Taxation of Artwork Guide

A comprehensive study from 26 countries across the world

COVER WTS Global Guide on Taxation of Artwork | Content
Rodney Graham – Rotating Stand (Red, Blue, Yellow, Green, Orange)
2015 | Steel, aluminium, wood, acrylic paint on canvas | Unique
335.3 x 304.8 x 310 cm / 132 x 120 x 122 in
© Rodney Graham | Photo: Stefan Altenburger Photography Zürich | Courtesy Rodney Graham and Hauser & Wirth

Content

Introduction ......................................................... 04 Russia ................................................................. 130

Austria ................................................................. 06 Spain ................................................................... 138

Belgium ............................................................... 14 Sweden ............................................................... 146

Brazil ................................................................... 24 Switzerland ......................................................... 152

China ................................................................... 32 UAE ...................................................................... 160

Costa Rica ............................................................ 38 Ukraine ............................................................... 166

Denmark ............................................................. 44 Uruguay .............................................................. 172

Estonia ................................................................ 52 USA ...................................................................... 178

France ................................................................. 60 Vietnam .............................................................. 186

Germany ............................................................. 68 Contact ............................................................... 192

Hungary .............................................................. 76 Hauser & Wirth .................................................... 194

India .................................................................... 82 Imprint ............................................................... 195

Italy ..................................................................... 88

Luxembourg ........................................................ 96

Netherlands ......................................................... 104

Norway ............................................................... 112

Pakistan .............................................................. 118

Portugal .............................................................. 124

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WTS Global Guide on Taxation of Artwork | Introduction WTS Global Guide on Taxation of Artwork | Introduction

Introduction

The question: “What is art?” has been troubling hu- concentrated in main markets like the US, UK and Chi- actions of collectors by helping them to navigate com-
manity for centuries. The definition of art is debatable na, most countries have some sort of art market on plicated tax issues around art investments. It should
and subjective. The concept of art has changed over the their own. also be valuable reading not only for galleries, private
centuries and the role of art has developed from aes- museums, family offices, heirs and beneficiaries but
thetic pleasure to investment objects today. There is no In this respect you are holding in your hands a unique hopefully also for art dealers, consultants, art fairs and
agreement and thus we are left with so many defini- report on the taxation of artwork. Whilst there are artists alike.
tions and possibilities when talking about art and busi- publications available explaining artwork taxation in
ness. Contemporary art business is multi-disciplinary, main markets – mostly the US and to some extent the WTS Global was established in 2003 and a dedicated
combining legal, economic, political, technological UK and other European countries, a detailed report WTS Global Private Clients Service Line was initiated
and philosophical aspects of the art world. that covers European countries, the United States of in 2017. Members from this Service Line spanning 26
America, Costa Rica, Uruguay, Brazil and also the Unit- countries contributed to this report.
The international art market is estimated to have ed Arab Emirates, India, Pakistan, China and Vietnam is
turned over USD 64 billion in business in recent years. one of a kind. Several of these countries have tax sys- As art markets continue to grow, WTS Global has taken
Considering its size alone, it is easy to see why the tems as colourful and entertaining as their artwork, the initiative to build dedicated expertise in this specif-
art trade has captured the interest of the investment something that makes reading this report even more ic industry and to provide cross-border assistance to its
community. Art is seen as an investment class in many interesting. private clients, corporate collectors, galleries, founda-
circles and then again, for many, it is considered a dis- tions and asset managers with regards to the taxation
grace that art is just another form of investment to cap- There are several risks connected with investment into of artwork. This report is the first comprehensive study
italise on. Works of art can be viewed in multiple ways art which are unique to this specific investment class, containing 26 country overviews from WTS Global
- they are both to be used by consumers and also give such as physical damage, risk of ownership, authentic- member firms.
tremendous emotional pleasure at the same time. The ity, provenance and price volatility and taxation. Price
value of artwork tends to increase over time, turning volatility issues and the fact that art investments have We would like to warmly thank all of the authors who
them into potential sources of capital gain and diver- become accessible to people who have previously felt took the time and effort to contribute to this report.
sification. At the same time, art maintains the unique priced out of the market turns the wealth tax applica- Special thanks also go to Hauser & Wirth who provided
characteristic that it can’t be mass produced. Art seems tion on art into a philosophical question. us with the artwork preceding each country chapter.
to be an addictive and generic asset class which is prov-
en by various types of current “trends” such as tokeni- Taxation can also have beneficial effects on collectors
zation and fractional owning of art funds and artwork. as there are tax advantages available for charitable in-
Turning pure enjoyment of the artwork itself into frac- vestments into art. In some countries there are regula-
tional joy of holding the shares in hypothetical Picas- tions in place that enable the paying of taxes in lieu in
so. Thanks to block chain based apps and platforms, artwork. Tax questions are central in the art business, Gerd D. Goyvaerts Tom Offerhaus
viewing and buying art has become increasingly easy. entailing remarkable financial risks such as wealth and
Online auctions might not have the same energy and inheritance taxes, income taxes and even simply incor-
buzz as sparklingly catered off-line events but inves- rectly recorded VAT or sales taxes.
tors would still be attracted to socially validating in-
vestments. This Taxation of Artwork report deals with income,
wealth and inheritance taxes, corporate owners of art- Bruno Bächli Kärt Anna Maire Kelder
However, the changes in 2020 due to COVID-19 have work, VAT and customs duties application. Hopefully,
been remarkable and have posed great challenges answers and a way forward can be found for questions
to the international art market. The latest Art Market such as: “Should inheritance or gift taxes be paid on my
2020 report showed that the commercial galleries’ collection?”; “Should the artwork be obtained through
trade was down by 36% on average and auction sales a company or as an individual?”; “Will purchases or
had decreased, whilst online sales had increased by sales of artwork be subject to VAT?”; “Am I carrying out
37% and private sales have assumedly plummeted. occasional or regular transactions with artworks?”;
The full effect of 2020 to the global art market is yet to “Which taxes will be due on imported artwork?” from
be seen. the standpoint of 26 countries.

Although it can be said that sales are geographically The current report should contribute to the art trans-

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Rita Ackermann – Palladio WTS Global Guide on Taxation of Artwork | Austria
2015 | Acrylic, spray paint, pastel and pigment on canvas
168.3 x 127 x 3.8 cm / 66 1/4 x 50 x 1 1/2 in
© Rita Ackermannn | Photo: Genevieve Hanson | Courtesy Rita Ackermann and Hauser & Wirth

1. Legal Framework

1.1. it of a small business (up to a turnover of EUR 700.000)

