Why and when does Saatchi Art need to apply indirect taxes (VAT, GST, etc.) to their commission for artists?
Saatchi promotes artists' work on its website and, when a buyer is found, provides a number of different services (e.g. payment processing and shipping). For this service, Saatchi charges a fee via its commission.
Saatchi Art is a US based corporation registered in Australia, Canada, the EU and the UK and must charge GST/VAT on the e-service it provides to artists who reside in those countries (AU, CA, EU or the UK). Saatchi is obligated to collect and remit GST/VAT to the proper tax authorities..
For example: If an artwork is sold by a UK artist for £100 and Saatchi Art is taking a 40% commission, Saatchi must charge the non-VAT registered artist £40 (commission) + 20% UK VAT, or £8, for the provision of its services. While we cannot act as your tax advisor, if you are making substantial sales of art, you should consult with your financial advisor as it may be beneficial for you to register as a business, which may allow you to recoup some or all of the Indirect Tax you pay to suppliers and service providers.
I think I am under the tax threshold for VAT, GST, etc. Why do I have to pay?
Saatchi Art is a marketplace providing you with a service, and by law must collect VAT/GST/indirect tax as applicable on art sales originating in countries where we are registered and remit such amounts. We also must collect taxes on the services we provide to artists in those markets.
Could I be exempt from indirect tax?
In general, exemption tends to be limited to organizations such as not-for-profits and religious organizations. Please consult with your local tax authority or your financial advisor to know whether you could be exempt.
What are the benefits of registering for indirect tax (VAT, GST) if I am under the threshold for each country?
EU and UK: If you register and supply Saatchi Art with a verifiable tax id number, Saatchi Art will not charge tax on the commissions we charge you for our services.
AU: If you register in AU and supply Saatchi Art with an ABN number and confirm you are registered for GST, Saatchi Art will not charge tax on the commissions we charge you for our services.
CA: All artists, regardless of their incorporation status, will be charged a flat 5% GST, beginning May 15, 2024.
I was charged tax on previous orders, but I am registered and have provided you with my tax id number. Will Saatchi Art reimburse me for the tax fees that were applied(VAT/GST/Indirect tax)?
If we collected VAT/GST in this instance, we were not able to validate the tax ID supplied as required by law. Please confirm that the number we have on record is correct and contact our support desk. Thankfully, as a registrant, you should be able to report and recover any tax we did collect related to our fees charged.
Note: this does not apply to Canadian artists.
Where can I get more resources about how tax works in my country?
Every country is different, but we suggest starting with these basic resources for the EU and UK.
EU: https://vat-one-stop-shop.ec.europa.eu/index_en
UK:https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers
I am still confused/what you’re doing seems illegal/this is not the law, etc.
As of July 1, 2021, marketplaces are liable to collect, report, and remit VAT when they facilitate certain cross-border business-to-consumer transactions on behalf of their third-party sellers where parties to the transaction are in the UK or EU. Saatchi Art is considered a marketplace under these rules and we are therefore obligated to collect VAT in place of sellers. Under these and other rules, we are also obligated to collect VAT on commissions paid to artists if they don’t have a registered VAT number.