The decision to scrap the UK discount on import VAT for works of art bought at auction comes into effect on September 1.
Full domestic VAT is now payable on the auctioneer’s charges on those works imported from outside the European Union that remain inside the EU after being sold in the UK. As reported earlier this year, the European Court of Human Justice ruled in February that the previous discount rate of five per cent should be scrapped.
Put simply, previously when an object was brought to the UK for sale the import price was taken to be the hammer price and the buyer’s premium. The sum of both was subject to import VAT of five per cent rather than UK domestic VAT of 17.5 per cent. From this Friday only the hammer price will be treated as the import price and so the buyer’s premium will be subject to domestic VAT.
The ruling does not affect dealers’ costs or any other part of import VAT beyond auctioneers’ commissions.
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