Art Gallery

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SeamusOShea

Guest
Wifey and I were discussing opening a small art gallery/cafe in a unit close to our house.
We were considering taking pictures on a sale or return basis, from artists and retaining a % of the sale price.
What are the tax implications?
We believe that artists in Ireland do not have to pay tax or VAT, so we presume that we would be paying them the full price of the sale, less our commission?
Woild we be classed in the same way, or would we be paying VAT or tax?
Can we consider a painting being sold for €100. We take €30 (30%) and pay the artist €70. How would we process the €30? All comments appreciated!
 

Brendan Burgess

Founder
Messages
40,246
Hi Seamus

As I say to nearly every question like this, do not start a serious business without having detailed knowledge of it. Can you or your wife get experience in an art gallery for a year first? You have to know how to promote and sell art. This is the most important first step before you worry about the tax issues.

Brendan
 
S

SeamusOShea

Guest
Rough discussion

Thanks for the advice. It was just rough discussion/trivia on the tax implications, if anyone might know.
 
B

backinireland

Guest
Re: Rough discussion

Hello Seamus,

I know that artists don't automatically get tax exemption status. One has to apply for it and it can be quite a rigorous procedure - it took me about 9 months a few years ago, involving alot of form filling, sending examples of work to Dublin Castle etc. etc. As far as I know the exemption dosen't apply to gallery owners as they are not actually producing the work of art.

Hope this helps
 
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SeamusOShea

Guest
Finance model

Thanks for feedback.

If we were a VAT registered company, can we consider a painting being sold for €100. We take €30 (30%) and pay the artist (amateur) €70. How would we process the €30?. Should 21% have been added on to the sale of the item before commission, or what?

Naturally, in the future if we were to proceed, we would be chatting to an accountant, it's just that we want to discuss the rough model.......
 
M

myopinion

Guest
this one

I don't know about artist tax.

If you are running a gallery/shop selling paintings,
you are not an artist.

Basically you are providing a service to artists,the
service is displaying and selling their paintings.

You must charge vat for your service, so if an artist
pays you 30e you must add vat on 30e.
 
S

SeamusOShea

Guest
I think I am getting somewhere

So if I charge them 30% commission, I must pay VAT on it? I need help understanding this one. How do I collect the VAT in the first place. Is it on the commission or the total. Any help really appreciated.

Can we imagine that I am a VAT registered car salesroom. A private customer (amateur artist) wants me to sell his car for him. I get 10,000 Euro from a buyer and want to keep 10% commission. Can anyone explain the fiscal arrangement I should follow?
 
M

Marie

Guest
I think I am getting somewhere

Sheamus - Pehaps you're conflating at least two things here which perhaps contribute to a muddle.

If you set up an art gallery and if artists consent to exhibit/sell their work through your gallery they are not "amateurs" they are professionals selling their work; they are paying tax on their income (an artist is a one-wo(man) business) less the cost of materials, studio rental, time making the stuff etc.

Your income from a gallery exhibiting and selling work of living artists IS "the commission". In my experience as an exhibiting artist I (the artist) sets the price s(he) wants for the artwork. That is the figure which goes in the catalogue. The gallery then deducts a pre-agreed percentage.

The artist records the sale-price minus the gallery percentage as taxable income.

I understood the system to be that the gallery adds up all the "percentages" from sales of different artists' works and that (less publicity, cost of private viewings, premises, employment of staff etc. plus high insurance of unique works on your premises!!!) is the gallery's "income" and is taxable.

Without wishing to put you off your project, attracting artists to exhibit through a particular gallery, and attracting the right buyers, is highly skilled disciplined stuff and requires contacts, business acumen and in-depth knowledge of art history as well as understanding of contemporary art.
 
S

SeamusOShea

Guest
Thank You!!

Thanks ever so much Marie!! We totally understand the complexities and knowledge required. To be totally honest, we were considering doing it in parellel with a cafe, and use it as a supplementary business.
 
S

SeamusOShea

Guest
As Columbo would say........

.......just one little thing bother's me Marie. If the artist is not VAT registered, but the cafe/gallery is, then must we include 21% VAT in the sale price?
 
M

Marie

Guest
As Columbo would say........

Sheamus - Again I think you don't need to be concerned at all about what the artist is or isn't doing or whether they're VAT registered! The percentage the gallery takes of the sale-price is the gallery's fee for exhibiting and/or selling the artwork and that's what you pay VAT on.

An analogy is the builder who takes on a domestic renovation and contracts out parts of the renovation (e.g. hires and pays a plasterer, hires and pays a tiler). The builder pays VAT (and reclaims VAT) on all the bathroom furniture, tiles etc. and pays the plaster an agreed fee for the job, and pays the tiler an agreed fee for the job. The builder doesn't either charge or reclaim VAT on the tiler's wage or the plaster's wage. They settle that themselves and their tax-returns don't have anything to do with the project price paid by the homeowner to the builder (because the builder has not charged the homeowner VAT for subcontractors' wages), or the builder's own VAT.

Perhaps your worry is based on the concept that you would be "employing" the artists........but that's not the case!
 
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