Taxation: Commission refers Austria to the Court of Justice over the VAT treatment of resale rights of works of art

The resale right - which gives rise to what are commonly known as 'royalties' - is an unassignable and inalienable property right enjoyed by the author of an original work of graphic or plastic art, to an economic interest in successive sales of the work concerned. This right allows an artist, under certain conditions, to receive a percentage of the sale price of a work of art when it is resold.

Under Austrian law royalty payments to an artist or to those entitled to royalties for the resale of an original work of art, are currently subject to VAT. This violates EU law according to which VAT is only due on goods or services 'provided for consideration', i.e. for payment (the VAT Directive, Council Directive 2006/112/EC).

In a previous judgement, the Court of Justice of the EU decided that when a person provides services without receiving a direct consideration, there is no basis of assessment or amount on the basis of which the VAT can be applied. In the view of the Court, such services are consequently not subject to VAT (C-16/93 on 3 March 1994, R.J. Tolsma). 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.

The European Commission decided to send a reasoned opinion to the Austrian authorities in July 2016. As Austria has failed to bring its legislation in line with EU law, the Commission has decided to refer Austria to the Court of Justice of the EU.

For More Information:

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  On the monitoring the EU law in the area of Taxation and Customs Union.

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  On the key decisions in the December 2017 infringements package, see full MEMO/17/4767.

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  On the general infringements procedure, see MEMO/12/12 (an info graph).

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  On the EU infringements procedure.

IP/17/4776