ART PURCHASE AND TAX BENEFITS

1) Art Purchase and Tax Benefits for Businesses Operating in France

Acquisition of Works by Living Artists by Businesses and Professionals

Article 238bis AB of the French General Tax Code (CGI) specifies that: “Businesses that purchase original works by living artists between January 1, 2002, and December 31, 2025, and record them as fixed assets, may deduct from their taxable income for the year of acquisition and the following four years, in equal installments, an amount equal to the purchase price.”

Furthermore, Article 238bis of the CGI stipulates: “For the calculation of the tax reduction amount, all payments eligible under this article are capped at €20,000 or 0.5% of turnover, whichever is higher.” »

Click here to consult the corresponding article of the French General Tax Code (CGI)

This tax advantage is subject to four conditions:

The acquired artworks must be recorded as fixed assets.

The deduction made for each fiscal year must not exceed 0.5% of the year's revenue.

The artwork must be displayed for five years in a location freely accessible to the company's employees and visitors.

The company must record an amount equal to the deduction in a special reserve account on the liabilities side of its balance sheet. This amount will be added back to taxable income in the event of a change in the artwork's use, its sale, or a withdrawal from the reserve account.

2) Art purchases and tax benefits for individuals with their tax residence in France
Works of art are not subject to the French wealth tax (IFI). Works of art that qualify for tax benefits are listed in article 98 A of the general tax code.

NAVIGATE THE CODE SUMMARY

Companies that purchase original works of art by living artists between January 1, 2002, and December 31, 2022, and record them as fixed assets may deduct from their taxable income, in equal installments over the year of acquisition and the following four years, an amount equal to the purchase price.

The deduction made for each fiscal year may not exceed the limit mentioned in the first paragraph of section 3 of Article 238 bis, less the total amount of payments mentioned in the same article.

To qualify for the deduction provided for in the first paragraph, the company must display the acquired artwork in a location accessible to the public or employees, excluding their offices, for the period corresponding to the year of acquisition and the following four years.

Amounts corresponding to the purchase price of musical instruments are also deductible under the conditions set forth in the first paragraph. To qualify for the deduction, the company must commit to lending these instruments free of charge to performing artists who request them.

The company must record an amount equal to the deduction made pursuant to the first paragraph in a special reserve account on the liabilities side of its balance sheet. This amount is added back to taxable income in the event of a change in the use or sale of the artwork or instrument, or a withdrawal from the reserve account.

The company may create a provision for depreciation when the depreciation of the artwork exceeds the amount of deductions already made under the first through fourth paragraphs.

NOTE: In accordance with Article 134, III of Law No. 2019-1479 of December 29, 2019, these provisions apply to payments made during fiscal years ending on or after December 31, 2020.

DEDUCTING ART FROM YOUR TAXES

Reclaim the Money from Your Art

Discover all the rights you can claim on works of art. Learn about the deductions available for artworks. Find links to secure websites, as well as countless benefits and interesting facts about all types of artwork. Tax breaks and direct deductions for artworks are available from your income tax. On this page, you will find relevant links to information on the advantages and savings associated with art creations. The artist, Savonarola, has conducted research to better serve art lovers and art enthusiasts online.

REAL BENEFITS FROM TAX DEDUCTIONS

"Build your own Contemporary Art Collection, display it in public spaces like hotels, beautify your walls, waiting rooms, and lobbies, and start saving on your taxes now!" Article 238bis AB of the French General Tax Code allows businesses that purchase works by living artists to benefit from advantageous tax provisions. For works with an acquisition price of less than €5,000 excluding VAT, businesses and self-employed professionals can deduct the purchase price from their taxable income in equal installments over the year of acquisition and the following four years. This benefit is granted on the condition that the works are displayed free of charge in a location "accessible to the public, clients, and/or employees of the company, excluding any personal offices." "Build your own contemporary art collection, display it in public spaces like hotels, beautify your walls, waiting rooms, and lobbies, and start saving on your taxes!"

In short, a company that purchases a work of art can deduct the purchase as an expense and thus reduce its annual profit (and therefore its tax liability). The calculation of the benefit obtained is done on a case-by-case basis, so it's impossible to generalize how much a company will recover from this transaction.

Who benefits? Businesses and companies, as well as self-employed professionals who have opted for actual income tax reporting, when they include the acquisition in their taxable income for the fiscal year, up to a limit of 0.5% of their revenue.

The SNAPcgt advocates for identical tax provisions on this issue, for both businesses and individuals. Why can't an individual who buys a work of art benefit from the same tax advantages as a business? We believe that the presence of a work of art in a private home is just as deserving of support as in a business, provided it is displayed and not stored in a vault.

Created by the law of December 31, 1968, payment in kind (dation en paiement) is a process that allows for the settlement of a tax debt through the transfer of works of art, books, collectibles, or documents of significant historical or artistic value.

It is possible to settle taxes by substituting works of art for cash (paying with artworks instead of money). This is also feasible in the context of an inheritance. The state is not obligated to accept this principle (especially if the artwork is not highly valued).

Inheritance tax payment is a system that allows for the payment of inheritance tax in kind, for example by transferring works of art instead of cash. It is therefore a transaction, not an act of philanthropy.

When a work of art is resold, an individual or a company pays a share of the taxes on any profit they make from the transaction. Capital gains are exempt from taxation after 12 years (the same applies to the resale of houses).