Provisional text

delivered on 12 June 2025 (1)

Case C‑433/24

Galerie Karsten Greve

Ministère de l’Économie, des Finances et de la Souveraineté industrielle et numérique

(Request for a preliminary ruling from the Conseil d’État (Council of State, France))

( Reference for a preliminary ruling – Taxation – Value added tax – Directive 2006/112/EC – Special arrangements for second-hand goods, works of art, collectors’ items and antiques – Article 316 – Taxable dealers – Margin scheme – Concept of ‘creator’ – Legal person )

Introduction

The provisions of EU law on value added tax (VAT) provide for special taxation arrangements for the resale, inter alia, of works of art acquired from their creators.

While it is clear that, in order to benefit from those arrangements, a work of art must have been created personally by the artist deemed to be its creator – and it is not disputed that that is the case here – doubt remains as to whether the same requirement applies, not to the creative aspect, but to the commercial aspect of the activity of the artist concerned. It is not uncommon for artists to create legal persons, either as a single partner or in association with other persons, in order to carry on the commercial activity involved in any artistic creation engaged in on a professional basis. In the dispute in the main proceedings, that question arose in relation to works of art which their creator supplied acting, not as a natural person, but through a legal person in which he is one of the partners.

The Court is thus called upon to determine whether – and, if so, under what conditions – the special taxation arrangements at issue in the main proceedings are applicable to the resale of works of art acquired in such circumstances.

Legal context

European Union law

Under Article 311(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax: (2)

‘For the purposes of [Chapter IV, entitled ‘Special arrangements for second-hand goods, works of art, collectors’ items and antiques’], and without prejudice to other Community provisions, the following definitions shall apply:

…

(2)“works of art” means the objects listed in Annex IX, Part A;

…

(5)“taxable dealer” means any taxable person who, in the course of his economic activity and with a view to resale, purchases, or applies for the purposes of his business, or imports, second-hand goods, works of art, collectors’ items or antiques, whether that taxable person is acting for himself or on behalf of another person pursuant to a contract under which commission is payable on purchase or sale;

…’

Article 313(1) of that directive provides:

‘In respect of the supply of second-hand goods, works of art, collectors’ items or antiques carried out by taxable dealers, Member States shall apply a special scheme for taxing the profit margin made by the taxable dealer, in accordance with the provisions of this Subsection.’

Article 316(1)(b) of that directive provides:

‘Member States shall grant taxable dealers the right to opt for application of the margin scheme to the following transactions:

…

(b)the supply of works of art supplied to the taxable dealer by their creators or their successors in title;

…’

Point 1 of Part A of Annex IX to that directive is worded as follows:

‘Pictures, collages and similar decorative plaques, paintings and drawings, executed entirely by hand by the artist, other than plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, hand-decorated manufactured articles, theatrical scenery, studio back cloths or the like of painted canvas (CN code 9701).’

French law

Article 316(1)(b) of Directive 2006/112 was transposed into French law by Article 297 B of the Code général des impôts (General Tax Code), read in conjunction with subparagraph 2 of Article 278 septies thereof, which refers to the ‘supply of works of art carried out by their creator or his successors in title’.

Facts, procedure and questions referred for a preliminary ruling

Galerie Karsten Greve (‘GKG’) operates as an art gallery business and must, therefore, be regarded as a taxable dealer within the meaning of Article 311(1)(5) of Directive 2006/112. In 2014 it made, inter alia, an intra-Community acquisition of several paintings by the painter Gideon Rubin from Studio Rubin Gideon (‘SRG’), established in the United Kingdom, of which Mr Rubin is one of the two partners (the second being, according to the information contained in GKG’s observations, his wife). GKG then applied the margin scheme to the supplies of those paintings to its customers. (3)

Following an audit of accounts, the tax authorities called into question the benefit of that scheme and, consequently, issued GKG with additional assessments for VAT for the period from 1 January to 31 December 2014.

