Collectors to Pay More Taxes on Imported Art at U.K. Auctions
23.03.2006 By Linda Sandler, Bloomberg
Art collectors who buy imported works at auctions will pay higher taxes on the commissions they owe to auctioneers, according to today's U.K. budget.
The U.K. will tax the commission at the standard VAT rate of 17.5 percent, following a recent European Court of Justice ruling. Previously, businesses and individuals could use temporary import arrangements to defer the tax, which totaled 5 percent under the prior U.K. interpretation of European VAT law.
Christie's International and Sotheby's Holdings Inc., the top two auction houses, charge London buyers a 20 percent commission on the first 100,000 pounds ($174,910) of an item's hammer price, and 12 percent on the rest.
Anthony Browne, who is chairman of the British Art Market Federation, a trade group of dealers and auction houses, said the change only applies to art that comes into the U.K. for sale from outside the European Union, and remains here. If the item is bought and taken home by a non-European, there will be no extra charge, he said.
Buyers of items that originate in the EU already pay the full tax, ``so this just brings it into line,'' Browne said. ``It will have a marginal effect on the market.''
The higher tax follows a new levy on art that the U.K. imposed on Feb. 14, implementing an EU rule. Sotheby's and Christie's said earlier this month that buyers must pay the artists' royalties, which are capped at 12,500 euros ($14,904) for any individual item sold.