Article 26a Sixth Directive 77/388/EEC

A. Definitions

For the purposes of this Article, and without prejudice to other Community provisions:

(a)works of art shall mean the objects referred to in (a) of Annex I.

However, Member States shall have the option of not considering as ‘works of art’ the items mentioned in the final three indents in (a) in Annex I;

(b)collectors items shall mean the objects referred to in (b) of Annex I;

(c)antiques shall mean the objects referred to in (c) of Annex I;

(d)second-hand goods shall mean tangible movable property that is suitable for further use as it is or after repair, other than works of art, collectors' items or antiques and other than precious metals or precious stones as defined by the Member States;

(e)taxable dealer shall mean a taxable person who, in the course of his economic activity, purchases or acquires for the purposes of his undertaking, or imports with a view to resale, second-hand goods and/or works of art, collectors' items or antiques, whether that taxable person is acting for himself or on behalf of another person pursuant to a contract under which commission is payable on purchase or sale;

(f)organizer of a sale by public auction shall mean any taxable person who, in the course of his economic activity, offers goods for sale by public auction with a view to handing them over to the highest bidder;

(g)principal of an organizer of a sale by public auction shall mean any person who transmits goods to an organizer of a sale by public auction under a contract under which commission is payable on a sale subject to the following provisions:

—the organizer of the sale by public auction offers the goods for sale in his own name but on behalf of his principal,

—the organizer of the sale by public auction hands over the goods, in his own name but on behalf of his principal, to the highest bidder at the public auction.

B. Special arrangements for taxable dealers

1.In respect of supplies of second-hand goods, works of art, collectors' items and antiques effected by taxable dealers, Member States shall apply special arrangements for taxing the profit margin made by the taxable dealer, in accordance with the following provisions.

2.The supplies of goods referred to in paragraph 1 shall be supplies, by a taxable dealer, of second-hand goods, works of art, collectors' items or antiques supplied to him within the Community:

—by a non-taxable person,

—or

—by another taxable person, in so far as the supply of goods by that other taxable person is exempt in accordance with Article 13 (B) (c),

—or

—by another taxable person in so far as the supply of goods by that other taxable person qualifies for the exemption provided for in Article 24 and involves capital assets,

—or

—by another taxable dealer, in so far as the supply of goods by that other taxable dealer was subject to value added tax in accordance with these special arrangements.

3.The taxable amount of the supplies of goods referred to in paragraph 2 shall be the profit margin made by the taxable dealer, less the amount of value added tax relating to the profit margin. That profit margin shall be equal to the difference between the selling price charged by the taxable dealer for the goods and the purchase price.

For the purposes of this paragraph, the following definitions shall apply:

—selling price shall mean everything which constitutes the consideration, which has been, or is to be, obtained by the taxable dealer from the purchaser or a third party, including subsidies directly linked to that transaction, taxes, duties, levies and charges and incidental expenses such as commission, packaging, transport and insurance costs charged by the taxable dealer to the purchaser but excluding the amounts referred to in Article 11 (A) (3),

—purchase price shall mean everything which constitutes the consideration defined in the first indent, obtained, or to be obtained, from the taxable dealer by his supplier.

4.Member States shall entitle taxable dealers to opt for application of the special arrangements to supplies of:

(a)works of art, collectors' items or antiques which they have imported themselves;

(b)works of art supplied to them by their creators or their successors in title;

(c)works of art supplied to them by a taxable person other than a taxable dealer where the supply by that other taxable person was subject to the reduced rate pursuant to Article 12 (3) (c).

Member States shall determine the detailed rules for exercising this option which shall in any event cover a period at least equal to two calendar years.

If the option is taken up, the taxable amount shall be determined in accordance with paragraph 3. For supplies of works of art, collectors' items or antiques which the taxable dealer has imported himself, the purchase price to be taken into account in calculating the margin shall be equal to the taxable amount on importation, determined in accordance with Article 11 (B), plus the value added tax due or paid on importation.

5.Where they are effected in the conditions laid down in Article 15, the supplies of second-hand goods, works of art, collectors' item or antiques subject to the special arrangements for taxing the margin shall be exempt.

6.Taxable persons shall not be entitled to deduct from the tax for which they are liable the value added tax due or paid in respect of goods which have been, or are to be, supplied to them by a taxable dealer, in so far as the supply of those goods by the taxable dealer is subject to the special arrangements for taxing the margin.

7.In so far as goods are used for the purpose of supplies by him subject to the special arrangements for taxing the margin, the taxable dealer shall not be entitled to deduct from the tax for which he is liable:

(a)the value added tax due or paid in respect of works af art, collectors' items or antiques which he has imported himself;

(b)the value added tax due or paid in respect of works of art which have been, or are to be, supplied to him by their creators or their successors in title;

(c)the value added tax due or paid in respect of works of art which have been, or are to be, supplied to him by a taxable person other than a taxable dealer.

8.Where he is led to apply both the normal arrangements for value added tax and the special arrangements for taxing the margin, the taxable dealer must follow separately in his accounts the transactions falling under each of these arrangements, according to rules laid down by the Member States,

9.The taxable dealer may not indicate separately on the invoices which he issues, ————— tax relating to supplies of goods which he makes subject to the special arrangements for taxing the margin.

10.In order to simplify the procedure for charging the tax and subject to the consultation provided for in Article 29, Member States may provide that, for certain transactions or for certain categories of taxable dealers, the taxable amount of supplies of goods subject to the special arrangements for taxing the margin shall be determined for each tax period during which the taxable dealer must submit the return referred to in Article 22 (4).

