This article is co-authored by ArtSecure Founder Phoebe Kouvelas and KG Law Firm Associates Loukas Panetsos & Emmanouela Vitsa.
The recently enacted Law 4738/2020 introduced a beneficial tax treatment for certain art transactions. (You can read updates relating to 2022 here).
Reduction of Sales VAT
In particular, for the period between 27/10/2020 and 31/12/2021, the sale/purchase of the following works of art will be subject to the reduced 13% VAT rate, if made by their creator or his/her successors: paintings, drawings, collages and similar decorative plaques, original engravings, prints and lithographs, original sculptures and statuary, as well as sculpture casts up to 8 copies supervised by the artist or his/her successors. On the other hand, no change has been made to the special VAT margin scheme regime.
This amendment is expected to provide a much-needed boost to direct sales by artists and their estates/ successors, albeit only temporarily.
Nevertheless, Law 4738/2020 is silent on whether this reduction also applies to galleries/ private dealers selling as agents on behalf of artists and their estates/ successors. If not, it renders them less competitive, as sales through a gallery or private dealer will be subject to a higher VAT rate, increasing the price the buyer will pay for the same artwork when buying through them, as opposed to buying directly from the artist.
In order to remedy this consequence, it can be argued that the VAT reduction should also be applied to sales through a gallery/ private dealer, when such gallery/ private dealer act(s) as agents on behalf of artists or their successors. This argument can be based on an older circular by the Ministry of Finance (Circular 1302/1998) which accepted State Legal Council Opinion 796/97. According to this, when galleries/ private dealers sell artworks as agents acting for and on behalf of the creators or their successors, the same reduced VAT to which sales directly by artists are subject, applies.
It remains to be seen whether Gallery Associations will seek a clarification on this from the Ministry of Finance.
Reduction of Import VAT
Law 4738/2020 also introduces, for the same period, a reduction to 13% on the import VAT of works of art, collectors’ items or antiques and antiquities in Greece. Clearly, collectors planning to import their artworks in Greece may want to benefit from this provision and transfer their collection until the end of 2021.
Further, a specific category of collectors and dealers may also benefit from the reduced import VAT rate in connection to the current deferral of the application of the new import Regulation 880/2019 estimated to take effect sometime after 2022. Briefly, when the Regulation becomes applicable, importing in the EU art and antiques (a) above a certain age and value and (b) created or discovered outside the customs territory of the EU will be subject to a strict licensing regime. Although the Regulation is in effect, its application is deferred until after 2022, when the necessary European centralized electronic system is expected to be operable. Therefore, 2021 may be the only year when one can import a collection to Greece freely with reduced import VAT rate.
Update: As of February 2021, the Ministry of Finance clarified that when galleries/ private dealers sell artworks as agents acting for and on behalf of the creators or their successors, the same reduced VAT to which sales directly by artists are subject, applies.