By a judgment of 25 November 2020, the tribunal administratif de Paris (Administrative Court, Paris, France) dismissed GKG’s application for the cancellation of those additional tax assessments and the corresponding penalties. By judgment of 1 June 2022, the cour administrative d’appel de Paris (Administrative Court of Appeal, Paris, France) dismissed the appeal lodged by GKG against that judgment. In the view of that court, GKG was not entitled to apply the VAT margin scheme to the supply of those paintings because the paintings had not been supplied to it by their creator. It held, in particular, that, only the artist who had painted the paintings with his or her own hand could be the creator, so that SRG, as a legal person, could not be regarded as the creator of the paintings at issue.

GKG lodged an appeal on a point of law against that judgment before the Conseil d’État (Council of State, France), the referring court. The Conseil d’État (Council of State) considers that the answer to the ground of appeal raised by GKG depends on whether the provisions of Article 316(1)(b) of Directive 2006/112, combined with those of Article 311(1)(2) thereof and Part A of Annex IX thereto, must be interpreted as precluding a legal person, such as a company, from being considered, within the meaning and for the purpose of those provisions, as the ‘creator’ of a painting.

In those circumstances, the Conseil d’État (Council of State) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

(1)‘(1) Must the provisions of Article 316(1)(b) of [Directive 2006/112], combined with those of Article 311(1)(2) thereof and those of Part A of Annex IX thereto, be interpreted as precluding a legal person such as a company from being regarded, within the meaning and for the purposes of those provisions, as the “creator” of a painting?

(2)If the first question is answered in the negative, which criteria must be taken into account to allow a legal person such as a company to be regarded, within the meaning and for the purposes of those same provisions, as the “creator” of a painting (such as, in the case of a company, the company being subject to a particular legal regime, the fact that the natural person who painted the painting holds some or all of the company’s share capital, the exercise by that person of management functions within the company, and so on)?’

The request for a preliminary ruling was received at the Court on 20 June 2024. Written observations were submitted by GKG, the French and Spanish Governments and the European Commission. The French and Spanish Governments and the Commission attended the hearing on 25 March 2025.

Analysis

In the present case, the referring court refers two questions to the Court of Justice for a preliminary ruling, the first of which concerns the possibility of applying the margin scheme to a work of art supplied to a taxable dealer by its creator acting through a legal person and the second concerns possible conditions for that application.

The wording of the questions referred

The first question, as worded, refers to the definition of the concept of ‘creator’ within the meaning of the relevant provisions of Directive 2006/112. However, as demonstrated by the exchange of arguments between the parties in these preliminary ruling proceedings, that wording is confusing in so far as it tends to focus on that concept understood in the abstract, which leads to a reference to copyright. Such considerations seem to me to be entirely superfluous in interpreting that directive, which does not concern the ownership of works of art, but the taxation of commercial transactions. I also note that there is no doubt that the paintings at issue in the present case fall within the definition of works of art set out in Article 311(1)(2) of that directive, read in conjunction with point 1 of Part A of Annex IX thereto.

I therefore propose to address the first question not from the perspective of the concept of ‘creator’, but from that of the meaning to be given to the words ‘works of art supplied … by their creators’ contained in Article 316(1)(b) of Directive 2006/112. Furthermore, in so far as the two questions referred for a preliminary ruling are closely linked, I propose to examine them together.

Thus, by its questions the referring court asks, in essence, whether – and, if so, under what conditions – Article 316(1)(b) of Directive 2006/112 must be interpreted as meaning that Member States are required to grant taxable dealers the right to opt for the application of the margin scheme to supplies of works of art made to them by the creator acting through a legal person.

The applicability of Article 316(1)(b) of Directive 2006/112

In order to answer the first part of the question thus reformulated, it is necessary to return briefly to the concept of ‘creator’. In this respect, the Court has already held that the words ‘creator’ and ‘artist’ used in Article 103(2)(a) of Directive 2006/112 and in point 7 of Part A of Annex IX thereto are identical in scope, taking into account, inter alia, the particular importance given to the personal involvement of the creator of a photograph in its execution. (4)

It must be considered that the same is true of the terms ‘creator’ and ‘artist’ used, respectively, in Article 316(1)(b) and point 1 of Part A of Annex IX to Directive 2006/112. Just as in the case of the photographs referred to in point 7 of Part A of that annex, particular importance is also given to the personal involvement of the creator in the execution of the ‘pictures, collages and similar decorative plaques, paintings and drawings’ referred to in point 1 of Part A of that annex. That provision thus requires that those works be ‘executed entirely by hand by the artist’. That wording must, in my view, be understood as requiring that the work in question be executed, first, manually, that is to say, at most using simple tools such as paint brushes, pencils or similar, and without the application of any mechanical, photographic or electronic process, and, secondly, personally by the person who is deemed to be its creator.

