ART AND TAXATION

INDIVIDUALS


THERE ARE SEVERAL WAYS TO EXEMPT FROM TAX PURCHASE OF ART

If you are an individual or business manager, there is necessarily a disposition that is in your interest and that can help you reduce your taxes.

ISF EXEMPTION :

Artworks, whatever their nature, are not subject to the French solidarity
tax on Fortune (ISF) .To this extent, they are not mentioned in the
ISF declaration and the sums devoted to the acquisition are not taxable.
This tax provision can be applied equally to paintings, drawings, gouaches, watercolors, sculptures and bronzes. It makes it a useful tool to minimize ISF.

THE ADVANTAGEOUS TAXATION OF CAPITAL GAINS:

In case of resale, the situation is different if the seller has a bill or not.

• if he has bill, he can opt:

– for a lump taxation of 5%,
– or for the general regime of capital gains ( identical to real estate capital gains with tax exemption after 21 years)

if you sell your work with a lower price than 5000 euros, you will be
exempt from tax. more than 5000 euros, you will be taxed at 5%
(except if you have detained this artwork for more than 12 years.)

• If he doesn’t have a bill:

The seller only has to pay 5% of tax., that will be discharge by the sellers count

HERITAGE TRANSMISSION :

Under certain conditions, artworks can be in case of succession, integrated into the contract of « Meubles Meublants ».

PAYMENT IN KIND OF CERTAIN TAXES :

The law allows to artworks owners to pay some taxes in proposing an artwork to the State in return for royalties due.

SUCCESSIONS

Artworks and common furniture are treated in a very special way in the successions context. This particularity takes place in their valuation method to determine the tax base.
This regime offers to heirs the possibility to benefit artworks of the
5% contract, at the condition that they can be assimilated as “Meubles Meublants”. In some cases, exemptions taxes are also provided in the tax law succession.

COMPANIES


PURCHASE OF CONTEMPORARY ARTWORKS

A company that buys an original work can under certain conditions deducts from its annual result, the purchase price of the work:

Shaping and improve its image by sponsoring a living artist, upgrade and decorate your professionals premises with original artworks:

They must be performed by living artists, and be presented in a public space accessible to employees, customers, suppliers, … during the depreciation period of the work, so 5 years.

The original living artists artworks are excluded from the professional tax base.

The tax deduction made under each fiscal exercise can’t exceed 5% of sales annual company turnover.

The deduction will be 20% of the purchase price of the work during
5 years.

The company must register in a special reserve account in liabilities amount equal to the deduction made. This amount is reinstated to taxable result in the case of assignment change or transfer of artwork or deduction on the reserve account.

The company may establish a provision for depreciation when the artwork depreciation exceeds the amount of deductions already made under the first to fourth subparagraphs.

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