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SELLING INTERNATIONALLY: TAXES

VAT, SALES TAXES AND IMPORT DUTIES. A FEW POINTERS.

 

When selling abroad, there are a number of factors to take into consideration from deciding how to ship your artworks to making sure you comply with local regulations and in particular taxes! Navigating the complex world of taxes is no easy task but unfortunately, it is an important one to do to avoid nasty surprises such as fines for not paying VAT or sales taxes when required or having to pay for unexpected import duty fees.

We have listed below some information we have gathered whilst going through the process of ensuring we are compliant ourselves. Please note that all information provided below is aimed at giving you pointers and is in no ways exhaustive. We do not take responsibility either for the accuracy of the information provided on this page. It is ultimately up to you, the seller, to ensure measures are taken to comply with local tax regulations. We recommend seeking advice with a professional tax adviser when needed.

VALUE ADDED TAX (VAT)

What is VAT?

Value Added Tax, commonly referred to as VAT, is a consumer tax added on top of the value of an artwork if the person selling the artwork is VAT registered. VAT is a tax found across Europe and in some other countries in the world.

In Europe, whether you need to pay and register for VAT will usually depend on your annual sales revenue generated in each country and the location of your inventory. This threshold will vary from one country to another and in Europe is usually between 35,000 euros to 85,000 euros.

 

How to know whether I need to register for VAT?

Amazon has partnered with KPMG to create a test to know whether you need to register for VAT. You can take the test to have an understanding as to whether you need to register for VAT but please note that this test was developed for Amazon sellers specifically in mind and although it can be used as a starting point we always encourage you to seek professional advice from qualified tax advisor as there is no guarantee of the accuracy of it. You can find the test here.

Below we have also listed some basic information on a few key countries where Affordable Art Fair has customers on whether you need to register for VAT.

United Kingdom

If your business is established in the EU, you will need to register for VAT in the UK if:

  • You store your artworks in the UK or sell to UK-based consumers who are not VAT registered AND
  • Your sales exceed the UK's distance selling VAT threshold of £70,000 

If your business is located outside of the EU, you will need to register for VAT in the UK if:

  • You sell to EU customers artworks that you store in the UK

You can find more detailed information here on whether and how you need to register for VAT in the UK. If you need to register, forms you will need can be found here.

 

France

If your business is established in the EU, you will need to register for VAT in France if:

  • You store your artworks in France or sell to French consumers who are not VAT registered AND
  • Your sales exceed France's distance selling VAT threshold of €35,000 

If your business is located outside of the EU, you will need to register for VAT in France if:

  • You sell to EU customers, artworks that you store in France

You can find more detailed information here on whether and how you need to register for VAT in France.

 

Belgium

If your business is established in the EU, you will need to register for VAT in Belgium if:

  • You store your artworks in Belgium or sell to Belgium-based consumers who are not VAT registered AND
  • Your sales exceed Belgium's distance selling VAT threshold of €35,000 

If your business is located outside of the EU, you will need to register for VAT in Belgium if:

  • You sell to EU customers, artworks that you store in the Belgium

You can find more detailed information here on whether and how you need to register for VAT in Belgium. 

 

Netherlands

If your business is established in the EU, you will need to register for VAT in the Netherlands if:

  • You store your artworks in the Netherlands or sell to Netherland-based consumers who are not VAT registered AND
  • Your sales exceed the Netherlands' distance selling VAT threshold of €100,000 

If your business is located outside of the EU, you will need to register for VAT in the Netherlands if:

  • You sell to EU customers, artworks that you store in the Netherlands

You can find more detailed information here on whether and how you need to register for VAT in the Netherlands.

 

Sweden

If your business is established in the EU, you will need to register for VAT in Sweden if:

  • You store your artworks in Sweden or sell to Sweden-based consumers who are not VAT registered AND
  • Your sales exceed Sweden's distance selling VAT threshold of SEK 320,000 

If your business is located outside of the EU, you will need to register for VAT in Sweden if:

  • You sell to EU customers, artworks that you store in Sweden

You can find more detailed information here on whether and how you need to register for VAT in Sweden.

 

Italy

If your business is established in the EU, you will need to register for VAT in Italy if:

  • You store your artworks in Italy or sell to Italy-based consumers who are not VAT registered AND
  • Your sales exceed the Italian distance selling VAT threshold of €35,000 

If your business is located outside of the EU, you will need to register for VAT in Italy if:

  • You sell to EU customers, artworks that you store in Italy

You can find more detailed information here on whether and how you need to register for VAT in Italy.

 

Germany

If your business is established in the EU, you will need to register for VAT in Germany if:

  • You store your artworks in Germany or sell to Germany-based consumers who are not VAT registered AND
  • Your sales exceed Germany's distance selling VAT threshold of €100,000 

If your business is located outside of the EU, you will need to register for VAT in Germany if:

  • You sell to EU customers, artworks that you store in Germany

You can find more detailed information here on whether and how you need to register for VAT in Germany.

 

Spain

If your business is established in the EU, you will need to register for VAT in Spain if:

  • You store your artworks in Spain or sell to Spain-based consumers who are not VAT registered AND
  • Your sales exceed Spain's distance selling VAT threshold of €35,000 

If your business is located outside of the EU, you will need to register for VAT in Spain if:

  • You sell to EU customers, artworks that you store in Spain

You can find more detailed information here on whether and how you need to register for VAT in Spain.

 

Distant selling VAT thresholds on each European country will be available on each country's local tax authority website. This is where you will find the most accurate and up to date information. You can also refer to the European VAT desk.

 

What are the consequences for non-compliance with VAT regulations in the EU?

Not complying with VAT regulations will have a number of consequences and particular attention to compliance is required as the consequences, usually financial, can turn a profitable activity into a money losing one. We have listed a few of the possible consequences here and encourage you to keep up to date with any changes:

1. You will have to pay the VAT you owe each tax authority and often interest on the VAT from the day it should have been paid to the day you actually pay it. With VAT rates typically around 20% in the EU, failing to comply can significantly impact a gallery's profit margin.

2. Fines and financial penalties, although they vary from one country to another, are also common sanctions and will usually be calculated as a percentage on a combination of the time you failed to register for VAT and pay and the amount of VAT you owe.

3. If it comes to our attention that you are failing to comply with local tax authorities regulations, we will temporarily make your account inactive until we have sufficient evidence that you have completed all necessary steps to become compliant. 

 

SALES TAXES

In countries like the United States, rather than charging VAT, they charge a sales tax. Unlike VAT which will be included in the price displayed to consumers, sales taxes will be added on top of the value of an artwork at check out. These rates vary from one country to another and can be anywhere from 5% to 20%.

IMPORT DUTIES

Some countries will charge an import duty fee on artwork being imported into the country. This tax is different to VAT and sale taxes. When a country charges import duties, upon arrival in that country, your artworks will be held in customs until either you or the buyer pay the import fees. For example, Hong Kong do not charge import duties and Singapore charge 5% of the value of the artwork. We encourage all sellers to make it clear whether they will be paying for import duties or whether it will be the customer’s responsibility to pay for it, before the artwork is being shipped out. 

 

 

 

This page was last updated on the 5th of September 2018