Case: No VAT reclaim for scheme user

European Court of Justice (Fourth Chamber)

T von Danwitz, President of the Seventh Chamber, acting as President of the Fourth Chamber, K Jürimäe, C Lycourgos, E Juhász and C Vajda (Rapporteur), Judges.

Judgment delivered 29 November 2018.

Value added tax – Directive 2006/112 (the Principal VAT Directive), art. 314, 316 and 322 — Special scheme for works of art, collectors’ items and antiques — Margin scheme — Taxable dealer — Supply of works of art by the creator, or his successor in title — Intra-Community transactions — National tax authority’s’ refusal to allow a taxable person to use the margin scheme — (1) Conditions under which the margin scheme applied — (2) Right to deduct input tax.

Mensing v Finanzamt Hamm (Case C-264/17)


Mr Mensing ran art galleries in Germany. Works of art, which originated from artists residing in other Members States, were supplied to him. Such supplies were treated in the Member States, where the artists resided, as exempt from VAT, being intra-Community supplies. Mr Mensing paid VAT in Germany on those supplies. He did not exercise his right to deduct such VAT.

The Tax Office in Hamm rejected his request to apply the margin scheme to those supplies.

The first question

The ECJ considered whether art. 316(1)(b) means that a taxable dealer may use the margin scheme for works of art, which were supplied to him by an exempt intra-Community supply, by the creator or his successors in title, when those persons fell outside the categories of persons in art. 314.The ECJ noted that art. 316 states that the Member States must grant taxable dealers the right to apply the margin scheme to the supply of goods listed in that article. That right was not subject to complying with the conditions in art. 314(a) to (d). Also, Member States lack discretion regarding the conditions, to which they may subject the right of a taxable dealer to apply that scheme.

Thus, a taxable dealer may apply that scheme to works of art, which were supplied under an exempt intra-Community supply, by the creator or his successors in title, and also when those persons fall outside the categories in art. 314.

The second question

Also, the ECJ considered whether a taxable dealer may, when applying the margin scheme, deduct input VAT where such a right was stopped under art. 322(b), if that latter provision has not been transposed into German law.

The ECJ noted that Mr Mensing directly invoked the right in art. 316(1)(b), which is not in German law, for intra-Community supplies of works of art. Thus, Mr Mensing may apply the margin scheme under that article solely under the conditions in that directive, i.e. when he does not exercise, for those same supplies, the right to deduct VAT.


Mensing wanted to use the margin scheme, which applies to works of art bought from their creators. The Germany tax authority unsuccessfully tried to deny him the right to use that scheme. By using it, Mensing charges VAT on only his profit margin, rather than on the full sale price. Not surprisingly, the ECJ rejected his claim both (1) to use the margin scheme in art. 316(1)(b) and (2) to deduct the VAT paid on the supply to him of the works of art.

For commentary on the scheme for second-hand goods, see In-Depth at ¶48-625.

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