How are income and wealth taxed in your country? and special freelance professionals (e.g. lawyers, tax
advisors, artists, doctors) is determined on a cash ba-
Individuals and resident companies are in general tax- sis. For a larger business, the profit is calculated on an
able on their worldwide income. Taxable income is accrual basis of accounting.
the total income from one or more sources, decreased
by any special expenses and the losses incurred from The Austrian Corporate Income Tax Act relies on the
these sources. Tax rates on the income of individuals definition of “income” provided in the Austrian Income
depend on the total income per year. The income tax Tax Act. Therefore, as long as there are no special claus-
rate is progressive (except for real estate gains, capital es in the Corporate Income Tax Act, the general rules of
yields and dividends). the Income Tax Act apply. One of these special clauses is
that the income of a private or public limited company
Austria does not have a wealth tax. is to be regarded as “business in-come” in any event,
regardless of the nature of the income. Consequently,
1.2. the valuation has to be done using the net equity com-
What is the range of the applicable tax rates for indi- parison method. Net equity is determined based on
viduals on income and wealth? the Austrian generally accepted accounting principles
codified in the Austrian Commercial Code. A private or
The progressive tax rate on the income of individuals is public limited company is therefore legally required to
calculated as follows: keep books and records under the Commercial Code.
The starting point is always the Austrian generally ac-
→ income up to EUR 11,000 per year 0% cepted accounting principles, which are adjusted in
→ income between EUR 11,000 and EUR 18,000 per some cases by special tax rules to determine the tax
year 20% base.
→ income between EUR 18,000 and EUR 31,000 per
year 35% 1.4.
→ income between EUR 31,000 and EUR 60,000 per What is the range of the applicable tax rates for legal
year 42% entities on profit and capital?
→ income between EUR 60,000 and EUR 90,000 per
year 48% The flat rate of corporate income tax is 25% (but a re-
→ income between EUR 90,000 and EUR 1 million per duction of the corporate income tax rate to 21% within
year 50% the next two years has been announced) on any profit
→ income over EUR 1 million per year 55 %. earned by a corporation.

From 2020, the lower three tariff levels for wage and 1.5.
income tax will be reduced. However, the reform will What kind of valuation is generally accepted in respect
be extended to two years: in the first step, only the of certain assets (such as art) by the tax authorities?
starting tax rate is reduced (from 25% to 20% - already
done retrospectively in September 2020 for the whole Austrian tax authorities assume that strangers do not
year 2020), the next two tax rates will follow in 2021 give each other presents. Therefore, price agreements
and/or 2022 (from 35% to 30% and from 42% to 40%). between third parties are in general recognized for tax
purposes.
1.3.
How are profit and net equity taxed in your country?

Taxable profit is the total income realised from carry-

Austria ing on business activities, whatever the nature of the

income or business. As a general rule, the taxable prof-

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WTS Global Guide on Taxation of Artwork | Austria WTS Global Guide on Taxation of Artwork | Austria

2. Taxation of Art of ad-vantages can serve to show whether the artist 2.1.2. Wealth taxes
lump sum is to be recommended. State, appraisal and Does your country envisage any specific categories of
promotion prizes are exempt from income tax. classification of artworks (e.g. tax-exempt personal
2.1. Individuals not carried out “en bloc” but through several individual belongings/household)?
Is there an obligation of declaring | disclosing private transactions, is generally assumed to be an entrepre- An artist, relocating from abroad, might be entitled to
artworks to the tax or other authorities (list of inven- neurial activity. Furthermore, according to the legal favourable tax treatment by retaining the previous for- Not applicable as Austria does not have a wealth tax.
tories or alike)? decisions the operation of a gallery or the art trade is eign tax burden (but at least 15%) on foreign income if
a typical commercial activity. Even if the gallery is only the relocation is in Austria´s public interest. 2.1.3. Inheritance | gift taxes
The classification of an art piece as a generally tax ex- operated part-time with the participation of family In case of an inheritance or gift will there be any tax
empt private or as a taxable (business) asset is crucial members, the professional actions (in this case: initial levied?
when deciding whether or not the art piece has to be conversion costs of EUR 60,000, 30 artists under con-
declared in the tax return. tract, homepage, exhibitions, fairs, customary sales There is no Inheritance or Gift Tax. However, gifts (do-
There is no explicit obligation to disclose taxable pri- commission of about 35 % of the sales price) testifies nations) are subject to obligatory notification to the tax
vate art pieces to the tax authorities. that there is no hobbyism. authorities. This also applies for secondary residences.

2.1.1. Income taxes The income of an artist is classified as income from

Is income generated from the sale of artworks taxed self-employment. An artistic activity is only seen to be
in your country? If yes, please indicate how (i.e. capital present if a personal, creative activity is developed ac-
gains tax | income from self-employment). cording to design principles which are characteristic of
3. Taxation of legal entities (as owner of the artworks)
a (recognised) branch of art or a comprehensive, rec-
The taxation from the sale of artworks depends of ognised field of art (painting, sculpture, architecture).
the classification of an art piece (private or household Artists and writers can distribute their positive income 3.1. Corporate income taxes 1,750. The minimum corporate tax can be credited to
good in contrast to business asset): at the time of initial assessment (in the calendar year in How are profits deriving from the sale of artworks the corporate tax the company has to pay when it is
which the first positive income deriving from self-em- taxed? profitable in following years.
Capital gains resulting from the sale of privately held ployment as an artist occurs e.g. from the sale of art-
movable assets are generally tax ex-empt. However, works) evenly over the year in which the income was In case of sales of art pieces by a legal entity, net prof- Are there any general advantages of a legal entity as
such assets are also taxed at the progressive tax rate earned and the two previous calendar years. Depend- its derived from sales are subject to corporate income owner of artworks instead of a private ownership?
(see point 1.2.) if the period between acquisition and ing on the level of (other) income in the two previ- tax. Expenses in respect of the sale are generally tax
sale does not exceed one year. Reference should be ous assessment years, there may be considerable tax deductible. The art trading company pays corporate income tax on
made to the exemption limit of EUR 440 for capital ad-vantages, especially if no or only low income was profits. The profit arising from sales of art pieces can be
gains within the one year period. However, with an earned in the previous years. Moreover, in Austria art- The flat rate of corporate income tax is 25% (but a re- distributed to the shareholder as a dividend. Dividends
increased number of transactions, the demarcation ists can freely choose whether they want to deduct the duction of the corporate income tax rate to 21% within to natural persons are taxed with a final withholding
to commerciality must be observed. The rental of pri- actual business expenses or whether they want to pay the next two years has been announced) on any prof- tax at a rate of 27.5%.
vately held art objects is subject to the progressive in- a lump sum for business expenses (“basic flat rate”). it earned by a corporation. If a company suffers a loss From a tax point of view there are no general advan-
come tax rate. The business expenses of artists can be calculated at or makes a very small profit, the company still has to tages to owning artworks through a legal entity. How-
an average rate. The prerequisite is that no books are pay a mini-mum amount of tax. The annual minimum ever, social security and confidentiality considerations
The sale of business assets is always taxed at the pro- kept and that the previous year’s turnover did not ex- tax for public limited companies (AG) amounts to EUR may lead to deciding in favour of owning the artworks
gressive tax rate (see point 1.2.) regardless of wheth- ceed EUR 220,000. The aver-age rate is 12% of the turn- 3,500 and for private limited companies (GmbH) to EUR through a legal entity.
er they are qualified as fixed or current assets. An art over (maximum EUR 26,400 per year). In addition to
dealer in the form of a sole proprietor or partnership the average rate of expenses, expenses for external
is subject to income tax at the progressive tax rate and services and compulsory insurance contributions can
realises income from trade and business. It can be dif- also be claimed as operating expenses. Furthermore,
ficult to determine whether the private sphere of the there is a special artist or writer lump sum. The operat-
4. VAT | Customs
sale of artworks has already been exceeded and the ing expenses can also be estimated at 12% of the turn-
seller is in fact an “art dealer”. In the business sphere over (maximum EUR 8,725 per year). In contrast to the
a loss carry forward is possible compared to a loss re- basic flat rate, there is no turnover limit. The catalogue When selling or dealing with works of art within your er friendly. First of all, the reduced rate applies solely
sulting from the sale of a privately held art work. The of additional operating expenses that can be deducted country what VAT implications have to be considered? on sales of art work performed by artists themselves.
Austrian tax authorities explicitly mention the sale of is wider than the basic flat rate and includes, among Additionally, certain traders enjoy a preferential rate,
an art collection as an example of a commercial activi- other things, expenses for musical instruments, ma- The Austrian VAT Code provides for a reduced rate of i.e. those who sell works of art occasionally and have
ty. According to the settled case law of the Administra- terial for works of art, training costs as well as travel 13% to a limited extent. The rules pursuant to Art 103 of imported the goods, or purchased the work of art di-
tive Court, the sale or purchase of collections, which is and overnight expenses. A calculation and comparison the VAT Directive are rather complicated than consum- rectly from the artist or were eligible for an input tax

