Please note, if you're not VAT registered, the following won't apply to you.
Why has the client requested a VAT invoice?
Many of our corporate clients, as VAT registered businesses, can claim back the VAT included in the price of artworks they buy. To do this, they need a record of how much they are entitled to - this comes in the form of VAT invoices.
Why must I create the invoice?
As you're the seller of the artwork, the invoice must come from you. As an agent between you and the customer, we don't pay VAT on the sale of the artwork and therefore aren’t the ones to issue the invoice.
VAT rules vary between countries. If you're unsure on how to proceed after receiving a request for an invoice, do speak to a member of our team. Alternatively. you can seek local advice. For example, if you're an EU seller selling to a customer outside the EU, VAT will not usually be applicable.
I don’t want to make a VAT invoice for an amount I didn’t receive.
The amount we'll ask you to invoice will be the sale price of the artwork, the amount before commission is taken. Please check the commission statement that we'll have sent you as this doubles as a VAT invoice for the commission that we'll have taken.
How do I work out VAT?
When we request an invoice, we will specify and ask you to include the item list price and shipping costs. Both of these prices are inclusive of VAT. The grand total after VAT has been added should equal the sum of these two costs.
The amounts included on the invoice before the grand total must have VAT taken off of them in order to account for the VAT that will be added once the grand total is calculated. This is not as simple as taking away 20%, but there are tools available online to do it for you.
For example, if we request an invoice for a work that you sold for £1,000 with shipping and handling costs of £100, your VAT invoice would break down like this:
Item price: £833.33 (item price minus VAT @ 20%)
Shipping and handling: £83.33 (shipping and handling cost minus VAT @ 20%)
VAT: £183.34 (20% of subtotal)
Grand total: £1,100 (subtotal plus VAT)