avoid major tax bills and fines for not following the relevant rules on VAT.

This affects:
  • artists living outside the EU who want to exhibit and sell their art in countries the EU
  • all artists selling to buyers based in the EU
  • galleries showing/selling art by Non-established taxable persons (e.g. international artists who do not live in the EU who are importing art for exhibitions in the EU);
  • galleries selling to buyers living in the EU and/or other countries
  • those living outside the EU and paying VAT on art bought in the EU
You need to:
  • be registered in all countries where VAT registration is relevant to your business activities
  • find out about proof to keep and forms to complete.
  • ensure you complete all VAT returns accurately for all relevant countries in line with reporting deadlines
  • be mindful of all the various distance selling thresholds for business that is not conducted face to face and how these apply to cross-border sales
PLACE OF SUPPLY

​The crucial issue is the place of supply principle.

What ‘place of supply’ means
The place of supply is the place where a supply is made and where VAT may be charged and paid.

With services, deciding the place of supply can be complicated. There are various rules that apply, depending on:
- whether you have more than 1 business location
- the kind of service you provide
- the place where your business or your business customer ‘belongs’

Definition of 'Place of Supply' | VAT: how to work out your place of supply of services
DISTANCE SELLING - ACROSS BORDERS

In addition, if trade is done through distance selling (e-Commerce) then the Distance Selling VAT Registration Thresholds apply - these can be different and lower than normal VAT Thresholds.

Note that if the distance selling relates to digital goods and services relating to art then the threshold is zero AND you have to register for VAT in the place where the customer lives
​
Distance selling is the term used to describes supplies of goods from one Member State to a person in another Member State where

  • - the customer is not registered for VAT, and
  • - the supplier is responsible for delivery of the goods.
The recipients of distance sales will mainly be private individuals, but they can also include small unregistered businesses, businesses making only exempt supplies, charities and public bodies.

​Definition of Distance Selling | VAT Place of Supply (Goods)
GEO-BLOCKING - FUTURE CHANGE IN THE EU

​In May 2016, the EU made a number of proposals about how it was going to tackle e-commerce within the EU and methods used for geo-blocking of transactions between different countries

​REFERENCE: EU Guidance
REFERENCE: Government Guidance
REFERENCE: Professional advice on VAT and cross-border sales
​
DISCLAIMER: Various people will purport to offer advice. You need to get references and/or check out all advisers if you intend to seek and pay for advice. What follows is for information only and does not constitute a recommendation
REFERENCE: Other Articles

VAT for Organisations, Exhibitions & Competitions
​

If you are a Non-Established Taxable Person (NETP), you must register for VAT in the UK and start to charge VAT if you make any taxable supplies here. For further information on NETPs see paragraph 6.2.3.
VAT Notice 700 -  The VAT Guide
OPEN EXHIBITIONS AND ART COMPETITIONS

Organisers of open exhibitions and art competitions accepting entries from artists who do not live or work in the country hosting the exhibition need to be fully conversant with the workings of VAT in relation to:
  • import of art
  • sale of art

[ NOTE: I THINK this applies irrespective of their status in relation to other matters relating to VAT. If in doubt seek professional advice. ]
 
VAT arrangements for those sending artwork to the UK for exhibition or a competition changed in December 2012

Those international artists defined as a Non-Established Taxable Person (NETP) now have to register for VAT and charge VAT if they make any supplies here.

This in turn changed the arrangements made by competition organisers for artwork received from international artists (people who don't live or work here for tax purposes) for exhibitions or art competitions.
REFERENCE:

​VAT Information (International Artists) (PDF) - notes for artists applying to exhibit at the Summer Exhibition of the Royal Academy of Art
If you are not normally resident in the UK, you must have a UK VAT registration number before your work(s) can be submitted. You must provide your UK VAT number when you submit.
VAT for non-UK artists and UK exhibition organisers | Making A Mark - This post provides an introduction to recent changes in Value Added Tax and VAT registration for both 
  • artists living outside the UK who want to exhibit and sell their art in the UK; and 
  • those selling art by overseas artists in the UK i.e. the managers of art galleries and art fairs, the Executive Committees of Art Societies and the organisers of Art Competitions.
REFERENCE: Government Guidance

VAT and Digital Art Services and Art Supplies
​

Note: This is a very brief summary and will be expanded in future to clarify further what the implications of the change in rules are.
​See some of the official publications above.

Recently EU governments have expressed concerned about the tendency for certain multi-national companies which are choosing to locate in specific countries so as to avoid paying tax on their trading in other EU countries. As a result changes were made to the VAT rules - and were implemented in the UK on 1 January 2015. 

