Reduction of VAT Rate on Artworks

Reduction of VAT Rate on Artworks

The government council has approved a bill to reduce the VAT rate on the sale of artworks to 8%, a decision warmly welcomed by the sector.

On June 26, the government council approved the bill proposing a reduced VAT rate of 8% on transactions involving artworks, collectibles, and antiques, down from the previous 17%.

This reform, supported by the Luxembourg Association for Art Galleries & Practitioners (Lafa) and VAT Solutions, a company specializing in VAT, stems from successful discussions with the Ministries of Culture and Finance to emphasize the importance of this measure for Luxembourg's art market.

It also responds to the European Union's Directive 2022/542, which aims to harmonize VAT rates across the 27 member states. Strict implementation of this directive could have increased VAT on the import and sale of artworks, making these transactions more expensive and discouraging buyers, which would have affected local sales in galleries and fairs, according to Lafa. Such an increase would have impacted gallery revenues and reduced tax income.

By adopting an 8% VAT rate for artworks, Luxembourg aligns more closely with the rates of its neighbors: 5.5% in France, 6% in Belgium, and 7% in Germany. This measure will be implemented once the sale of artworks, collectibles, and antiques is added to Annex A of the VAT law.

Following the government council's approval, the reform bill will proceed through the usual legislative process. The new 8% VAT rate is expected to come into effect on January 1, 2025.