Art and VAT, when the Administration loses its role as critic.

23/12/2019
The criteria in France for applying the reduced VAT rate linked to the "creative" nature of art photographs was not compliant with European Union law. Thus judged the Court of Justice of the European Union in Luxembourg. The source of the debate, a possible distortion between French and European law vis a vis the application of the reduced VAT rate to art photographs. With regard to VAT, the photographs are considered to be “art photographs” benefiting from the reduced tax rate when they are “taken by the artist, printed by him or under his control, signed and numbered within the limit of thirty copies, all formats and all media combined ”(article 98 A, II, 7 ° of annex III to the General Tax Code).

Under these conditions foreseen by the VAT directive (directive 2006/112 from November 28, 2006, article 103, 2, b and annex IX, part A, 7), the French tax administration added that "cannot be considered as works of art only photographs that bear witness to a manifest creative intention on the part of their author ”(BOFIP - BOI-TVA-SECT-90-10 §280).

Thus, on the basis of this doctrine, the tax administration had to assess the artistic nature of the photograph allowing its author to be qualified as an artist and to benefit from the reduced VAT rate. In this context the administration questioned the reduced rate of VAT applied by the company “Regards Photographiques” for the sale of portraits and wedding photographs, on the basis that these would not reveal any creative intention, nor would they be of interest to any public. Following litigation by the company, the Conseil d’Etat questioned the Court of Justice of the European Union on the interpretation to be given to the provisions in question.


In consequence France must review its administrative doctrine on reduced VAT rates for art photographs. The Court first clarified that the concept of "artist", referred to in Annex IX to the VAT Directive, could not be understood by a person distinct from the author of the work, as referred to by the directive itself (CJEU, September 5, 2019, C-145/18). It also recalled that if the provisions relating to the reduced rate are subject to a strict interpretation, the interpretation adopted must not deprive the provision of its effects.

More interestingly, the Court censored the doctrine. It considers that the determination of the artistic character of a work was subject to an assessment by the tax authorities on the basis of "vague and subjective" criteria. The application of these criteria did not guarantee either respect for legal certainty, given the margin of appreciation left by the tax authorities, or tax neutrality. Indeed, two objectively identical photographs could be taxed differently, as noted by the Advocate General.

The tax administration thus lost its role as an art critic and was forced to modify the criteria set by its doctrine.


For more information, please contact Karolina Blasiak: k.blasiak@rosemont-mc.com

Credit Pictures: Court of Justice of the European Union in Luxembourg
Source: http://www.fiscalonline.com/Condamnation-de-la-legislation.html