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WTS Global Guide on Taxation of Artwork | Austria WTS Global Guide on Taxation of Artwork | Austria

deduction. The result is that sales by professional art concerned, Austria applies the reduced rate of 13%, ir-
6. Special provisions re taxation of arts
dealers are subject of the standard rate of 20%. respective whether the seller is the artist or a whole-
saler. However, if certain conditions are met, the im-
When works of art cross the border of your country portation of works of art is zero rated. If the importer is [Trust | foundation] In Austria, all contributions/donations to a private
what needs to be considered regarding VAT | customs? a collector of art and the goods imported are not dedi- foundation are subject to a foundation entrance tax
cated for a resale and if the work of art is part of an es- Austrian private foundations are considered as corpo- of 2.5 % of the fair market value. Capital gains result-
Austria is a Member State of the European Union and tablishment or association which is a beneficiary, the rate entities for tax purposes and there-fore subject to ing from the sale of art work is generally tax exempt.
has to apply the Unions customs code. In accordance importer is en-titled to apply for zero rating. Such an corporate income tax at the standard rate. However, However, such assets are also taxed at the corporate
with Reg. 1186/2009/EC and Directive 2009/132/ establishment can be a private museum, a gallery and there are several specific tax rules for private founda- income tax rate if the period between acquisition and
EC imports of art might be eligible for the zero rate. to a certain extent a permanent place which is partly tions. Furthermore, an Austrian private foundation is sale does not exceed one year. Reference should be
In general, as far as the tax rate for the import VAT is accessible to the public. not allowed made to the exemption limit of EUR 440 for capital
gains within the period of one year.
→ to engage in commercial activities other than of a
purely incidental character,
→ to be a personally liable partner of a general or lim-
5. Voluntarily disclosure program ited partnership and
→ to have management functions of a commercial
company.
What is the procedure in a voluntary disclosure of pre- lishing evasion or non-payment / abusive reduction
viously not properly declared art works and what are of taxes if the misconduct was connected with a
the expected consequences? non-payment / abusive reduction of taxes.
→ Payment of the evaded tax in accordance with the
If the domestic tax authorities find out that a taxpayer applicable tax regulations.
has undeclared income (e.g. from the sales of art piec- → Timeliness, i.e. no acts of prosecution have been
es) and no voluntary disclosure has been submitted, carried out yet, the offence has not yet been dis-cov-
criminal tax proceedings are initiated with punish- ered or at least the offender does not know of any
ments including fines and imprisonment. Tax fraud of such discovery, etc. The requirement of timeliness
more than EUR 500,000.00 can lead to imprisonment is not fulfilled if a voluntary disclosure to the tax
for up to ten years. authorities has already been made concerning the

Does your country have a non-punishable voluntary

disclosure programme?

A successful voluntary disclosure guarantees full im-

munity from prosecution for tax evasion. In order to
be successful, the domestic taxpayer has to declare all
undeclared taxable income of the last ten years. He
also has to pay the evaded taxes together with inter-
est on arrears. If the voluntary disclosure is submitted
on the occasion of a secondary review or a tax audit a
penal surcharge of 5% to 30% applies – depending on
the evaded tax amount. A voluntary disclosure leads to
an exemption from punishment, if all of the fol-lowing
requirements are met:

→ Disclosure of the offence.

→ Submission of the voluntary disclosure to the com-
petent tax or duty office.
→ The offender has not been caught in the very act of
committing the tax offence.
→ Disclosure of the circumstances relevant for estab-

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WTS Global Guide on Taxation of Artwork | Austria WTS Global Guide on Taxation of Artwork

Gottfried Schellmann
Managing Director

[email protected] +43 1 24 266 74

Specialization
→ Private Clients
» Immigration and moving away tax issues
» Asset succession concepts
» Tax classification of foreign investment vehicles (e.g. trusts)
» National and international corporate succession planning
→ VAT advisory
→ International Tax
→ Customs Law and Excise Duties

Dr. Jürgen Reinold

Managing Director

[email protected] +43 1 24 266 41

Specialization
→ Private Clients
» Taxation and optimization of Real Estate transactions
» Tax Consulting of private foundations
» Taxation of capital assets
» Taxation of artists and athletes
» Tax allowance for scientists and researchers
→ Tax advice in restructuring projects
→ International Tax

WTS Tax Service Steuerberatungs mbH

Am Modenapark 10
1030 Vienna

WTS Global in Austria, WTS Tax Service.

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Rodney Graham – Main Street Tree WTS Global Guide on Taxation of Artwork | Belgium
2006 | Chromogenic photograph
228.6 x 186.5 x 5 cm / 90 x 73 3/8 x 2 in (framed)
© Rodney Graham | Photo: Tom Van Eynde | Courtesy Rodney Graham and Hauser & Wirth

1. Legal Framework

1.1. tain qualifying financial instruments that are held via

How are income and wealth taxed in your country? a Belgian or non-Belgian securities accounts, when a
threshold of EUR 500,000 is exceeded.
Belgian individuals are subject to individual income
tax. For personal income tax purposes, a distinction 1.3.
is made between four different categories of income. How are profit and net equity taxed in your country?
Particular rules apply to each category. The categories
are real estate income, movable property income (in- Companies are subject to corporate income tax. The
cluding dividends, interest and royalties), professional tax base for CIT purposes consists of worldwide income
income (including business profits, employment and minus certain allowed deductions. It is assumed that
pension income) and miscellaneous income (including all income received by a company is, in principle, pro-
capital gains arising from speculative transactions). fessional income/profit.

There is no “wealth tax” as such applicable to wealth Non-profit associations and foundations are normally
held by individuals. Although certain taxes are relat- subject to legal entities tax, which pre-dominantly re-
ed to a specific equity, such as the tax on securities ac- lates to financial investment income (e.g. interest and
counts. dividends), real estate in-come (e.g. lease income),
and some miscellaneous forms of income (e.g. capital
1.2. gains on substantial shareholdings).
What is the range of the applicable tax rates for indi-
viduals on income and wealth? There are no rules foreseen for the taxation of net eq-
uity.
Tax rates vary, depending on the category of income.
1.4.
Income from real estate is taxed globally together What is the range of the applicable tax rates for legal
with other earned income, at the progressive rates be- entities on profit and capital?
tween 25% - 50%.
As of tax year 2019 (financial years ending 31 Decem-
Income from movable property is in principle subject ber 2018 and later), the general corporate tax rate
to a final withholding tax if paid in Belgium. If no with- amounts up to 29%, increased with a 2% crisis tax,
holding tax was levied, a tax equal to the withholding which is a surtax, implying an effective rate of 29.58%.
tax rate will be levied through a tax assessment. With- SMEs will be able to profit from a decreased rate of
holding tax rate on dividends and interest is 30%. Low- 20%, also in-creased with a 2% crisis tax, implying an
er rates are applicable if specific conditions are met. effective rate of 20.40% on the first bracket of EUR
100.000,00 profit.
Professional income is subject to progressive tax rates
between 25% - 50%. Tax will be in-creased with a com- As of tax year 2021 (financial years ending 31 Decem-
munal surcharge (average rate of 7%). ber 2020 and later), the standard CIT rate will be low-
ered to 25%, without any crisis tax (will be abolished).
Miscellaneous income is subject to flat tax rates, de- For SME’s, this rate will be kept at 20%, with the crisis
pending on the type of income, between 15% - 33%. tax also being abolished.

