Case C‑51/18

European Commission

v

Republic of Austria

(Failure of a Member State to fulfil obligations — Taxation — Value added tax (VAT) — Directive 2006/112/EC — Article 2(1) — Administrative practice of imposing VAT on the royalty payable to an author of an original work of art on the basis of the resale right)

Summary — Judgment of the Court (Eighth Chamber), 19 December 2018

Harmonisation of fiscal legislation — Common system of value added tax — Taxable transactions — Supplies of goods and services for consideration — Administrative practice of imposing VAT on the royalty payable to an author of an original work of art on the basis of the resale right — Not permissible

(Council Directive 2006/112, Art. 2(1))

A Member State which provides that the royalty payable to an author of an original work of art on the basis of the resale right is subject to value added tax fails to fulfil its obligations under Article 2(1) of Directive 2006/112 on the common system of value added tax.

It is clear from settled case-law that a supply of goods or services is made for consideration, within the meaning of the VAT Directive, only if there is a legal relationship between the supplier, on the one hand, and the customer or recipient, on the other hand, in the context of which there is reciprocal performance, the remuneration received by the supplier constituting the value actually given in return for the goods or service supplied to the customer or the recipient.

However, the legal relationship which arises in the context of the resale of an original work of art does so only between the seller and the buyer and the existence of the resale right for the benefit of the creator of that work does not have any influence on that relationship. Consequently, it cannot be considered that, because he benefits from the resale right, the author of that work participates in any way, even indirectly, in the resale transaction, in particular by tolerating that transaction.

First of all, the parties to the resale transaction agree freely to the transfer of the work concerned by the seller and the price to be paid by the buyer, without having to solicit or consult the author of that work in any way. The author, for his part, does not possess any means of intervening in the resale transaction, in particular to prevent its occurrence in the event that he disagrees with it.

Next, the author of an original work of art which is resold receives, under Article 1(1) of Directive 2001/84, a percentage of the price obtained from the resale of that work, the payment of which is, in principle, imposed on the seller. However, in so far as the resale right from which that author benefits, which entails the obligation on the seller to pay the author the amount fixed on the basis of that right, is a benefit stemming from the EU legislature, it must be considered that it does not apply in the context of any kind of legal relationship between the author and the seller.

Finally, in accordance with the EU legislature’s intention, expressed in the first sentence of recital 3 of Directive 2001/84, the aim of the resale right is to ensure that authors of original works of art covered by that directive, namely graphic and plastic works of art, share in the economic success of their original works of art. It follows that the EU legislature does not in any way envisage those authors participating in resale transactions for their works, but merely grants them a right to share in the economic outcome of acts of resale once they have occurred.

(see paras 44, 47-50, 60, operative part 1)