That means that a work of art referred to in point 1 of Part A of Annex IX to Directive 2006/112, and consequently also in Article 316(1)(b) thereof, can be executed only by a natural person acting as such since only such a person is able to execute it ‘by hand’, within the meaning of the former provision.

By contrast, neither point 1 of Part A of Annex IX nor Article 316(1)(b), nor any other provision of Directive 2006/112, lays down a similar requirement as regards the manner in which the work at issue is to be supplied. The latter provision requires only that the work be supplied by the artist.

Unlike the execution of a work of art, which forms part of the creative activity consisting in material acts, the supply is part of the creator’s commercial activity, the substance of which consists not in physical manipulation of the works at issue, but legal acts, (5) which both legal persons and natural persons are capable of performing. There is therefore nothing to prevent the supply from being made by an artist acting through a legal person.

That conclusion, which follows from the wording of the provisions under examination, can be supported by their purpose and by elements of systemic analysis.

In the first place, as regards the purpose of Article 316(1)(b) of Directive 2006/112, the Commission summarises, in its observations, the preparatory work that led to the adoption of the act giving rise to that provision. (6) It is apparent from that preparatory work that the Council’s intention was to promote imports of works of art by providing for VAT benefits. So as not to disadvantage artists established within the European Union, those same benefits, in particular the possibility of opting for the subsequent application of the margin scheme, were applied to supplies of works of art by their creators or by their heirs established within the territory of the European Union.

Thus, as the Commission rightly maintains, the objective of the EU legislature, in adopting the current Article 316(1)(b) of Directive 2006/112, was to promote the introduction into the EU market of new works of art, whether imported or newly created within its territory, by providing for favourable tax treatment both for the importation of such works and for their first supply after creation, (7) as well as for the subsequent resale of those works by taxable dealers.

However, to interpret that provision as meaning that works of art which have been supplied to taxable dealers by their creators acting through legal persons are excluded from its benefit would run counter to that objective. That exclusion would in fact be based on the legal form under which the creator carries on his or her commercial activity, even though that criterion is not relevant from the point of view of the objective pursued by the EU legislature in adopting that provision. However, those works comply with the criterion for the application of the provision in question envisaged by the EU legislature, namely that they are newly created.

That finding is not called into question by the French Government’s arguments to the contrary, according to which the main objective of the margin scheme is to avoid double taxation of goods that have already been taxed.

As that government itself acknowledges, that objective is achieved by Article 314 of Directive 2006/112, which provides for the mandatory application of the margin scheme in situations where there is a risk of double taxation. By contrast, the optional application (in respect of the taxable persons concerned) of that scheme, under Article 316 of that directive, pursues different objectives, as mentioned in points 25 and 26 of this Opinion. There is no justification, in the light of those objectives, for distinguishing the tax treatment of works of art supplied by their creators according to the legal form of natural or legal person under which those creators make the supply, when, in both cases, they are in the same situation from the point of view of the levying of VAT, being, inter alia, taxable persons. (8)

For the same reason, such a distinction is not justified by the general objectives of the common system of VAT, also referred to by the French Government. As taxable persons, the creators of works of art are in an identical situation from the point of view of those general objectives, whether they act as natural persons or through legal persons.

In the second place, as regards the systemic analysis of Article 316(1)(b) of Directive 2006/112, it is true that that provision is covered by an arrangement that derogates from the general rules of that directive and should not therefore be interpreted broadly. However, the Court has already had occasion to hold that the interpretation of the terms used to define that arrangement must conform to the objectives pursued by it and respect the requirements of tax neutrality. (9)

To interpret Article 316(1)(b) of Directive 2006/112 as excluding from its benefit works of art supplied to taxable dealers by their creators acting through legal persons would be contrary not only to the objectives of that provision, (10) but also to the principle of tax neutrality.

