There is always an interaction between law and art - independent of a specific language. However, the relation can have more than 4 feet (of lawyer and artist) since different authorities are interested in the flow of art, too.
As an audience, art provides us always good atmosphere which is transferable through the various art works, e.g. digital, visual, sculpture, fine art, music, or movie. Fairs, exhibitions and trade shows enrich us.
The other side of the coin reflects the business reality. It shows multiple implementation requirements and regulatory recommendations in connection with art, jewelry or cars. Further, cross border transaction can lead to unnecessary tax and legal implications (Income Tax, Value Added Tax, Customs Duty, Transfer of Cultural Goods) and traders, dealers, galleries, and auction houses must observe special due diligence obligations if they accept more than CHF 100'000 in cash in connection with commercial transactions (Anti Money Laundering Act, AMLA). As a result, art work converts in reality into regulations.
Traders, dealers, galleries and auction houses must identify their contracting party, ascertain the beneficial owner of the transaction and fulfil certain documentary obligations. Galleries must additionally review, consider and clarify the background and the purpose of the transactions. Hence, cash transactions lead to additional compliance work for the involved parties and specific due diligence obligations. At least, these specific obligations are covered and processed by a financial intermediary e.g. bank, if the value of the art work (cash amount) is less than CHF 100'000.
As said, indirect taxation and customs are always interested in the movement of art work. The main questions in the indirect tax world are:
- who supplies (it indicates the supplier position (e.g. seller, lessor): business or private individual);
- to whom (it indicates the recipient’s position (e.g. buyer, lessee): business or private individual);
- what kind of supply (nature of the supply (e.g. nature of art work): supply of good or supply of service, supply of installed art work, cultural property, art work); and
- where (this question indicates the place of supply, which jurisdiction is applicable).
In order to be in line with all these regulatory rules followed by the tax and contractual requirements, proactive clarification of issues, IT solutions and checklists help our clients to be prepared for internal controls and potential external audits. There is no date of expiry for good preparation work!
Example of checklist - Guidelines for cross border exhibition and fair maker
To demonstrate the practical way forward in relation to indirect taxation and customs in Switzerland, please find below a checklist for the daily handling of art:
- Identification: artist, gallery, event organization, role, name and address of the involved parties, Swiss VAT number, if applicable
- Identification: foreign VAT number (except Switzerland) is available, if yes, please indicate the foreign VAT number of the involved person (name, address, seat, role etc.) , if any
- Transport: delivery conditions (Incoterms 2010), who organizes the transport, for what (cultural property, good, installed art work), where and to whom
- Swiss Customs Office: please clarify which customs office is responsible
- Opening hours of the customs office (working days) need to be considered. If the customs office is closed please contact:
- Carnet ATA is clarified, if applicable
Details are available under:
Please note that Carnet ATA is not applicable for leasing, rental services, and goods for potential sales transaction
- Validity check of the Carnet ATA
The Carnet ATA is valid for 1 year. If the good did not leave Swiss territory within the limited period of 1 year (deadline), import VAT will be due (8% / 2.5%) which is not refundable, plus potential penalties
- Correct closing of Carnet ATA procedure (goods will be returned) is reviewed Please monitor the correct closing customs procedure of Carnet ATA. If the Carnet ATA does not have the stamp of the Customs Authority, the local chamber of commerce will not be able to reimburse your deposit
- Clarification of the importer status of the artwork and the purposes of the importation (e.g. exhibition)
In order to import works of art, sculptures, paintings and other collectors' items that are intended for long-term public exhibition (e.g. in a museum) duty and VAT free, you as the importer or exhibitor must not undertake to sell the objects. Otherwise the corresponding duties/import VAT for each object sold must be paid. Please note, specific customs form is applicable at: http://www.ezv.admin.ch/zollinfo_firmen/04021/04022/05336/index.html?lang=en
- Importer: review and consideration of the importer status by the artists directly Please make sure that the artist will import the artwork directly into Switzerland or a written authorisation for third party is available (Auftrag zur Einfuhr des Kunstwerkes/ Auftrag für Einfuhr im Namen vom Künstler). In this case the customs papers need to show the name of the artist on the customs documentation (artist = importer)
- Artworks of art students: cross border movement of own artwork (ausländischer Studienaufenthalt)
Please note that specific customs rules are applicable for art students. There is a possibility to import and export their own artworks, if the artworks are not sold at the time of import/export. Further details please contact the relevant customs office
- Review and consideration of the status for painters and sculptors
Only painters and sculptors can benefit from the duty/VAT free importation of their own artwork
- Place of supply: review and consider the place of transaction, bonded warehouse/customs warehouse
Transactions and activities performed within a bonded warehouse or customs warehouse are treated as transactions perfomed within Swiss territory, however, specific criterias need to be fulfilled in order to benefit from a no VATable activity (e.g. deposit payment, Customs control, foreign goods stored etc). No customs duties are due.