As mentioned above, there is no wealth tax as such There is no separate tax rate determined for legal en-
applicable in Belgium. However, transactions with tities tax purposes. Immovable and movable income
respect to certain shares and securities are subject to shall be subject to withholding taxes and shall be
a tax on stock exchange transactions. Also the mere deemed to have been subject to their tax regime. E.g.

Belgium holding of an securities account will be taxed at a

flat tax rate of 0,15%, which will be imposed on cer-
dividend will be subject to a withholding tax of 30%. In
addition, non-profit organisations and private founda-

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WTS Global Guide on Taxation of Artwork | Belgium WTS Global Guide on Taxation of Artwork | Belgium

tions are subject to an annual ‘patrimony tax’ of 0,17%. garding the valuation (art. 2.7.3.3.2 FTC), e.g. foreign such as the frequency of sales, the professional activ- 2.1.3. Inheritance | gift taxes
real estate, but this is not the case for work of arts. ity of the seller, using a VAT number, the financing of In case of a gift will there be any tax levied?
1.5. the purchased works of art, using split sale techniques,
What kind of valuation is generally accepted in respect For income tax purposes, as mentioned, individuals etc. can be taken into account. The use of an offshore If a work of art is donated by a Belgian resident via a
of certain assets (such as art) by the tax authorities? will not be taxable on the mere holding of works of company, which potentially leads to the application of registered gift, a flat rate gift tax is in principle due.
art. There are thus no specific valuation rules foreseen cayman tax, is not sufficient to qualify a mere sale as a The tax rates vary according to the region where the
Valuation methods are subject to very different views, in this respect. Only upon a speculative sale or in case of professional activity. donor resides (Flanders, Brussels Capital or Walloon
depending on the asset to be valued and the type of professional selling of art, an individual will be taxed Regions) and the degree of kinship between the donor
valuation. A company can be valued, for example, on the gains cq. profit made from the sale. In case of If the sale of privately held works of art is part of the and the beneficiary:
by means of an income-oriented approach or a mar- a company holding works of art, in principle, works of taxable person’s business activity, the income from
ket-oriented approach or even another approach. art will be valued at the price of acquisition. The mere the sale is taxable as professional income (progressive → Flemish Region: 3% for donations to a spouse, co-
holding of works of art is not taxable on behalf of com- rates of up to 50%). habitant and direct forebear or descendant; 7% for
In general, privately held assets such as art are not tax- panies. donations to any other persons.
able and hence there are no specific valuation rules. If The taxable base would then be equal to the differ- → Brussels Capital Region: 3% for donations to a
a valuation is needed, then either the acquisition value It is important to note that the tax authorities do not ence between the market value of the property at the spouse, legal cohabitant and direct fore-bear or de-
will be taken or the fair market value. accept depreciation of the value of a work of art, since date of transfer, less the initial acquisition cost and any scendant; 7% for donations to any other persons.
in general, the value of art is deemed not to decrease. other costs related to the transfer and the business ac- → Walloon Region: 3.3% for donations to a spouse, le-
For inheritance tax purposes, the value of an asset is However, if the work of art is sold at a lower value than tivity. A self-employed professional art dealer will be gal cohabitant and direct forebear or descendant;
its fair market value or sale value at the time of death. the acquisition value, a loss in value may be accounted subject to the payment of social security contributions. 5.5% for donations to any other persons.
For certain assets is foreseen in specific regulations re- for. These may also be deducted from the professional in-
come when calculating the personal income tax. Gift tax is not due “as such”, but is levied only as a part
of the registration duties and is levied on the fair mar-
2.1.2. Wealth taxes ket value of the donated (movable) work of art.
Does your country envisage any specific categories of
2. Taxation of Art classification of works of art (e.g. tax-exempt personal Gift tax is only due for donations registered in Belgium
belongings | household)? Donations of movable property, such as a work of art,
made by notarial deed will have to be registered and
2.1. Individuals movable income. Such rental income is taxable at pro- There is no general wealth tax in Belgium, nor do any thus be subject to gift tax (for foreign deeds as of 1
Is there an obligation of declaring | disclosing private gressive rates, up to 50%. specific categories of classification of works of art exist December 2020). Under Belgian civil law, works of art
works of art to the tax or other authorities (list of in- in Belgian tax law. which are movable assets (at least, most of them will
ventories or the like)? Capital gains resulting from the sale of privately held be movable assets) can be simply “gifted” at will (tra-
movable assets are tax exempt provided that the sale Is there an obligation to declare works of art in the tax ditio de manu), even if the object of art is too heavy or
Concerning income tax, there is no legal obligation to is part of the normal management of private patri- return? Please indicate how this is done or if there is impractical to be displaced (traditio de longa manu).
declare the ownership of private works of art as such. mony (i.e. acting with due diligence without taking any other obligation of declaration. Hence, a notarial deed is not legally required. Obvious-
To date, there is no national register yet that specifies abnormal risks). Thus, capital gains resulting from the ly, in such a case it is recommended to provide proof
which work of art be-longs to which individual. How- sale of private works of art as part of a normal man- We refer to our answer to question 2.1.: there is no in written form (pacte adjoint), although art. 2279
ever, subject to other regulations such as the look- agement of private patrimony, are not taxable in the legal obligation to declare the ownership of private CC states that the mere possession of the work of art
through taxation or so-called cayman tax, the decla- hands of the natural person. works of art as such in the personal income tax return. is proof by itself. If the donor deceases within a three
ration of a list of assets may be a resulting obligation. However, subject to other regulations, such as the year period as a Belgian resident, the donated assets
Whether a transaction is part of the normal manage- look-through taxation or cayman tax, the declaration will be subject to inheritance tax (see below for appli-
As far as inheritance tax is concerned, the heirs or leg- ment of private patrimony is often a matter of fact. As- of a list of assets may be a resulting obligation. cable rates). .
atees are obliged to declare works of art when they pects that can influence the assessment are the specu-
belong to the estate of the deceased. lative and repetitive nature of such transactions. How are works of art valued for tax purposes in your In case of an inheritance will there be any tax levied?
If the sale of a private work of art is not part of the country? Are there any common and accepted valua-
2.1.1. Income taxes normal management of private patrimony, the cap- tion methods, i.e. at cost, insured value, market price? Belgian inheritance tax on movable assets, such as
Is income generated from the sale of works of art taxed ital gain is taxable as miscellaneous income, which is works of art or an art collection, is due upon the de-
in your country? If yes, please indicate how (i.e. capital subject to income tax at the rate of 33%. In such case a For tax purposes, private works of art as such are val- cease of a Belgian resident, irrespective of the resi-
gains tax | income from self-employment). capital loss would also be tax deductible. ued on the basis of the fair market value. dence of the recipient heir or legatee.

