Buying an artwork : combining pleasure, enhancement and tax optimization!
Acquisition of artworks from living artists by firms and self-employedThe article 238bis AB of the CGI states that:"companies who buy works from living artists can deduct from the income statement of the acquisition period and on to the next four years, in equal shares, a total which equals the artwork’s purchasing price. This system allows to deduct each year, for 5 years, 20% of the purchase price of artworks by living artists.
This tax benefit relies on four elements:
- - Purchased goods must be registered as fixed assets.
- - The tax deduction must not exceed 0,5% of the year’s revenues.
- - The artwork must be exposed for any of the company’s employee and visitor to see, in an access-free space, for 5 years.
- The company must register on a special reserve account an amount similar to the deducted sum, knowing that this amount will be reintegrated to the taxable results if the artwork is sold or if withdrawal is made on the reserve account.
Tax on wealth exoneration:
- Article 885I of the CGI states that : "artworks are not concerned by the tax on wealth. They are not to be registered on the Tax on Wealth declaration and the concerned amounts are tax-free. This tax deduction is applicable to painting, drawing, watercolour as well as sculpture and bronze.”
Taxation and capital gain:
- The article 271 of the CGI states that: "in case of resale of an artwork, the seller can, if in possession of a bill, choose between two options: the flat rate taxation of 5% or the application of the general system of capital gains (similar system to capital gains for real estate with tax deduction after 15 years). If he does not have a bill, the seller will have to pay the 5% tax, which will be paid off by the intermediary, for the seller. As for transferring assets: under certain conditions, in case of inheritance, artworks can be included in the 5% furniture package.”
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