Seán Fleming (Laois-Offaly, Fianna Fail)
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Question 47: To ask the Minister for Finance the arrangements in place regarding recouping VAT to the Exchequer when State agencies arrange the sale of assets abroad and when VAT may be charged on the sale commission or on the sale proceeds (details supplied); and if he will make a statement on the matter. [28992/11]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the EU VAT Directive, with which the VAT law in EU Member States must comply, provides for a margin scheme for auctioneers of works of art. Under the margin scheme, VAT is charged on the commission or margin received by the auctioneer and not the full value of the item being supplied as would be the case under normal VAT rules.

However, it is important to note that auctioneers may elect to use the margin scheme for some sales and not others. The margin scheme arrangement is referred to as the "auction scheme" and the goods concerned are referred to as "auction scheme goods". In general, auction scheme goods are goods passed to the auctioneer by a person who is otherwise not entitled to a VAT input credit on their acquisition. The auctioneer is regarded as simultaneously buying and selling the goods and for VAT purposes does not treat the transaction as a sale where commission is charged. VAT, as mentioned previously, is accounted for on the margin and not the full consideration received.

Under the auction scheme VAT is accounted for in the Member State in which the auction takes place, that is, where the auction scheme goods are supplied. Where the auction is held within another EU Member State, VAT is charged in that Member State and not in Ireland. In such case, as there would be no liability to Irish VAT, the issue of recouping VAT to the Exchequer does not arise.