Patronage – Tax exemption

Purchasing an artwork can be fiscally beneficial for companies as well as for individuals. This tax advantage, which is often overlooked, is also an opportunity for the company to communicate to its customers and employees in a way that is beneficial to them.

The term “tax exemption” is used to refer to the set of legal provisions designed to reduce the charges and the amount of income tax payable by taxpayers. Among these provisions (called tax niches), we find the tax exemption linked to the purchase of works of art.

For more information, please visit the official website of the French administration.

The advantages of tax exemption through the acquisition of artwork for companies:

Indulge yourself and reduce your taxable income by acquiring original artworks by living artists. According to art. 238 bis AB of the CGI, companies that purchase artworks by living artists benefit from very advantageous tax provisions.

They can enter 100% of the acquisition amount in the annual balance sheet or the following 4 years in equal fractions.

The deduction made may not exceed the limit of 0.5% of sales per fiscal year.

Who benefits from it?

Businesses, corporations and professionals who have opted for a real reporting of their income (BIC, BNC OR BA).

Exhibit the work for 5 years in a place accessible to the public or to employees, with the exception of private offices. These provisions do not apply to individuals.

Find all the details on the official website of the Ministry of Culture.

The advantages of tax exemption through the acquisition of artworks for private individuals:

From a fiscal point of view, the purchase of an artwork proves to be very attractive for individuals. In fact, the realization of such an acquisition allows the latter to benefit from an exemption or a reduction of the Wealth Tax insofar as the price of the work in question is not taken into account during the calculation of the Wealth Tax base.

The purchase of a work of art can also make it easier for an individual to pay a tax debt. This payment is made through the donation or remittance of the work of art. This solution also allows individuals to opt for capital gains tax.

It can then be a question of 5% of the value of the work, a normal taxation of 27% as well as an annual allowance of 10% after at least two years of possession of the work of art. It should also be specified that works of art and collectors’ items whose value is less than 5,000 euros are not subject to any taxation.

When the individual also holds a work of art for at least 12 years, he benefits from a complete exemption. 720,000, investing in works of art can be much more advantageous than investing in the stock market, which in some cases is not very profitable.

On the other hand, the purchase of a work of art that has been masterfully designed can easily avoid the Wealth Tax. This acquisition also offers the possibility of benefiting from a capital gains exemption.

To do so, it is important that the work of art be owned for a dozen years by a private individual. In order to be able to extend this capital gains tax after 12 years, the private individual who owns the work of art must necessarily have the invoice that proves that he is indeed the owner.

The date of the acquisition as well as the identity of the owner must also appear on the invoice. Before acquiring a collector’s item or a work of art, it is also essential that the private individual bases his purchase on his personal taste.

To protect himself from possible disputes, he must also ask for a dated invoice when he proceeds to the acquisition of valuable items. The best way to determine the value of a work of art is for experts to contemplate it.

Since individuals seeking a tax advantage do not have this ability, it is preferable for them to seek the advice of professionals in galleries or boutiques.

Since the French market is widely appreciated in the field of acquisition and disposal of works of art, it is fairly easy for an individual to obtain the type of work that suits him or her. During the purchase of this work, factors such as the available budget and personal taste will play a significant role.

The artwork being moreover realized with the aim of being used, it will also have to be chosen according to the use that one wants to make of it.