Hand-painted fans may be subject to 10% VAT if they are considered works of art

The tax classification of artisanal products with artistic elements is a determining factor for the tax burden on professionals. Recently, the Dirección General de Tributos (DGT) has addressed the question of whether hand-painted fans can benefit from the reduced VAT rate.

What the DGT has ruled

The inquiry focuses on determining whether the supply of fans made by an author can be considered a supply of works of art. According to the Administration's criteria, for the 10% tax rate to apply, the fans must meet the requirements to be considered works of art under the Combined Nomenclature, specifically within code CN 9701.

If the product does not fit into said tariff classification, the activity cannot benefit from the reduced rate and must apply the general rate of 21% on the value of the transaction. The resolution emphasizes that the nature of the object is the key factor in determining the applicable VAT rate.

What this means for you

If you are a professional or entrepreneur marketing manual products with an artistic component, the distinction between a decorative object and a work of art has a direct impact on your invoicing and the final price for the consumer.

• Application of 10%: This will only be possible if the fans are strictly classified as works of art (CN 9701).
• Application of 21%: This will be the rule for any fan that does not meet the technical criteria of the nomenclature for works of art.

What you should do

When selling products that combine craftsmanship and art, it is necessary to verify the exact tariff classification of the goods. Correctly determining the CN code is fundamental to avoid errors in tax settlement and to ensure that the tax rate corresponding to the real nature of the product sold is applied. It is recommended to assess the technical classification of each product before establishing its tax regime.