New provisions on the VAT-Free Zone, margin scheme and importation of collectors' items and antiques
Law n°6713 dated 24 July 2015
On 1 August 2015, Law n°6713 amending the Luxembourg VAT legislation entered into force. It aims at promoting the art sector. After the implementation of the VAT Freeport, this law further enhances the favorable environment for art-related transactions through various measures.
Among other, the law addresses the practical implications of transactions done within the VAT-free zone, particularly regarding the implementation of optional measures under the VAT Directive 2006/112/EC. One of these measures aims at preventing double taxation in situations where the goods leave the VAT suspension regime (i.e. the regularization of VAT and importation of goods subject to VAT).
In addition, the new law modifies and enlarges the scope of the margin scheme for the supply of second-hand goods, works of art, collectors’ items and antiques to organizers of public auction sales by adding article 56ter-2 to the Luxembourg VAT Law. As a consequence, a Grand-Ducal Regulation has simultaneously entered into force to revoke the previous one dated 12 July 1995 on limitations, conditions and application of the margin scheme.
Moreover, and following a trend observed in the European Union (as mentioned by Circular 775 issued on 30 July 2015 by the Luxembourg VAT Authorities), the reduced rate (8% as of 1 January 2015) is now applicable to imports and intra-community acquisitions following an import by the taxpayer of collectors’ items and antiques. In this context and amongst other amendments, a specific annex E has been included to specify the works of art, collectors’ items and antiques targeted under the new article 56ter of the Luxembourg VAT Law.
It is expected that the new provisions will positively influence the transactions related to the Luxembourg VAT-Free Zone and support Luxembourg as an investment platform for works of art.
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