If the (non-professional) rental of works of art gener- When assessing whether the sale of works of art should If the deceased was a Belgian resident, inheritance tax
ates income, this income should be declared as taxable be considered as professional in-come, factual aspects is levied on the net value of all world-wide proper-

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WTS Global Guide on Taxation of Artwork | Belgium WTS Global Guide on Taxation of Artwork | Belgium

ty, i.e. property situated in or outside Belgium. If the estate passing on to a direct forebear or a descendant capital gains tax due by private foundations, so capital these distributions in a discretionary manner, within
deceased was a non-Belgian resident, “the right of is split up into immovable and movable property, and gains on works of art cannot be taxed. the legal and statutory rules as defined.
transfer upon death” is only levied on the net value of both are taxed separately, each heir being taxed indi-
Belgian immovable property, which by hypothesis will vidually. The inheritance tax rates can be summarised The Belgian private foundation was introduced into In case of a donation to a Belgian private foundation, in
not include works of art or art collections. For works as follows: the Belgian legal system by the law of 2 May 2002, Flanders such donation can remain tax exempt. If reg-
of art or art collections, this means that they will only which was recently modified by the law of 23 March istered, the donation will be subject to a 5.5% gift tax.
be subject to inheritance tax in case of inheritance by a → Flemish Region: 3% - 27% for a spouse, cohabitant 2019. In essence, the Belgian private foundation is a In case of a legacy to a Belgian private foundation, in
Belgian resident. and direct forebear or descendant; 25% - 55% for special purpose vehicle, with a separate legal person- Flanders the rate of inheritance tax is 8.5%.
other persons. ality, used with the aim of pursuing one or more specif-
Please note that individual works of art which do not → Brussels Capital Region: 3% - 30% for a spouse, legal ic benevolent purposes. The tax rates vary according to the region: a donation
form part of an art collection and which can be seen as cohabitant and direct forebear or descendant; 20% to a private foundation in the Brussels Capital Region
“regular house decoration” will only rarely be individ- - 80% for other persons. One of the examples given by the Belgian legislator is is subject to a gift tax of 7% and a legacy to a private
ually declared for inheritance taxes, and will fall under → Walloon Region: 3% - 30% for a spouse, legal cohab- keeping and maintaining a collection of works of art. foundation in Brussels Capital Region is subject to an
the general notion of “decoration” or “huisraad”. itant and direct forebear or descendant; 20% - 80% Art collectors may want to be sure that the property inheritance tax of 25%; in the Walloon Region both gift
for other persons. stays in their family and passes on from generation to and inheritance tax is at 7%.
For purposes of taxation, the value of an asset is its fair generation. At the same time, they want to reduce the
market value or sale value at the time of death. Each Since 1985, it has been possible to pay inheritance tax- tax costs of such transfer to the next generation. Throughout its existence, the Belgian private founda-
work of art must be valued separately. es in Belgium with works of art, subject to an agree- tion is in principle subject to the annual “inheritance
ment with the tax authorities on the value and the Distributions made by a Belgian private foundation are tax compensatory charge” (a patrimony tax) of 0.17%.
The tax rates are progressive and vary according to the cultural impact thereof. The valuation will be made not subject to inheritance tax, provided that a number However, this tax is not due if the total value of the as-
region (Flemish, Brussels Capital or Walloon Regions) by a specific committee, which will then report to the of conditions are met. In a number of specific cases, sets of the foundation only amounts to EUR 25,000.00
and the degree of kinship between the deceased and income tax authorities or the Patrimonial Documen- the ruling committee correctly decided that the pay- or less.
the heir or legatee. Depending on the degree of kin- tation (The Administration Measurements and Assess- ments made by a Belgian private foundation within
ship, the tax due is determined per heir or legatee, ments). However, this possibility is rarely used. For ex- the framework of its purpose were not subject to in-
taking into account the portion of the estate, or glob- ample, in 2018 it was not used a single time. heritance tax, provided that, for example, the board of
ally. Specifically, for the Flemish region, the part of the directors of the Belgian private foundation decided on

3. Taxation of legal entities (as owner of the artworks) 4. VAT | Customs

3.1. Corporate income taxes The tax authorities believe that, over time, art basi- When selling or dealing with works of art within your If the sale of artwork is only an occasional activity
How are profits deriving from the sale of works of art cally only increases in value and does not lose value. country what VAT implications have to be considered? and if there is no intention to carry on a regular sales
taxed? Therefore, depreciation on the value of the works of business of art in Belgium, such an occasional activity
arts is not accepted for tax purposes. However, if the The Belgian VAT authorities apply a broad interpreta- should remain out of scope of Belgian VAT. However,
Considering the fact that all income received by a com- work of art is sold at a lower value than the acquisition tion of a “VAT taxable person”. Activities related to art- this is a factual discussion. If different sales transac-
pany is deemed to be professional in-come, profits de- value, a loss in value may be recorded. work collections could therefore easily qualify as a VAT tions occur shortly after one another, it cannot be ex-
rived from sales of works of art will be subject to the taxable activity under Belgian VAT law. cluded that the Belgian VAT authorities could consider
corporate income tax. We hereby refer to the answer In the event of a later sale of the artwork, gains will be the relevant company as a VAT taxable company.
on question 1.3. taxable. However, the Belgian authorities consider that the
mere purchase of artwork as an investment, without The standard VAT rate in Belgium is 21%. However, the
Are there any general advantages of a legal entity as However, please note that holding art through a Bel- the intention to perform any economic activity, could sale of works of art could in principle be subject to the
owner of artworks instead of a private ownership? gian private foundations can be advantageous. Bel- qualify as a transaction outside the scope of VAT in reduced VAT rate of 6%. Here, some conditions as well
gian Private Foundations are normally subject to legal Belgium (administrative decision no. E.T. 19449 dated as some formalities would have to be met.
From a tax point of view there are no advantages to entities tax, which predominantly relates to financial 06.12.1974).
owning an artwork through a company, although investment income (e.g. interest and dividends), real
some legal proposals are currently being considered estate income (e.g. lease income), and some miscel- The latter question would be different if the seller
to support the con-temporary art sector. laneous forms of income (e.g. capital gains on sub- qualified as a “professional dealer”, which is a normal
stantial shareholdings). There is however no general VAT taxable business.

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WTS Global Guide on Taxation of Artwork | Belgium WTS Global Guide on Taxation of Artwork | Belgium

