The Court of Justice rules that VAT paid on intra-Community acquisition of a work of art forms part of the profit margin.
This statement was made in response to a case of an art dealer who buys art from makers from other EU member states. In the situation of the art dealer, there are intra-Community acquisitions. The art dealer pays VAT on these purchases.
Margin scheme
In this case, the art dealer also applies the margin scheme. As a result, he does not pay VAT on the turnover, but on the profit margin. The profit margin is the difference between the purchase price and the sales price. Because the art dealer has used the margin scheme, he is not allowed to reclaim the VAT paid.
The question now is: should the VAT paid on the intra-Community acquisition be added to the purchase price in this case, or will it become part of the profit margin?
Paid VAT belongs to profit margin
A recent ruling by the Court of Justice shows that the VAT paid is not added to the purchase price, but is part of the profit margin. VAT must then be paid on this profit margin, i.e. including the VAT paid on acquisition.
You can read more information about the margin scheme at belastingdienst.nl .
Source: belastingdienst.nl
