Tax exemption for the purchase of works of art

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The art market has seen a 55% increase in the last 10 years. France represents the ^4th market place on the planet – far – behind the United States, China and the United Kingdom.

The principle of tax exemption through the purchase of works of art

Investing in works of art can be tax advantageous for a company, but also for individuals subject to ISF.

In fact, this practice makes it possible to reduce the amount of taxable income under certain conditions . Low-income households can also access this tax advantage on capital gains when selling or passing on an inheritance. Tax reductions on works of art concern capital gains tax and sales or export tax.

Works of art compatible with tax exemption

Purchasing a work of art is not only a way to make investments and save taxes, but can also contribute to the beautification of a home. Works of art qualifying for tax exemption are defined by article 98A of the General Tax Code.

Works of art compatible with tax exemption can be photos of artists, antiques, jewelry, paintings , antique furniture or old documents such as letters, autographs and others. Collectibles can also benefit from it, such as classic cars or Sneakers for example.

To choose a work of art, an individual looking for a tax advantage within their reach must be accompanied by an advisor . There are professionals in boutiques or galleries who can best advise their clients on the purchase of a work of art likely to bring them tax advantages.

The conditions for benefiting from tax exemption for the purchase of works of art

To save tax thanks to art, you must meet the following conditions:

• The first essential condition is the establishment of the acquisition invoice for the work of art. No tax benefit will be granted without the invoice.
• Then, the legislation requires, in return for benefiting from tax advantages, the exhibition of works to the public for a minimum period of 5 years following acquisition. The exhibition conditions are different depending on the price of the good. Works of art whose price is less than 5,000 euros excluding taxes must be exhibited in a place accessible to the company's employees and customers.
• The exhibition is not compulsory for individuals and the legislation takes into account all types of works of art.
  
  

  The advantages of tax exemption for works of art

  Tax exemption through works of art has multiple advantages. But what exactly are these benefits, and who do they benefit?

  The advantages for a business

  A company that invests in art can benefit from a more or less significant tax reduction. Investing in works of art can allow a company to benefit from a tax reduction on the profit of the financial year of acquisition and for the following four years.

  The amount of the acquired works will be recorded in the fixed assets account to be able to benefit from the tax reduction in equal fractions over five years.

  A company that keeps a work of art for five years will be offered a tax deduction of around 20%. However, the reduction can never exceed 5% of the company's annual turnover.

  Benefits for individuals

  Purchasing a work of art is tax advantageous for individuals. In fact, it allows a reduction or even an exemption from ISF , because the price of the work is not taken into account in the calculation of the ISF base. Works of art can also allow the individual to discharge a tax debt through the delivery of a work of art or donation.

  In addition, it is possible to choose taxation on capital gains , either 5% of the value, or the normal taxation of 27% with a reduction of 10% per year after two years of ownership. It should be noted that works of art and collectibles worth less than 5,000 euros are not taxed and jewelry is only taxed at 4.5%. If the individual holds the work for 12 years, he will benefit from a complete exemption.