Since January 1, 2025, a reduced VAT rate of 7%, instead of the previous 19%, applies to the trade of artworks in Germany. This change was introduced in the 2024 Annual Tax Act and aims to strengthen the German art market while improving the competitiveness of galleries and art dealers. This development could also have a positive impact on art transportation services by facilitating international exchanges. Other countries, such as France, already apply a reduced VAT rate of 5.5%.

VAT on Art Sales: How Does It Affect Me as a Buyer?

When purchasing an artwork, VAT is a key factor in the final price. In general, dealers and galleries must add VAT to the sale price, whereas private sales are usually tax-free. With the new regulation from 2025, the VAT rate on artworks sold by galleries or in the art trade will be reduced from 19% to 7%. This means that artworks can be offered at lower prices, as the tax burden decreases.

Benefits of the Tax Act

The reduction in VAT brings several advantages:

• Strengthening the Art Market: By lowering the tax burden, German galleries and art dealers become more competitive internationally. This could lead to a revitalization of the art trade and increased presence at international fairs.
• Support for Artists: The German government hopes that the demand for artworks will increase due to this change, benefiting contemporary artists in particular. Higher sales could help them reach a broader audience and increase their income.
• Cost Savings for Collectors: For collectors, the VAT reduction means potentially lower purchase prices, making art acquisitions more financially attractive. Especially for high-value art, the savings can be significant. Anyone considering investing in art will directly benefit from the new regulation—whether as a collector, investor, or simply an art enthusiast.

Affected Artworks and Exceptions

The reduced VAT rate of 7% applies to the sale, intra-community acquisition (innergemeinschaftlicher Erwerb), and import of certain artworks and collectibles. This means:

• Sale: When a gallery or an art dealer sells an artwork, only 7% VAT instead of 19% is charged.
• Intra-community acquisition: Buyers who acquire art from another EU country will also pay the reduced VAT rate of 7% when importing it into Germany.
• Import from non-EU countries: The tax reduction also applies when importing artworks from outside the EU.

Which Artworks Are Covered by the Regulation?

The reduced VAT rate applies to traditionally recognized artworks, such as:

• Paintings, drawings, and collages created by artists by hand.
• Original sculptures and statues, provided they are entirely created by artists.
• Hand-signed prints, such as etchings or lithographs, when produced in limited editions.

What Are the Exceptions?

Not all artworks benefit from the tax reduction. The full VAT rate of 19% still applies to:

• Photographs, unless developed, limited, and signed by the artist.
• Serial prints and reproductions, such as offset prints or posters.
• Digital artworks, as they do not fall under traditional art categories.
• Media art, such as video art or light installations.
• Rental of artworks, since the regulation applies only to sales, not to rentals or leasing.

These exceptions mean that some contemporary art forms will still be subject to the standard VAT rate. Buyers and dealers should therefore carefully check whether an artwork qualifies for the reduced tax rate.

What Are the VAT Rules in Other Countries?

• Switzerland: The import of artworks is subject to the regular VAT rate of 7.7%. Additionally, free zones such as the Geneva Freeport offer special storage conditions.
• France: A reduced VAT rate of 5.5% applies to the sale and import of artworks.

 Conclusion:

Overall, the introduction of the reduced VAT rate represents significant support for the German art trade and could provide positive momentum for both artists and collectors, as well as for galleries.

Photo Credit: Eclipse of the Sun (1926), George Grosz – © Heckscher Museum of Art / Public domain