Art taxation

Written on
31 March 2024
  • WHAT IS A WORK OF ART?

Works of art include, under certain conditions, paintings, collages, etchings, engravings, prints and original lithographs printed in limited numbers, tapestries and wall textiles made by hand (on the basis of original cartoons supplied by the artists), photographs taken by the artist, printed by him or under his supervision (signed and numbered up to a limit of thirty copies) and, lastly, if they are entirely executed by an artist, original productions of statuary art or sculpture, as well as unique copies of ceramics (1).

 

  • IS PRIVATE OWNERSHIP OF WORKS OF ART TAXED?

Works of art are excluded from the basis of assessment for the Impôt sur la Fortune Immobilière (IFI) if they do not constitute a real estate asset (2). There is therefore no obligation to hold them.

 

  • TAXATION OF THE SALE OF WORKS OF ART BY PRIVATE INDIVIDUALS

Under article 150 VI of the General Tax Code, a flat-rate tax applies to sales for valuable consideration or exports of works of art, collectors’ items or antiques. The rate of this tax is set at 6% of the sale price (3). If the seller or exporter is domiciled in France for tax purposes, the CRDS at the rate of 0.5% applies. The overall tax rate is then 6.5%.

However, the seller has the option of waiving the lump-sum taxation. He may opt for the common law capital gains tax regime for movable property. An allowance of 5% per year of ownership is then applied to the gross capital gain. Withholding tax is 19% and social security contributions are 17.2% (4), giving an overall rate of 36.2%. Under this system, works of art sold for less than €5,000 are exempt (5).

Lastly, gifts and bequests of works of art are exempt from transfer duties (6). Similarly, the purchaser, donee, heir or legatee of a work of art, books, collectors’ items or documents of high artistic or historical value, is exempt from transfer duties and ancillary taxes relating to the transfer of these assets, when he or she donates them to the State (7).

 

  • TAX BENEFITS FOR COMPANIES

Companies subject to corporate income tax in the “industrial and commercial profit” category that purchase an original work of art before December 31, 2025 may, under certain conditions, deduct the purchase price from their taxable income. To do so, the company must display the acquired item for 5 years in a place accessible to the public or to employees, with the exception of their offices (8). The sums are deductible up to a limit of €20,000 or 5‰ of the company’s sales excluding tax, whichever is higher (9). The tax deduction is spread over 5 years.

 

  • CAN I PAY MY TAXES WITH MY WORKS OF ART?

Yes, it’s possible. This is known as dation in payment, the best-known of which was made by the Picasso family. However, not all taxes are covered by this payment method. Works of art, books, collectors’ items and documents of high artistic or historical value are the only items on which you can pay transfer duty, property wealth tax and partition duty (10).

 

  • WORKS OF ART AND VAT

Value-added tax (VAT) is levied at the reduced rate of 5.5% on deliveries of works of art by their creator or his successors in title, and on imports and intra-Community acquisitions of works of art (11). On the other hand, no VAT is applicable if the purchase is made from a vendor not liable for VAT.

 

  • DEPRECIATION OF WORKS OF ART

A provision may be booked to cover the depreciation of works of art included in a company’s assets. This depreciation must be established by a court-approved expert when the acquisition cost of the work exceeds €7,600 (12).

 

(1) CGI, art. 98 A.

(2) CGI, art. 964.

(3) CGI, art. 150 VK.

(4) CGI, art. 200 B.

(5) CGI, art. 150 UA.

(6) CGI, art. 795.

(7) CGI, art. 1131.

(8) CGI, art. 238 bis AB.

(9) CGI, art. 238 bis.

(10) CGI, art. 1716 bis.

(11) CGI, art. 278-0 bis.

(12) CGI, art. 39.

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