Houdart A&C is the leading advisory firm for French auctioneers
As a result of our large client base in this business sector, our close relationship with the profession’s regulatory bodies, and our expertise in sector-specific valuation, taxation, law and accounting, Houdart A&C offers leading chartered accountancy and audit services for judicial and voluntary auctioneers.
Houdart A&C is regularly called upon by its counterparts to provide technical expertise for their auctioneer clients.
We provide advice for a wide range of auction-related operations: sales and valuations of official auctioneer licenses and auction houses (opérateur de ventes volontaires, OVV). In the past five years, we have assisted professionals in about thirty such cases.
We also conduct training and disseminate technical literature pertaining to auction house taxation schemes in order to help auctioneers to efficiently manage intricate transactions, especially with regard to VAT rules.
Judicial and voluntary auctioneers: two distinct professions
In France, auctioneers are ministerial officers who carry out certain court procedures, and can also work with private, accredited auction houses to oversee voluntary auctions. They are allowed run both kinds of auctions, but if they do so, auctioneers must keep these two activities strictly separate. The order of 2 November 1945, as amended by law 2000-642 of 10 July 2000 and law 2011-850 of 20 July 2011, separated judicial and voluntary auction activities.
Auctioneers can organise voluntary auctions for items that are being sold freely by their owners. They can perform the inventories and appraisals for said auctions and call on experts for more specialised auctions.
Auctioneers running judicial sales are ministerial officers and have full liability for their actions as part of their appointment. They organise auctions for estates and in the context of court-ordered liquidation or receivership. They are in charge of appraisals and overseeing public auctions of movable property and chattels.
Accountancy and taxation requirements
Legal obligations and regulations pertaining to accountancy and taxation for auctioneers require particular attention as said professionals are appointed by French courts, and by the nature itself of their business activities.
Auctioneers must keep records of all auction house transactions. In addition to customary accounting obligations (keeping a transaction logbook and a fixed-asset register), accounting for authorised representatives must comply with specific rules for third-party accounts, management of cash flow to principals, financial stability.
Accounting requirements also depend on the auctioneer’s method of doing business: as a sole trader or with a commercial or non-commercial company.
Sole traders and non-commercial companies implement one of two accounting methods: a cash basis or accrual basis accounting. Conversely, commercial companies are required to implement the accrual basis method.
The twofold business activity of auctioneers (judicial and voluntary auctions) requires two distinct legal structures and accounting systems.
Depending on the transaction, auctioneers can work as disclosed or undisclosed agents, which are subject to different VAT schemes.
- When auctioneers act as undisclosed agents (invoicing in their own name on behalf of an undisclosed principal), they are taxed on total transaction amounts. They benefit, however, from the VAT margin scheme on the commissions paid by the seller and buyer.
- Auctioneers acting as disclosed agents (on behalf of and in the name of the principal) are considered as service providers and are subject to the standard VAT rate of 20% on income.
As auctioneers are authorised agents, they must pay the taxes on capital gains and on precious metals.
When working with third parties from abroad, other taxation aspects apply: VAT on temporary imports, declaring exchange of goods, export declarations.
Judicial and voluntary auctions are separate activities defined by law. As such, auctioneers are represented by two different professional bodies: the Chambre Nationale des Commissaires-Priseurs for judicial auctions and the Conseil des Ventes Volontaires for voluntary auctions.
The so-called “Macron law” of 6 August 2015 merged the professions of judicial auctioneer and court bailiff to create the profession of commissioner of justice.
These two professions are likely to undergo major changes before their scheduled merger comes into force on 1 July 2022.