Art trades on two paths: under the hammer, in public, with published prices — or behind closed doors, at a price only two parties ever know. The auction looks transparent at first glance, the private route noncommittal. Both are only half true, and the missing half is the half the price is decided on.
This article puts the two paths side by side: the buyer’s premiums of the major houses as they stand in 2026, margin-scheme taxation under the German VAT rules of § 25a UStG, dealer mark-ups, provenance due diligence, and the warranty exclusion that makes a hammer bid a one-sided contract. Every figure carries its source; where the market publishes nothing, that is stated too.
The hammer price is not the price. Buyer’s premium, VAT on the premium and an excluded warranty claim come on top — while the private route charges the margin nobody shows.
The buyer’s premium in 2026: who takes how much
The buyer’s premium is the buyer’s commission to the house, tiered by hammer price. The 2026 position:
- ✦Christie's. 28% up to £1.5m, 22% up to £6m, 15% above
- ✦Sotheby's (since Feb. 2026). 28% up to $2m, 22% up to $8m, 15% above
- ✦Phillips. 29% up to $2m, 22% / 15% above; Priority Bidding cuts 1–4 points
- ✦Lempertz (Cologne). 27% plus 19% VAT on the premium, 22% from €800,000
Three observations. First, the top houses have kept raising fees: Sotheby’s moved to 28% and lifted the first-tier threshold from $1m to $2m in February 2026 (The Art Newspaper, 17.02.2026). Second, the tiers are progressive in appearance only — on a work around €2m the premium lands in the mid five figures, the same sum a private negotiation could argue as a discount. Third, VAT is charged on the premium in Germany, generally 19% at German houses and sometimes the reduced rate for imported works — so the total load depends on the object, not only the house.
Margin-scheme taxation: the tax you never see
When a German dealer resells an artwork they have bought, the sale falls under the margin scheme of § 25a UStG. The taxable base is not the sale price but the margin — the difference between purchase and sale price, at 19%. Because the margin is treated as already inclusive of VAT, the arithmetic is 19/119: roughly 16% of the margin, not of the sale price (UStAE 25a.1 of the BMF). Where the purchase price cannot be evidenced, the flat margin of § 25a (3) sentence 2 UStG applies: 30% of the sale price counts as the taxable base, effectively around 4.8% of it.
For the buyer this construction has a distinct quality: the invoice shows no VAT, because § 25a (4) UStG excludes a separate tax statement. The seller’s purchase price therefore necessarily stays secret — the same rule that simplifies the tax design makes the true purchase price invisible to the market side. Anyone who wants to know which margin is inside the price cannot read it off the invoice; they can only negotiate. A dealer’s option to switch to regular taxation at the reduced 7% rate (§ 25a (3), (8) UStG) exists — mainly relevant for imported works — and changes the visibility not at all.
The private path: margin without a scale
Galleries and dealers typically work on mark-ups of 30 to 50 per cent; on primary sales the split between gallery and artist is often 50/50. Negotiated discounts are normal — Artsy cites 5 to 15 per cent, and collector reports suggest 25 to 30 per cent has been reached under pressure. A private sale through an auction house is billed on commission; the houses’ rates are unpublished and negotiable. That this is no niche business is clear from volume: Christie’s reported over one billion dollars in private sales for the first half of 2026, Sotheby’s a record $826m (The Art Newspaper, 15.07.2026).
The market overall is growing and shifting: the Art Basel & UBS Report 2026 (edited by Clare McAndrew) puts the global market at $59.6bn (+4%) — $34.8bn of it through galleries and dealers and $20.7bn through public auctions (+9%). The houses’ private sales fell to $4.2bn (−5%). The auction is therefore not the market but its visible part — the majority of transactions (41.5 million) run below the public numbers.
Provenance: the check both paths demand
The purchase path changes nothing about the duty of care. A serious check covers the unbroken chain of ownership including the years 1933 to 1945, the entry in the artist’s catalogue raisonné, an independent condition report and a search of the Art Loss Register; their priority search costs £300, €350 or $400 per object plus VAT (artloss.com), a loss registration £15 per object. In Germany, arbitration panels dedicated to Nazi-looted-art cases took effect on 1 December 2025, whose restitution decisions are binding on the parties (Weltkunst / ZEIT, 2025).
The difference lies in liability after purchase: with a dealer, the full warranty rights of §§ 434 ff. BGB apply — including authenticity where it was warranted. At auction, the exclusion applies: under §§ 41 ff. KGSG the houses’ conditions of sale exclude warranty, the hammer is acceptance under § 156 BGB, and an exception arises under § 444 BGB only in cases of intent or gross misrepresentation. The only thing that survives a hammer bid is the expertise you bought beforehand.
Which path fits which situation
The auction is the right path when a work trades publicly, the comparable results of prior sales are accessible and the expertise can be verified independently — its advantage is the public price as a fact, not a saving. The private path fits when discretion is the object itself — works the market is never meant to see publicly — and when the negotiating room in the margin is worth the surrendered protections. Neither is a question of taste; both are invoices: around the €2m mark, the two paths differ by sums that can exceed a year of concierge service.
How such a review works alongside discretion is described in our piece on vetting luxury service providers; the discretion of the private market is the subject of discretion and privacy in premium services.
Frequently asked questions
How high is the auction buyer's premium in 2026?
Christie's charges a tiered 28% up to £1.5m, 22% up to £6m and 15% above. Sotheby's raised its premium in February 2026: 28% up to $2m (the threshold moved from $1m to $2m), 22% up to $8m, 15% above. Phillips starts at 29% up to $2m but cuts one to four points through its Priority Bidding. German houses such as Lempertz charge 27% plus 19% VAT on the premium, and 22% from €800,000.
How does margin-scheme taxation work for art?
Under § 25a UStG, resales by dealers are taxed only on the margin, at 19%. Because the margin is treated as already inclusive of VAT, the effective rate is 19/119 — roughly 16% of the margin, not of the sale price. Where the purchase price cannot be evidenced, the flat margin applies: 30% of the sale price is the taxable base, effectively around 4.8% of it. For the buyer the key point: the invoice carries no separate VAT statement — the seller's purchase price stays secret.
Which risks does the buyer carry at auction?
The decisive one is the warranty exclusion. Under §§ 41 ff. KGSG the auctioneer is generally not liable for authenticity or condition; an exception applies only in cases of intent or fraudulent misrepresentation (§ 444 BGB). Add a reserve up to the lower estimate and third-party guarantees with irrevocable bids that can cluster prices at the guarantee threshold. With a dealer, by contrast, the full warranty rights of §§ 434 ff. BGB apply.
What belongs in a serious provenance check?
The unbroken chain of ownership including 1933 to 1945, the entry in the artist's catalogue raisonné, an independent condition report and a search of the Art Loss Register — their priority search costs £300 / €350 / $400 per object plus VAT. In Germany, new arbitration panels for Nazi-looted-art cases took effect in late 2025 and issue binding restitution decisions.
The quiet way to a decision
The decision does not begin in the saleroom but with the question of what the work is meant to do: publicly documented ownership, or a quiet part of a collection. Whoever holds that goal in writing also recognises which of the two paths carries the better half of the margin.
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