All you need to know about the taxation of art for private individuals?

Many people are increasingly interested in art. Fortunately, the taxation of art has become advantageous whether it is for artistic or decorative interest or for a lucrative operation. In France, works of art benefit from a privileged tax regime.

Capital gains tax

As it is a flat-rate taxation applicable to resale, the taxation of capital gains concerns sales by individuals subject to income tax. The flat-rate tax constitutes 6.5% of the sale price including the CRDS of 0.5%.

As for works of art sold at a price lower than €5,000, they are not taxed.

If an individual opts for taxation of actual capital gains, he or she has the option of not paying the 6.5% tax. In this case, presentation of the original purchase invoice is required and the tax is 36.2% on the actual capital gain. However, this option is only worthwhile unless :

  • The resale generates little or no capital gain.
  • The collection has been in the seller’s possession for a long time

Exemption for sales to museums (classified library, national museum, state archive service, etc.) is based on the flat-rate tax. It can be said that the taxation of art encourages citizens to take an interest in works of art of all times.

Inheritance tax

All works of art must be subject to inheritance tax. Today, the rate of inheritance tax varies according to the amount and family ties. It varies between 5 and 45%.

Since 1969, it has been possible to regularise inheritance tax by dation. Subject to certain conditions, the tax and cultural authorities are responsible for authorising the dation. Dation in payment is one of the main means of enriching public collections.

No tax on ownership

From the point of view of art taxation, the possession of works of art is very advantageous for private individuals. For art that is exempt from wealth tax until 2017, it is totally excluded from the basis of assessment for wealth tax on real estate according to the 2018 Finance Act.

In principle, the acquisition of a work of art is subject to one of the lowest VAT rates in Europe with a standard rate of 20%. Acquisitions made in France from artists directly or their heirs are subject to a reduced VAT rate of 5.5%, which is one of the lowest in the European Union. If an acquisition has been made from a vendor who is not subject to VAT, no VAT can be applied.

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