Sale and Resale of Works of Art. Special VAT Regime (REBU)

To understand the taxation of the sale and resale of works of art from the reseller’s perspective, there are several aspects to consider.

Sale of the work of art by its creator to a reseller:

• VAT: the invoice will be at 10% VAT (reduced rate). This reduced rate also applies if the seller is not the direct creator but a successor in title, or a business/professional who is not a reseller and is entitled to deduct the VAT incurred on the purchase.

• IRPF withholding: the invoice will carry 15% withholding. In the first years of activity, it may carry 7% withholding.

This applies when:

• The creator is an artist who regularly creates and sells works of art.

(Otherwise, the sale would not be subject to VAT; the seller would declare a capital gain in their income tax, and the buyer would pay ITP.)

• The creator and the reseller are established in Spain.

(If the creator is established outside Spain, the Double Tax Treaty between Spain and the seller’s country must be reviewed to determine whether withholding applies.)

Resale of the artwork by the reseller:

• VAT: the invoice will be at 21% VAT.

• IRPF withholding: the invoice will be without withholding (business activity).

Regarding VAT, the reseller may choose between the general regime or the “Special Regime for Used Goods, Works of Art, Antiques and Collectibles (REBU)”.

To apply REBU, the artwork must have been acquired under one of the following circumstances:

a) Purchase from persons who could not deduct the VAT on the purchase:

a. An individual
b. A businessperson/professional in an EU country under a “franchise regime”
c. A businessperson/professional unable to deduct VAT due to legal limitations
d. Another reseller registered under REBU

b) Purchase at the reduced 10% rate (e.g. from the artist)

c) Importation

Applying REBU:

1. Requires prior registration with the Treasury for this special regime.

2. Prevents VAT overtaxation: VAT is applied only to the profit margin, not to the full sale price. This reduces the final price and allows pricing flexibility.

3. The reseller may not deduct VAT incurred on the purchase.

4. Each resale must be evaluated to decide if applying REBU is beneficial.

5. If REBU applies, the invoice does not itemize VAT; it is included in the price. Under the general regime, 21% VAT must be itemized.

6. Intra-community supplies are not exempt from VAT when REBU applies.

I would like to show two numerical examples:

Conclusion: CASE 1: If the selling price is the same (€8,500), the reseller is better off under the general regime.

Conclusion: CASE 2: If the reseller increases the selling price so that the customer pays €10,285, REBU is more advantageous.

Our recommendation at GM Tax Consultancy is to assess each case individually to determine whether applying REBU is appropriate. If you are interested, we can discuss it at any time.