Deliveries of works

The following explanations refer to deliveries of works (as defined in Section 3 (4) UStG), such as deliveries of works of art. Information on the taxation of miscellaneous services such as the granting of rights of use and other independent services (performances etc.) can be found here:

Independent services such as performances, lectures etc.

Granting of rights of use for copyrighted works etc.

For deliveries of works, the question of whether the buyers are businesses/entrepreneurs (B2B: Business to Business) or private individuals (B2C: Business to Consumer) is significant.
As with all cross-border transactions, it is necessary to determine the country in which value added tax must be paid (where) and who must pay this tax (who).

 

Please note: Member State (within the EU) – third country (outside the EU)

Whether the goods are dispatched from an EU Member State (hereinafter referred to as Member State) or from a country outside the EU (hereinafter referred to as third country) plays a decisive role in determining the country in which the value added tax must be paid (where) and who is liable to pay the value added tax (who).

Deliveries of works of art from Member States are not subject to customs duties. However, they are relevant for value added tax purposes (see Deliveries of works of art from a Member State to Germany: B2B / B2C).

Customs regulations apply in the case of deliveries from a third country (see Deliveries of works of art from a third country to Germany).

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Deliveries of works of art from a Member State to Germany: B2B

B2B (Business to Business)

B2B refers to a delivery or miscellaneous service performed by a business person in return for a fee as part of his or her business. Artists are usually also business persons.

 

In which country must value added tax be paid (where)?

Rule: The place of delivery is the shipping destination, i.e. Germany (intra-Community acquisition, cf. Section 3 d UStG, Section 1 (1) No. 5 UStG, Section 1 a UStG).

Example:
An artist sells  and delivers a work of art from France to a gallery in Germany.
The place of delivery is Germany.

Exception: purchasing limit for certain buyers pursuant to Section 1 a (3) UStG
The transaction is not considered an intra-Community acquisition if the total amount for the acquisition of works from another Member State did not exceed 12,500 euros in the previous calendar year and is not expected to exceed this amount in the current calendar year and if the purchaser is subject to the small business regulation and has no VAT ID or if he or she is an entrepreneur who only engages in tax-free transactions for which no input tax is deducted. In this case, the place of delivery is not Germany.

Important!
The following applies in both cases - the rule and the exception: it is irrelevant in which Member State of the EU the artist is based. What is important is that the work was shipped to Germany from an EU country (not from a third country).

 

Who has to pay value added tax (who)?

Rule: In the case of intra-Community acquisitions, the recipient of the goods, i.e. the purchaser in Germany, is liable to pay the tax (Section 13 a (1) No. 2 UstG).

Example:
An artist sells and delivers a work of art from France to a gallery in Germany.
The place of delivery is Germany. The gallery in Germany is the tax debtor and must pay the value added tax to the authorities.

Notes on invoicing: No value added tax is listed on the invoice. The artist should list his own VAT ID and the gallery's VAT ID and include a note referencing the tax liability. The gallery in Germany should therefore request a VAT ID to provide to the seller (the artist). Otherwise the artist runs the risk of having to pay the value added tax again in his or her country.
In addition, it is advisable to indicate on the invoice the country from which the work was delivered because other regulations apply for deliveries from a third country to Germany (see here for details).

Sample wording regarding tax liability:
The invoice is issued without value added tax, as the recipient of the delivery is liable to pay the value added tax pursuant to Section 13 a (1) No. 2 UStG (intra-Community acquisition). The value added tax must be declared and paid by the recipient (tax liability of the recipient of the delivery).

A VAT ID is assigned to any business person within the EU upon request (only in his or her own country of residence) and is regarded as an attribute of a person's entrepreneurial status.
The VAT ID must be checked at the time of delivery.

 

Exception: purchasing limit for certain buyers pursuant to Section 1 a (3) UStG
The artist from the other Member State may have to pay the value added tax in his or her country depending on the local regulations.
Therefore, it is always advisable for the supplying artist to inform himself/herself regarding the status of the recipient.
Assuming the gallery based in Germany in the above example is a small business without a VAT ID, the artist based in France must check whether the delivery is subject to value added tax in France.
Note on invoicing:
If the delivery is subject to value added tax in France, the artist must indicate the VAT rate applicable in France on the invoice (or add a reference to a possible VAT exemption, such as the German small business regulation), i.e. he or she issues a "regular" invoice (as though he or she were issuing an invoice to a company in France).



Important!

Supply chains (e.g., when an artist based in Morocco sends a work from an exhibition in France to Germany) cannot be taken into account here because they involve very different regulations and can be highly complex depending on the specific situation. It is advisable to seek individual tax advice in such cases. 

Deliveries of works of art from a Member State to Germany: B2C

B2C (Business to Consumer)

The term B2C is used when the buyer of the delivery is not a business person (Business to Consumer).

 

In which country must value added tax be paid (where)?

Example:
An artist sells and delivers a painting from Denmark to a private individual (consumer) in Germany.

The total amount of all deliveries by the artist to Germany within a calendar year (known as the delivery threshold) is relevant for B2C transactions.

1. Up to a delivery threshold of 100,000 euros
Deliveries of works from another Member State to a consumer in Germany up to a delivery threshold of 100,000 euros must be taxed at the place where the shipment originated and not at the shipping destination (cf. Section 3 (6) UStG, Section 3 c (3) No. 1 UStG). Tax on these deliveries must therefore be paid by the artist in the other Member State and not in Germany.  The place of delivery is thus not Germany.

2. Exceeding a delivery threshold of 100,000 euros
After the delivery threshold of 100,000 euros has been exceeded, the artist from the other Member State must register in Germany and pay the value added tax at the shipping destination, i.e. in Germany (cf. Section 3 c (1) UstG). The place of delivery is Germany.

 

Who has to pay value added tax (who)?

1. Up to a delivery threshold of 100,000 euros
The artist is the debtor of the value added tax and must pay this tax according to the rules in his or her country.

Note on invoicing: The artist issues a "regular" invoice according to the requirements in his or her country and lists the value added tax applicable in his or her country. The VAT law of the other Member State applies.

2. Exceeding a delivery threshold of 100,000 euros
In the case of B2C and if the delivery threshold has been exceeded, the artist from abroad must register in Germany and pay the value added tax in Germany.
The responsible tax offices can be found here: tax offices responsible for businesses based abroad.

Note on invoicing: The invoice is therefore issued listing value added tax at the rate applicable in Germany and the tax must be paid in Germany.

Deliveries of works of art from a third country to Germany: B2B/B2C

The following applies to the delivery of a work of art from a third country to Germany:
The import of goods from a third country into Germany is subject to import VAT (cf. Section 1 (1) No. 4 UStG, Section 21 UStG). The import VAT is levied by the Federal Customs Administration. The regulations for customs duties apply mutatis mutandis to import VAT, i.e. goods imported from third countries must be registered with the customs authorities.

You can find more information on import VAT at touring artists here and provided by the Chamber of Industry and Commerce (IHK), e.g. here (in German).