5. Voluntarily disclosure program tioned above, whether a transaction is part of the nor- terposing of the cayman tax entity is not sufficient to
mal management of private patrimony is often a mat- achieve a requalification for tax purposes.
ter of fact.
What is the procedure in a voluntary disclosure of pre- untary disclosure. The artwork will then be valued at When certain conditions are met, distributions from
viously not properly declared works of art and what its fair market value or sale value at the time of death. If the sale of a privately held work of art is not part of foreign legal structures will also be taxed as a dividend
are the expected consequences? This may be useful when the owner wants to sell the the normal management of private patrimony, the on behalf of the recipient of the distribution. When the
work of art, and may not be able to prove its origin for capital gain is taxable as miscellaneous income, which foreign legal structure ‘at-tributes’ a work of art to the
Both individuals and legal entities, such as corpora- tax purposes. Clearly, the mere filing of a voluntary is subject to income tax at the rate of 33% (cf. supra). founder or beneficiary, he or she might become taxa-
tions and foundations, can apply for a tax regulariza- disclosure does not affect the origin for civil law pur- This may also apply under cayman tax, yet the mere in- ble on the value thereof by way of a dividend.
tion, including partnerships and unincorporated asso- poses.
ciations.
The voluntary disclosure is conceived to be all-in- If the application is accepted, the applicant will be
clusive. The taxpayer should disclose all previously asked to pay the regularization levy, i.e. the taxes due
non-declared capital and income. He should not limit plus a penalty, within 15 days. Upon receipt of pay-
the disclosure to the income from certain specific tax ment, a ‘regularization certificate’ will be issued. That
years. The subject of the disclosure would be all the certificate proves that the taxpayer has voluntarily dis-
non-statute-barred income as well as all capital which closed the income and/or capital.
qualifies as “statute-barred capital”. In reality, this will
only relate to income and/or capital that should have Practically speaking, the applicant can no longer be
been declared in the regular tax re-turn(s). No specific exposed to any claims from the tax authorities and he
provisions relating to works of art are included in the has obtained full immunity for criminal prosecution
applicable legislation. Different situations might oc- and money laundering. The application, the payment
cur, depending on the origin of the funds with which of the regularization levy or the certificate cannot be
the works of arts are purchased/received. used against the taxpayer as an indication for further
tax investigations. Clearly, if the work of art has been
If e.g. an artwork has been purchased with non-de- obtained through other criminal activities, the volun-
clared income, the purchase price of that artwork tary disclosure will not remedy those infringements.
should be included in the voluntary disclosure.
Does your country have a non-punishable voluntary
When an artwork was inherited from a Belgian resi- disclosure program?
dent, but has not been declared in the inheritance tax
return of the deceased resident, the value of the art- No.
work at the date of decease can be included in the vol-

6. Special provisions re taxation of arts

Belgium applies look-through taxation (referred to founder of the foreign legal structure (“look-through
as cayman tax) to Belgian tax residents who are the tax”).
founder or beneficiary of certain foreign legal struc-
tures. The result of cayman tax is that all income earned by
the foreign legal structure will retain its fiscal qualifi-
Pursuant to this cayman tax, income attributed to the cation (e.g. interest, dividend, capital gain, rent, other)
targeted foreign legal structures, such as trusts, for- for Belgian tax purposes and will be taxed accordingly
eign foundations or offshore companies, is deemed in the hands of the founder. Hence, e.g. capital gains
to be received directly by a Belgian resident or in the resulting from the sale of private works of art as part
hands of the Belgian non-for-profit organization or of a normal management of private patrimony are not
Belgian private foundation who is the shareholder or taxable in the hands of the natural person. As men-

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WTS Global Guide on Taxation of Artwork | Belgium WTS Global Guide on Taxation of Artwork

Gerd D. Goyvaerts
Tax Partner

[email protected] +32 (0) 3 443 20 00

Specialization
→ Private Clients
→ Estate planning, voluntary disclosures,
international tax planning,
anti-money laundering, trusts & foundations,
migration into and out of Belgium

Tiberghien
Grotesteenweg 214 B4,
2060 Antwerp

WTS Global in Belgium, Tiberghien.

22 23
Phyllida Barlow – untitled: dancer; 2018 WTS Global Guide on Taxation of Artwork | Brazil
2018 | Bonding, cement, PVA, paint, plaster, plywood, polycotton, sand, spray paint, steel
194.5 x 58.5 x 54.5 cm / 76 5/8 x 23 x 21 1/2 in
© Phyllida Barlow | Photo: Alex Delfanne, All Rights Reserved | Courtesy Phyllida Barlow and Hauser & Wirth

1. Legal Framework

1.1. Wealth
How are income and wealth taxed in your country? Wealth is presently not taxed in Brazil.

Brazilian nationals and foreigners who qualify as res- 1.2.

idents in Brazil for tax purposes will be taxed by the What is the range of the applicable tax rates for indi-
Brazilian individual income tax on a worldwide basis. viduals on income and wealth?
The applicable rates and payment mechanics will vary
depending on the type of income these individuals re- Earnings received from Brazilian legal entities
ceive. Salaries and bonuses are taxed at progressive rates
varying from 0% to 27.5%, the latter being present-
Earnings received from Brazilian legal entities ly applicable to earnings equal to or exceeding BRL
Income tax on earnings received from Brazilian legal 4,664.68 (approximately EUR 730 - September 2020)
entities, including salaries and bonuses, must be with- per month. The income tax payable will be withheld
held and paid by the Brazilian entities on a monthly and paid by the Brazilian entities on a monthly basis.
basis. Certain deductions for social security charges and de-
pendents are allowed in the calculation of the with-
Earnings received from other sources holding tax.
Unlike the income tax on earnings received from Bra-
zilian entities, the tax on earnings received from other Earnings received from other sources
individuals or from foreign sources must be calculated Earnings received from other individuals or from for-
and paid directly by the individuals who receive such eign sources are taxed at the same progressive rates
earnings. The payment must be made on a monthly ba- applicable to earnings received from Brazilian entities
sis up to the last business day of the month immediate- (0% to 27.5%). Certain deductions for social security
ly subsequent to that in which the earnings were re- charges and dependents will also be allowed in the
ceived. This payment mechanics is commonly referred calculation of the tax (but only in case these deduc-
to as “carnê leão”. tions have not been used in the calculation of the in-
come tax on earnings received from Brazilian entities).
Rental income and dividends related to investments
abroad must also be included in the “carnê leão”, re- Capital Gains
gardless if such earnings are remitted or otherwise Capital gains from the sale of assets, regardless of
transferred to Brazil. whether such assets are in Brazil or abroad, are taxed
at progressive rates varying from 15% to 22.5%. The
The income mentioned above will be included in the taxable gain will be equal to the positive difference
Annual Income Tax Return and the tax withheld or paid between (a) the price or amount obtained with the
will be considered as a credit. sale or disposition of the asset and (b) the respective
acquisition cost (amount effectively paid). If the asset
Capital Gains is abroad, such difference must be calculated (i) in USD
Tax on capital gains must be calculated and paid by the if the asset was acquired with resources originally re-
individual up to the last business day of the month im- ceived in foreign currency or (ii) in Reais if the asset
mediately subsequent to that in which the gains were was acquired with resources originally received in na-
obtained. Capital gains are informed in the Annual tional currency.
Income Tax Return but the tax paid will not be consid-
ered as a credit. Some exemptions and reductions may apply, such as
(i) the exemption on gains when the amount of the as-
Interest Income from Investments Abroad sets of the same type sold during the month is equal
Interest income from investments abroad are taxed as to or lower than BRL 35,000 (approximately EUR 5,470)

Brazil capital gains. or (ii) the exemption on gains from the sale of proper-
ties or disposition of investments maintained outside

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WTS Global Guide on Taxation of Artwork | Brazil WTS Global Guide on Taxation of Artwork | Brazil