This section considers key points followed by references to documents published by H.M. Revenue & Customs and articles and other publications providing information and advice
KEY POINTS:

All products supplied digitally (e.g. e-books, digital images; digital magazines or tutorials) are:
  • now rated for VAT based on the place of consumption (i.e. where the buyer lives) 
  • NOT on the place of supply (i.e. where the retailer is located for tax purposes). 
​
This now means that ALL retailers of digital products have to register for tax in all the countries that they supply to - irrespective of whether or not they meet the threshold for VAT in this country.  Unless they can find a third party to deal through who will also deal with all the VAT.

Guidance on what you need to consider when deciding whether your activity is ‘business’ is in the VAT Business/Non-Business Manual.

VAT chargeable Services within the European Union definition include the following:
  • E-books (e.g. Amazon Kindle)
  • Download and streaming videos
  • Cloud computing, including software provided as a service (‘SaaS’)
  • Streaming television
  • Broadcast television and radio
If your business turnover is below the UK VAT threshold
If you’re in business but your turnover is below the UK VAT threshold you’ll need to:
  • register for VAT before you can register for Union VAT MOSS
  • enter ‘Digital Services’ and select ‘Supplies of Digital Services (below UK VAT threshold) under VAT MOSS arrangements’ - when asked to search for a business activity as part of VAT registration
If you only register for UK VAT so you can use the VAT MOSS scheme, you’ll only need to submit nil VAT Returns.

​How does VAT apply to digital goods and services?
VAT: supplying digital services to private consumers (129 December 2014 | updated March 2015) - Changes to the place of supply rules for digital services
  • See also the section later on this page
What's the VAT Mini One-Stop Shop?
​NOTE: From 1st Jan 2015 registration to the VAT ON E-SERVICES site was suspended

REFERENCE: HM Revenue & Customs Publications

VAT on Digital Services in the EU - The history of updates is as follows:
  • 1 February 2016 - updated
  • 11 June 2015 - Updated to incorporate information about correcting VAT MOSS returns.
  • 20 March 2015 - How to complete VAT MOSS Returns and how to pay VAT MOSS bill.
  • 19 December 2014 - This guidance has been updated to incorporate information for micro businesses interested in registering for VAT MOSS.
  • 1 October 2014 - First published.

VAT on sales of digital services in the EU (VAT MOSS) Published 1 February 2016
​This collection brings together guidance and forms about VAT on the supply of digital services and the VAT Mini One Stop Shop (VAT MOSS).

Register for the VAT Mini One Stop Shop scheme 16 January 2018 - Guidance

Guidance - VAT: businesses supplying digital services to private consumers - Updated 24 March 2015
This explains the changes to the place of supply rules for digital services

REFERENCE: eCommerce Platforms
​

It's in the interests of ecommerce platforms to make it easy for clients to deal with the digital product VAT changes - and some have.

Bottom line - if the e-commerce platforms are to keep their customers they need to ensure that those using their service can be compliant with the rules for charging VAT for digital products sold in the EU

That's not to say all are - and you need to check this!

If you're selling digital goods to customers in the EU, you should charge VAT based on your customers' locations.

It's your responsibility to make sure that you comply fully with tax laws wherever your business operates. You should familiarize yourself with EU VAT rules as they apply to you.
Shopify

REFERENCE: VAT Advice from E-commerce sites

Here's what they have to say on the topic:
Etsy
  • How VAT works on Etsy
  • Digital VAT on Etsy - Etsy provides a simple way to collect and remit digital VAT from customers in different countries. Cites examples of digital products - E-books; Digital patterns; Downloadable PDFs
Shopify
  • Shopify: Charging VAT in the EU for digital goods - Useful summary of how the VAT rules apply and how to use the Shopify site to ensure compliance. Shopify is software used by independent retailers to set up an  e-commerce shop on their websites to process online sales, manage inventory/product listings and process payments
Create
  • Create: EU Digital Services VAT FAQ The 2015 change to legislation only affects sellers whose customers purchase digital products or services within the EU. Create users who have the 'Downloadable Products' facility enabled on their account and are actively selling digital products must observe these laws.
  • Create: How To Comply With 'EU Digital Services VAT' Rules - Create offer a FREE feature within your account to calculate the customer’s VAT rate based upon their resident state for all digital products (downloadable products). 

REFERENCE: Advice from accountants & tax advisors

  • Ernst and Young: Overview of EU VAT changes for digital products and
    services in 2015     - (pdf) - a campaign brochure for the services of a leading accountancy firm provides clearly structured advice to suppliers of digital goods anywhere in the world
  • Digitalising VAT | Tax Adviser Magazine (1 October 2015) - The completion of the digital single market is cited as one of 10 political priorities for the European Commission. Within its strategy to achieve this, announced on 6 May, three core strands have been identified

REFERENCE: Other sources of advice and information about VAT, digital products and place of supply