That principle precludes, in particular, economic operators carrying out the same transactions from being treated differently in relation to the collection of VAT. (11)

) However, when they supply their works of art, the creators carry out identical transactions regardless of the legal form under which they act. A difference in treatment of those works of art on the basis of that legal form would therefore be contrary to the principle of tax neutrality.

Article 316(1)(b) of Directive 2006/112 does not therefore preclude, in principle, a work of art from being regarded as having been supplied by the creator where that creator acted, in making that supply, through a legal person. It is also necessary to examine the circumstances in which such a supply may be regarded as being made ‘by the creator’ within the meaning of that provision.

The conditions for the application of Article 316(1)(b) of Directive 2006/112

By its second question, the referring court seeks to ascertain the criteria for regarding the supply of a work of art by a legal person as having been made by the creator of that work. It also suggests certain criteria (12) relating to the structure of the legal person in question and the role of the creator of the work of art within it.

However, it seems to me that the referring court is thus not asking the Court to interpret the law, but to create it. No specific criterion concerning the structure of the legal person in question or the role of the creator within it is apparent from the relevant provisions of Directive 2006/112. In my view, the Court therefore has no basis in law for establishing such criteria, which are, moreover, arbitrary.

For its part, the Commission proposes that the Court should rule that the criterion for permitting the application of the margin scheme to works of art which have been supplied to taxable dealers by their creators acting through legal persons must take account of the purpose of Article 316(1)(b) of Directive 2006/112, namely to promote the introduction into the market of newly created works of art.

According to that logic, the creator of a work of art is the first person who acquired the right of ownership of that work. The supply of the work in question by its creator would therefore normally constitute the first transfer of that ownership and, consequently, the act by which that work is introduced into the market. The same logic should apply to the creator who makes the supply of a work of art through a legal person. Such a supply would then be regarded as having been made by the creator, within the meaning of Article 316(1)(b) of Directive 2006/112, since that legal person was the holder, from the time that work was created, of the right to dispose thereof as owner. It appears to me that the Commission relaxed its position at the hearing by taking the view that a transfer of ownership of the work at issue between the creator and the legal person who subsequently supplies it to a taxable dealer could take place, but only free of charge, in which case that legal person would be regarded as the successor in title, within the meaning of that provision.

It is true that that proposal has the merit of being consistent with the purpose of Article 316(1)(b) of Directive 2006/112, as set out in points 25 and 26 of this Opinion.

However, like the criteria suggested by the referring court, that proposal seems to me to be unfounded, having regard to the provisions of Directive 2006/112. Had the EU legislature intended to establish first placing on the market as a criterion, it would have stated so explicitly, for example by specifying to that effect the definition of works of art in Part A of Annex IX to that directive, like that of new means of transport in Article 2(2) thereof.

It is true that the EU legislature, in adopting Article 316(1)(b) of Directive 2006/112 with a view to meeting the objectives mentioned in points 25 and 26 of this Opinion, probably started from the premiss that the supply of a work of art by its creator constitutes, in most situations, the first placing on the market. However, it has not laid that down as a condition for the applicability of that provision and it does not appear appropriate to lay down such a condition by judicial decision.

Moreover, the solution proposed by the Commission does not appear to prevent the risk of the margin scheme being applied in situations where it is not intended to be applied, in particular where the work of art has been made to order or in the context of an employment relationship.

Lastly, if the criterion relating to first placing on the market were to be accepted, it should also apply, logically, where the creator of a work of art makes the supply as a natural person. That criterion would therefore replace, to a certain extent, that laid down in Directive 2006/112, namely that the work of art is ‘supplied by its creator’. (13)

The latter criterion is the only one laid down by the EU legislature and, in my view, the only one to be taken into account.