Brazil and that have been acquired or made in foreign ject to the levy of Social Contributions on Revenues (PIS/ cluding artwork) outside Brazil are required to file 1,000,000. The DCBE must be filed by April 5th (or the
currency prior to the time of characterization of “resi- COFINS), according to two different regimes (which, in with the Central Bank of Brazil a Statement of Bra- previous business day if a non-business day) of each
dency” for Brazilian tax purposes, among others. principle, follow the taxpayer’s choice for the Actual zilian Capitals abroad known as DCBE if these assets following year. Assets must be included in the DCBE by
or Deemed Profit systems). Under the non-cumulative have an aggregate value equal to or greater than USD their market value.
Interest Income from Investments Abroad regime (applicable, in general, to legal entities subject
Interest income from investments abroad are taxed at to the Actual Profit system), PIS/COFINS are levied at a
progressive rates varying from 15% to 22.5%. combined rate of 9.25% on the total revenues accrued.
The legal entity is entitled to certain tax credits.
Tax Treaties / Offsetting of Taxes Paid Abroad
2. Taxation of Art
Earnings and gains received from countries with which Under the cumulative regime, PIS/COFINS are levied
Brazil has entered into double taxation treaties are at a combined rate of 3.65% on the gross revenues ac-
also subject to the applicable provisions of such trea- crued. No tax credits are available. 2.1. Individuals calculated (i) in USD if the asset was acquired with re-
ties. These provisions may afford a preferential tax Is there an obligation of declaring | disclosing private sources originally received in foreign currency or (ii) in
treatment or other tax benefits for eligible individual Brazilian law also provides for a “Special Tax Regime artworks to the tax or other authorities (list of inven- Reais if the asset was acquired with resources original-
taxpayers. When double taxation treaties are not ap- for Small Businesses (SIMPLES)”, applicable to compa- tories or alike)? ly received in national currency.
plicable, Brazilian income tax laws generally author- nies with annual gross revenues up to BRL 4,800,000
ize that the tax paid abroad with respect to income tax- (approximately EUR 750,000). Not applicable to certain As mentioned in the question 1.5 above, private art- Gains from the sale of assets, including artworks,
able in Brazil be credited against the Brazilian income companies or activities (e.g. corporations, companies works must be included in the Annual Individual In- maintained outside Brazil and that have been acquired
tax, provided that the offsetting of tax is allowed to with foreign shareholders and companies engaged in come Tax Return to be filed with the Brazilian Revenue in foreign currency prior to the time of characteriza-
Brazilian tax residents by the relevant foreign country consulting services). Companies enrolled in SIMPLES Service. They will be valued at their cost of acquisition tion of “residency” for Brazilian tax purposes will be
and that the offsetting does not exceed the tax due on may calculate and pay the IRPJ, CSLL, PIS, COFINS, Social (amounts effectively paid by the individual). exempt.
income received from Brazilian sources. Thus, it is nec- Security Contribution Paid by Employer (CPP) and, de-
essary to verify if the other country also allows the off- pending on the nature of the activities performed, the Moreover, individual taxpayers who own artworks 2.1.2. Wealth taxes
setting of tax and, in this case, it is necessary to obtain a State VAT (ICMS), Excise Tax (IPI) and the Municipal Ser- outside Brazil are required to file with the Central Does your country envisage any specific categories of
copy of the legislation that allows such offsetting. vice Tax (ISS) by means of a single monthly payment. Bank of Brazil a Statement of Brazilian Capitals abroad classification of artworks (e.g. tax-exempt personal
The rates vary in accordance to the companies’ reve- known as DCBE if these assets have an aggregate value belongings/household)?
1.3. nues. Companies are not entitled to book tax credits. equal to or greater than USD 1,000,000. The DCBE must
How are profit and net equity taxed in your country? Companies with foreign quotaholders, or affiliates of be filed by April 5th (or the following business day if Brazilian tax law does not provide for any categories of
foreign companies cannot benefit from SIMPLES. a non-business day) of each following year. In case of artworks. As mentioned below, individuals must de-
Profits accrued by Brazilian legal entities are subject to artworks, (i) the price recently paid by the individual clare in their Annual Income Tax Return all assets with
Corporate Income Tax (IRPJ) and Social Contribution on Brazil does not levy any taxes on net equity. may be considered or (ii) an appraisal may be issued by acquisition cost higher than BRL 5,000 (approximately
Net Profit (CSLL). These federal taxes may be calculated an expert on the matter. EUR 780), regardless of whether the works of art are
according to two main systems (other systems exist). 1.4. household goods. The capital gain accrued by individu-
Some kinds of businesses must enroll with the Actual What is the range of the applicable tax rates for legal 2.1.1. Income taxes als arising from the sale of assets (including artwork),
Profit system, which is also mandatory for companies entities on profit and capital? Is income generated from the sale of artworks taxed which sale price is equal or lower than BRL 35,000 (ap-
with annual gross exceeding BRL 78 million (approxi- in your country? If yes, please indicate how (i.e. capital proximately EUR 5,470), is exempt from income tax in
mately EUR 12 million). IRPJ is levied at a general rate of 15%, plus a surcharge gains tax | income from self-employment). Brazil.
of 10% on taxable income exceeding BRL 240,000 (ap-
Under the Actual Profit system, IRPJ and CSLL are levied proximately EUR 37,000). CSLL is levied at a general Tax on capital gains obtained on the sale of assets (in- Is there an obligation to declare works of art in the tax
on accounting profits adjusted with the additions and rate of 9%. cluding artworks) must be calculated and paid by the return? Please indicate how this is done or if there is
exclusions set forth by tax law. individual up to the last business day of the month im- any other obligation of declaration.
1.5. mediately subsequent to that in which the payment
Under the Deemed Profit system, IRPJ and CSLL are What kind of valuation is generally accepted in respect was received (cash basis). In Brazil, individuals must declare in their Annual In-
calculated on the sum of (i) the application of certain of certain assets (such as art) by the tax authorities? come Tax Return all assets (including artwork) with
percentages of the legal entity’s gross revenue, which Regardless of whether such assets are in Brazil or acquisition cost higher than BRL 5,000 (approximately
vary according to the legal entity’s activities (generally Assets, including artwork, must be included in the abroad, the gain will be taxed at progressive rates var- EUR 780). Individuals must file the Income Tax Return
8% for IRPJ and 12% for CSLL); and (ii) other revenues Annual Individual Income Tax Return to be filed with ying from 15% to 22.5%. The taxable gain will be equal until the last business day of April of the following year.
which are fully added to the taxable bases of these tax- the Brazilian Revenue Service at cost of acquisition to the positive difference between (a) the amount
es. (amounts effectively paid by the individual). obtained with the sale or disposition of the asset and Please, see the answer in 2.1 above.
(b) the respective acquisition cost (amount effectively
Revenues accrued by Brazilian companies are also sub- Moreover, individual taxpayers who own assets (in- paid). If the assets is abroad, such difference must be

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WTS Global Guide on Taxation of Artwork | Brazil WTS Global Guide on Taxation of Art work | Brazil

