The new ruling has serious financial implications for all EU galleries and auction houses who sell such works on behalf of vendors from outside the member states. For example, UK galleries will have to pay full VAT (which from January 1 stands at 20 per cent) and customs dues on video and light works.
The new classification goes against a victory won by Christie's-owned Haunch of Venison gallery in a UK tribunal two years ago. The firm had appealed against a Customs decision to charge them the full rate of VAT (£36,000) when importing six disassembled video installations by Viola into the UK from the United States in 2006. They also sought to import a light sculpture by Flavin.
As "sculpture", the gallery believed the works were liable for the reduced rate of VAT set at five per cent. In December 2008 the VAT and Duties Tribunal agreed.
The Netherlands also considered the classification of video and light installations and concurred that they should be classified as art under Chapter 97 of the Common Customs Tariff.
But now the EC has overturned this decision. As Dan Flavin's work has "the characteristics of lighting fittings…[it] is therefore to be classified…as wall lighting fittings". The Commission also found that it "is not the installation that constitutes a 'work of art' but [rather] the result of the operations (the light effect) carried out by it".
In short, these six-figure sculptures can only be considered works of art when they are assembled and switched on.
Art lawyer Pierre Valentin, who was the legal representative for Haunch at the time of the 2008 ruling but no longer represents the gallery, described the EU decision as "absurd".
