EU asks Austria to amend tax rules

By added on 26/07/2016

The European Commission has asked Austria to change its value-added tax (VAT) rules and non-resident taxpayer requirements, reports Tax News.

The Commission has requested that Austria amend its rules on the VAT treatment of resale rights on works of arts. Resale rights – which give rise to royalties – allow an artist to receive a percentage of the sale price of a work of art when it is resold.

In Austria, VAT is charged on the resale of works of art. The Commission said that, as there is no contractual relationship between the buyer and artist, it considers that the Austrian rule constitutes an infringement of Article 2 of the VAT Directive. Article 2 outlines the transactions that can be subject to VAT. The Commission added that, in line with an EU Court of Justice ruling, there must be a legal relationship between the provider of a service and the recipient for that service to be taxable.

The Commission has also asked Austria to change rules that require non-resident taxpayers to appoint representatives to administer their tax affairs on their behalf. Persons resident in Austria do not have to comply with this legislation.

The Commission said that these rules result in discriminatory treatment on the grounds of nationality and are therefore contrary to the right to free movement of goods, capital, services, and people as set down in the EU treaties.

In each case, the Commission sent Austria letters of formal notice in 2014. Its latest actions take the form of reasoned opinions. If Austria fails to respond to the Commission's satisfaction within two months, the Commission may refer the cases to the Court of Justice.