On 4th September 2014, the State Secretary of Finance published an explanation document on Table I. Table I is annexed to the Dutch VAT Act and emphasises the goods and services, which are subject to VAT at the (reduced) rate of …
The Netherlands – explanation on reduced rates in the Dutch VAT Act
On 4th September 2014, the State Secretary of Finance published an explanation document on Table I. Table I is annexed to the Dutch VAT Act and emphasises the goods and services, which are subject to VAT at the (reduced) rate of 6%.
One of the subjects illustrated is as follows.
Under provision a.29, the following supplies are reduced rated:
- Works of art, items for collections and antiquities, if imported;
- Works of art, if they are delivered by:
1) The creative artist or his general beneficiaries; or
2) An entrepreneur, other than the reseller, who deducts tax in full in respect of his revenues.
Explanation document on Table I
In paragraph 3.2 of the explanation document under provision a.29, the State Secretary of Finance sets out who may be regarded as “the creative artist”. This person is the designer and maker of a work of art. Decisive whom may be regarded as the creative artist, is whether the notion of the public marks paintings and handcrafted objects as works of art.
Third parties who make and produce works of art, commissioned by the creative artist, are not such artists themselves. The supply of works by such parties is not acknowledged with the reduced rate.
In case of a creative artist supplying works of art from his own legal incorporated entity (for example a limited liability company) to his/her customers, the lowered rate may be applied. However, the artist must take into account that:
- The works are factually made and produced by him/her;
- It is recognizable as such; and
- It is qualifying as works of art.
Only when these three conditions are met, the entity may be identified as the creative artist.
Two decisions regarding “the creative artist”
Notwithstanding the explanation document on Table I, the District Court of North-Netherlands ruled that a company making ceramic works might qualify as a creative artist, together with an artist. On 26th August 2014, the judges considered in two separate cases that the relation between the company (Royal Tichelaar Makkum, est. 1572) and the creative artists (including Studio Job) is so unique, that their individual contributions to the works of art cannot be separated from each other. The District Court holds therefore its opinion that for each project, the company, together with the artist, may be recognized as the creative artist. The judges distinguish a situation of ‘a fusion of creative ideas’ and ‘a search for the desired form of effectuation’. One phone call with the District Court learned that the Dutch Tax and Customs Administration did not lodge an appeal against these two decisions. The company thus may apply the reduced rate.
Sources (in Dutch language):
- Explanation document on Table I: https://zoek.officielebekendmakingen.nl/stcrt-2014-26112.html
- Decision 1: http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBNNE:2014:4271
- Decision 2: http://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBNNE:2014:4272