Value-added tax instructions for visual artists
Is the artist liable for VAT?
When the sales proceeds from works of art exceed EUR 10,000 in a given year, the artist is liable for value-added tax for the sales. The artist will then need to register for VAT liability. The artist charges the buyer for VAT and then disburses that amount to the tax authorities.
The artist him- or herself must assess whether sales exceed the EUR 10,000 limit. If the sales threshold for an artist’s VAT liability is exceeded during the tax year, the tax must be paid for the sales of the entire accounting period.
If sales exceed EUR 10,000 but remain below EUR 30,000, the taxpayer is eligible for relief for the VAT. The formula for calculation of this relief can be found in information about the Value Added Tax Act.
A VAT-liable artist must provide ‘start-up notification’ to the tax authorities on his or her own initiative. Forms for this notification are available online at www.ytj.fi and in person at offices of the tax authorities and TE Centres.
VAT liability means that the artist is required to file a pre-completed tax return as well as a VAT return (‘periodic tax return’) form.
VAT for sales of work
If the artist’s annual sales proceeds for works of art remain below EUR 10,000, he or she is not VAT liable for the sale of the works. The VAT rate for sale of works will then be 0%.
If the limit is exceeded, VAT should be added to the sales. The VAT rate for works of art is either 10% or 24% (as of 2016).
The lower rate, of 10%, is applied to the first sale of the art object when the seller is the creator of the work or a broker acting on the creator’s behalf.
The following works of art are considered to be art objects for VAT purposes:
- Paintings, collages, drawings, and pastels completely hand-created by the artist (construction plans and drawings; technical drawings; and other designs and drawings for an industrial, commercial, topographical, or equivalent purpose are not considered art objects).
- Original engravings, prints, and lithographs that are either black-and-white or colour proofs directly produced with one or several plates completely hand-made by the artist, irrespective of the materials or methods used, unless the method was mechanical or photomechanical.
- Original sculptures and statues, from any material, so long as they are completely created by the artist. Also covered are duplicates produced by the artist or in the control of his or her copyright holders in quantities of up to eight copies. Duplicates made in mass production or ordinary handicrafts of a commercial-merchandise nature are not considered art objects.
- Hand-woven tapestries and hand-made wall hangings and duplications made of them in accordance with the artist’s original sketch, in quantities of up to eight copies per work.
- Photographs taken or proofed by the artist or proofed, signed, and numbered under his or her supervision, to the number of 30, whatever their size and support material. This also includes photographs taken under the supervision of the artist.
The general rate of 24% is applied to the first sale and resale of all works of art other than those specified above. This means, for example, that the VAT rate for media art and installations and for photographs in excess of 30 copies is 24%.
With regard to performance art, performers’ fees have been prescribed as completely VAT-exempt. Therefore, no VAT is levied for performance art, and copyright remuneration too is primarily VAT-exempt.
Calculation of value added tax
VAT is calculated by taking the net price of the goods or services and adding the share of VAT. For example, when the price of a work of art has been determined on the basis of the price without VAT (usually with text such as ‘VAT 0%’ after the price), the VAT percentage is easy to calculate:
VAT at 10%: agreed price (VAT 0%) × 1.10 = price including VAT
VAT at 24%: agreed price (VAT 0%) × 1.24 = price including VAT
At times, the contract includes an agreed total price that the commissioner will pay for the work with the VAT included. The price will then be quoted with text such as ‘incl. VAT’ after it. In this case, the VAT can be calculated on the basis of the following formulae:
VAT at 10%: agreed price (incl. VAT) / 1.10 = price excluding VAT
VAT at 24%: agreed price (incl. VAT) / 1.24 = price excluding VAT
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