November 1, 2012 – Collecting objects of art has an age-old history in Germany. Numerous museums hold previously private collections purchased on the art market. Collecting educates, just like reading. Hence, this may be the reason why Germany applies a reduced VAT rate of 7 percent on works of art, comprising coins.
Recently the European Union has given Germany a warning regarding this privilege. They urged to raise the VAT rate on works of art in order to harmonize it with the EU level. We did not hear anything about German politicians protesting. However, thanks to the instigation of the associations affected, a decision was postponed. Thus, the reduced VAT is going to last during 2013. In 2014, though, we should be prepared for a change since from January 1, 2014 the reduced VAT is expected to be abolished. From then on the standard VAT rate will be applied on coins, too.
According to the new rules the dealer may choose whether he applies the standard VAT rate or a tax rate which is applied only on the seller’s profit. The latter, though, would mean an immense administrative labor. A particular problem will be to transfer the existing stock into the new tax on the profit rule. Debating lasts as how to find temporary arrangements. The associations are campaigning for a reasonable solution.
We reported about the protest in the EU. You can read this article here.