In that event, the taxable amount for supplies of goods to which the same rate of value added tax is applied shall be the total margin made by the taxable dealer less the amount of value added tax relating to that margin.

The total margin shall be equal to the difference between:

—the total amount of supplies of goods subject to the special arrangements for taxing the margin effected by the taxable dealer during the period; that amount shall be equal to the total selling prices determined in accordance with paragraph 3,

—and

—the total amount of purchases of goods as referred to in paragraph 2 effected, during that period, by the taxable dealer; that amount shall be equal to the total purchase prices determined in accordance with paragraph 3.

Member States shall take the necessary measures to ensure that the taxable persons concerned do not enjoy unjustfied advantages or sustain unjustified loss.

11.The taxable dealer may apply the normal value added tax arrangements to any supply covered by the special arrangements pursuant to paragraph 2 or 4.

Where the taxable dealer applies the normal value added tax arrangements to:

(a)the supply of a work of art, collectors' item or antique which he has imported himself, he shall be entitled to deduct from his tax liability the value added tax due or paid on the import of those goods;

(b)the supply of a work of art supplied to him by its creator or his successors in title, he shall be entitled to deduct from his tax liability the value added tax due or paid for the work of art supplied to him;

(c)the supply of a work of art supplied to him by a taxable person other than a taxable dealer, he shall be entitled to deduct from his tax liability the value added tax due or paid for the work of art supplied to him.

This right to deduct shall arise at the time when the tax due for the supply in respect of which the taxable dealer opts for application of the normal value added tax arrangements become chargeable.

C. Special arrangements for sales by public auction

1.By way of derogation from B, Member States may determine, in accordance with the following provisions, the taxable amount of supplies of second-hand goods, works of art, collectors' items or antiques effected by an organizer of sales by public auction, acting in his own name, pursuant to a contract under which commission is payable on the sale of those goods by public auction, on behalf of:

—a non-taxable person,

—or

—another taxable person, in so far as the supply of goods, within the meaning of Article 5 (4) (c), by that other taxable person is exempt in accordance with Article 13 (B) (c),

—or

—another taxable person, in so far as the supply of goods, within the meaning of Article 5 (4) (c), by that other taxable person qualifies for the exemption provided for in Article 24 and involves capital assets,

—or

—a taxable dealer, in so far as the supply of goods, within the meaning of Article 5 (4) (c), by that other taxable dealer, is subject to tax in accordance with the special arrangements for taxing the margin provided for in B.

2.The taxable amount of each supply of goods referred to in paragraph 1 shall be the total amount invoiced in accordance with paragraph 4 to the purchaser by the organizer of the sale by public auction, less:

—the net amount paid or to be paid by the organizer of the sale by public auction to his principal, determined in accordance with paragraph 3,

—and

—the amount of the tax due by the organizer of the sale by public auction in respect of his supply.

3.The net amount paid or to be paid by the organizer of the sale by public auction to his principal shall be equal to the difference between:

—the price of the goods at public auction,

—and

—the amount of the commission obtained or to be obtained by the organizer of the sale by public auction from his principal, under the contract whereby commission is payable on the sale.

4.The organizer of the sale by public auction must issue to the purchaser an invoice ————— itemizing:

—the auction price of the goods,

—taxes, dues, levies and charges,

—incidental expenses such as commission, packing, transport and insurance costs charged by the organizer to the purchaser of the goods.

That invoice must not indicate any value added tax separately.

5.The organizer of the sale by public auction to whom the goods were transmitted under a contract whereby commission is payable on a public auction sale must issue a statement to his principal.

That statement must itemize the amount of the transaction, i.e. the auction price of the goods less the amount of the commission obtained or to be obtained from the principal.

A statement so drawn up shall serve as the invoice which the principal, where he is a taxable person, must issue to the organizer of the sale by public auction in accordance with Article 22 (3).

6.Organizers of sales by public auction who supply goods under the conditions laid down in paragraph 1 must indicate in their accounts, in suspense accounts:

—the amounts obtained or to be obtained from the purchaser of the goods,

—the amount reimbursed or to be reimbursed to the vendor of the goods.

These amounts must be duly substantiated.

7.The supply of goods to a taxable person who is an organizer of sales by public auction shall be regarded as being effected when the sale of those goods by public auction is itself effected.

D. Transitional arrangements for the taxation of trade between Member States

During the period referred to in Article 28l, Member States shall apply the following provisions:

(a)supplies of new means of transport, within the meaning of Article 28a (2), effected within the conditions laid down in Article 28c (A) shall be excluded from the special arrangements provided for in B and C;

(b)by way of derogation from Article 28a (1) (a), intra-Community acquisitions of second-hand goods, works of art, collectors' items or antiques shall not be subject to value added tax where the vendor is a taxable dealer acting as such and the goods acquired have been subject to tax in the Member State of departure of the dispatch or transport, in accordance with the special arrangements for taxing the margin provided for in B, or where the vendor is an organizer of sales by public auction acting as such and the goods acquired have been subject to tax in the Member State of departure of the dispatch or transport, in accordance with the special arrangements provided for in C;

(c)Articles 28b (B) and 28c (A) (a), (c) and (d) shall not apply to supplies of goods subject to value added tax in accordance with either of the special arrangements laid down in B and C.