As GKG proposes, in essence, in its observations, that criterion must be interpreted as meaning that, where the creator of a work of art makes the supply thereof acting through a legal person, that supply must be regarded as being made ‘by the creator’, within the meaning of Article 316(1)(b) of Directive 2006/112, since that legal person is the emanation of that creator. In my view, such a situation arises where, first, the creator has sufficient decision-making power within the legal person to have the decisive vote on the sale of the work in question and, second, the proceeds from the sale of that work, or at the very least a substantial part of it, directly or indirectly forms part of the creator’s assets.

The criterion relating to the supply made by the creator, as thus interpreted, appears to be consistent with both the wording and the purpose of Article 316(1)(b) of Directive 2006/112 and to be the only one that can be inferred from the wording of that provision. That criterion is met not only where the creator carries on an economic activity in the form of a single-partner legal person, but also where he or she associates himself or herself with other persons in such a way that the two abovementioned conditions are satisfied. On the other hand, situations where the legal person is unrelated to the creator, and those where the creator is subject to a hierarchical authority within that legal person, will be excluded.

As regards the purpose of Article 316(1)(b) of Directive 2006/112, namely to promote the sale of newly created works of art, the criterion relating to the supply of a work of art by the creator under the conditions set out in point 45 of this Opinion would be equivalent, in most situations, to the first placing of that work on the market. In particular, any transfer of ownership between the creator of the work in question and the legal person constituting its emanation cannot be regarded as placing on the market. In practice, the application of that criterion would therefore, in essence, have the same result as the application of the criterion relating first transfer of ownership, as proposed by the Commission, without, however, entailing the disadvantages mentioned in points 40 to 43 of this Opinion.

Conclusion

In the light of all of the foregoing considerations, I propose that the Court answer the questions referred for a preliminary ruling by the Conseil d’État (Council of State, France) as follows:

Article 316(1)(b) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

must be interpreted as meaning that Member States must grant taxable dealers the right to opt for the application of the margin scheme to supplies of works of art which have been supplied to them by the creator acting through a legal person, provided that, first, the creator has sufficient decision-making power within the legal person to have the decisive vote on the sale of the work in question and, second, the proceeds from the sale of that work, or at the very least a substantial part of it, directly or indirectly forms part of the creator’s assets.

—

1Original language: French.

2OJ 2006 L 347, p. 1.

3I would point out that the applicability of Article 316(1)(b) of Directive 2006/112 to works of art which have been the subject of an intra-Community acquisition by a taxable dealer was confirmed by the Court in its judgment of 29 November 2018, Mensing (C‑264/17, EU:C:2018:968).

4Judgment of 5 September 2019, Regards Photographiques (C‑145/18, EU:C:2019:668, paragraph 30).

5Article 14(1) of Directive 2006/112 defines the ‘supply of goods’ as ‘the transfer of the right to dispose of tangible property as owner’, thus in its very essence a legal act.

6That is to say, Council Directive 94/5/EC of 14 February 1994 supplementing the common system of value added tax and amending Directive 77/388/EEC – Special arrangements applicable to second-hand goods, works of art, collectors’ items and antiques (OJ 1994 L 60, p. 16).

7That is to say, the possibility of applying a reduced rate to them, as provided for in Article 103 of Directive 2006/112.

8Therefore, Article 316(1)(b) of Directive 2006/112 can apply only to works of art supplied by their creators who are taxable persons since the application of the margin scheme to such goods supplied by non-taxable persons is governed by Article 314(a) of that directive.

9Judgment of 29 November 2018, Mensing (C‑264/17, EU:C:2018:968, paragraph 23).

10See points 25 to 29 of this Opinion.

11See, inter alia, judgment of 29 November 2018, Mensing (C‑264/17, EU:C:2018:968, paragraph 32).

12Such as making the legal person in question subject to special legal rules, the holding by the creator of the work supplied of all or part of the share capital of that legal person, and the performance by that creator of management functions within that legal person.

13By way of example, let us imagine the situation where the creator of a work of art sells it, then buys it back and resells it to a taxable dealer. While such a situation is certainly exceptional, it is not impossible. According to the criterion relating to first placing on the market, in that situation the margin scheme is not applicable, whilst the wording of the provision at issue does not appear to preclude it in any way.