How are works of art valued for tax purposes in your Donation and Inheritance (“ITCMD”). As ITCMD is a state
4. VAT | Customs
country? Are there any common and accepted valua- tax, the applicable rate (up to 8%) for movable assets
tion methods, i.e. at cost, insured value, market price? (e.g., works of art) may vary according to the State in
which the inventory is processed, in the case of inher- When selling or dealing with works of art within your When works of art cross the border of your country
As detailed above, Brazilian tax law only provides for itance, and the State in which the donor is domiciled, in country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?
the valuation of works of art at acquisition cost for in- case of gifts. The taxable basis generally corresponds
dividual income tax purposes. to the market value of the assets. In the State of São Transactions with works of art may benefit from a tax Export revenues are not taxed PIS and COFINS, and
Paulo, the applicable rate in is 4%. exemption of the State VAT (ICMS) when sold directly ICMS. Specific rules apply to exports in consignment
2.1.3. Inheritance | gift taxes by the author/artist. When a company buys an artwork and temporary exports (for fairs and expositions, e.g.).
In case of an inheritance or gift will there be any tax directly from its author/artist and resells it, it can (ex-
levied? cept for the State of Rio Grande do Sul) benefit from a The imports are taxed. Import Duty varies from 0% to
deemed credit of 50% of the ICMS (even considering 16% (4% for paintings, drawings and sculptures). Im-
Inheritance and gifts are subject to the levy of Tax on the exemption in its acquisition). As the National Fiscal ports of artworks produced abroad by authors/artists
Policy Council authorizes all Brazilian states to grant resident or domiciled in Brazil, per-formed by the au-
the exemption, a case-by-case analysis is necessary thors/artists themselves, are exempt from the Import
to check the applicability of the exemption and of the Duty. Special regimes for temporary imports may ap-
deemed credit in each State. In this scenario, some al- ply. Donations of some products of the Chapter 97 of
3. Taxation of legal entities (as owner of the artworks) ternatives to rationalize the tax burden, such as con- the Harmonized System (i.e. paintings, drawings, stat-
signment sales, can be analyzed. ues), destined to public museums or entities declared
of public utility are ex-empt from Import Duty.
3.1. Corporate income taxes and whose main activity does not include the buying The ICMS exemption and credit may also be applied to
How are profits deriving from the sale of artworks and selling of works of art, the capital gain arising the import of artworks donated by the author/artist The ICMS is due on imports and different rates apply
taxed? from the sale is subject to IRPJ and CSLL at the combined himself or when the artwork is acquired with funds (generally is 18%). A 4% rate usually applies to inter-
rate of 34%. PIS/COFINS are not levied on the revenues from the Ministry of Culture. state transactions with imported products.
The taxation of profits arising from the sale of artworks arising from this sale. The ICMS rate varies in each state, and is generally 18%.
may vary according to the system of taxation chosen by Interstate transactions are generally subject to rates of PIS-Import and COFINS-Import are levied at a 11.75%
the legal entity and to whether this activity is the main Are there any general advantages of a legal entity as 7% or 12%. rate. Donations of some products of the Chapter 97 of
activity of the legal entity. owner of artworks instead of a private ownership? the Harmonized System (i.e. paintings, drawings, stat-
Currently, the Excise Tax (IPI) is not levied on domestic ues), destined for public museums or entities declared
Under the Actual Profit system, in principle, the capital From a Brazilian tax perspective, it could be more ben- transactions with works of art (including photographs, of public utility are exempt.
gain (positive difference between the sale price and eficial for an individual to hold artworks through a le- paintings, drawings, statues, sculptures etc.).
the acquisition cost) arising from the sale of artworks gal entity. Legal entities subject to the Deemed Prof- The Excise Tax (IPI) is not levied on imports of works of
is subject to Corporate Income tax (IRPJ) and Social it system of taxation/cumulative regime and whose The preparation of works of art upon request of clients art.
Contribution on Net Profit (CSLL) at the combined rate main activity is the buying and selling of artworks are and the services from auction houses are taxed by the
of 34%. If the works of art are not registered as an in- subject to IRPJ, CSLL and PIS/COFINS at an effective rate municipal Service Tax (ISS), whose rate varies from 2%
vestment, Social Contributions on Revenues (PIS/COF- of 6.73% on the revenues accrued from the sales. to 5%.
INS) would be levied at a combined rate of 9.25% (non
cumulative regime) on the revenues accrued from the Meanwhile, as detailed above, any capital gain (posi-
sale. tive difference between the sale price and the acquisi-
tion cost) accrued by the individual is subject to income
Under the Deemed Profit system, Brazilian legal enti- tax at progressive rates ranging from 15% to 22.5%. 5. Voluntarily disclosure program
ties, having the buying and selling of artwork as their
main activity, must calculate the taxable bases of IRPJ
and CSLL (levied at the combined rate of 34%) based on What is the procedure in a voluntary disclosure of pre- no fines are levied. In case the original funds for the
8%/12%, respectively, of the revenues accrued with viously not properly declared art works and what are acquisition of the artwork had not being previously
the sale, regardless of the acquisition cost. In this case, the expected consequences? declared to the tax authorities, the income tax will be
PIS/COFINS are levied on the revenues from the sale of due and penalty and interest shall be charged.
artworks at a combined rate of 3.65% (cumulative re- Brazilian individuals may amend the Annual Income
gime). Tax Return to include previously undeclared art-work Brazilian legal entities are required to disclose their
at any time within 5 years of the filing. If the amended accounting and tax information in accordance with
For legal entities subject to the Deemed Profit system information does not give rise to any income tax due, the Brazilian Federal Revenue Service’s standards and

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WTS Global Guide on Taxation of Artwork | Brazil WTS Global Guide on Taxation of Art work | Brazil

systems. If a legal entity fails to disclose information Does your country have a non-punishable voluntary
on artwork, it may be subject to fines imposed by tax disclosure programme?
authorities.
In 2016, Brazil allowed the temporary repatriation Rosiene Nunes
Legal entities and individuals may only amend the re- of non-declared capital from abroad (which was reo- Partner
turns without any fines, as long as they are not under- pened in 2017). This programme did not allow the dis-
going a tax inspection. If the amendment gives rise to closure of works of art held abroad. [email protected] +55 11 3819 4855
any tax due, legal entities and individuals may benefit
from a voluntary disclosure procedure, under which Specialization
late payment fines might not be due. → Advice with respect to Brazilian individual taxation, for both Brazilian
and foreign individuals living in Brazil or abroad, based on the analysis
of international agreements to avoid double taxation
→ Individual Income Tax Returns
→ Statements of Brazilian Capitals Abroad
6. Special provisions re taxation of arts → Challenges, defenses and filing of appeals against assessment notes
from the Brazilian Revenue Service or the Central Bank of Brazil
→ Hypothetical Tax and Tax Equalization calculations
[Trust | foundation] → Tax and succession planning
→ Drafting of Wills
In Brazil, there are no trusts or foundations specifically
for holding works of art.

Stephanie Makin
Partner

[email protected] +55 11 3819 4855

Specialization
→ Advice with respect to Brazilian individual taxation, for both Brazilian
and foreign individuals living in Brazil or abroad
→ Assistance with tax inspections of the Brazilian Revenue Service against
individuals
→ National and international tax structuring for individuals
→ Advice with M&A transactions involving individuals residing in Brazil or
abroad

Machado Associados
Av. Brigadeiro Faria Lima 1656 - 11º andar
São Paulo, 01451-918

WTS Global in Brazil, Machado Associado.

30 31
Richard Jackson – Duck General WTS Global Guide on Taxation of Artwork | China
2007 | Fiberglass and hardware | 167.6 x 91.4 x 60.9 cm / 66 x 36 x 24 in
© Richard Jackson | Photo: Stefan Altenburger Photography Zürich
Courtesy Richard Jackson and Hauser & Wirth

1. Legal Framework

1.1. ners, while other legal forms are subject to Corporate

How are income and wealth taxed in your country? Income Tax (CIT). The taxation base is the profit derived
by the enterprise during a calendar year. The enter-
China domiciled or non-domiciled individuals having prise prepays the CIT quarterly. When one year is end-
stayed in China for 183 days or more in a calendar year ed, the enterprise should perform an annual CIT filing
are now defined as Chinese tax residents. Income de- by the end of May of next year.
rived by Chinese tax residents from China and overseas
shall be subject to individual income tax (IIT) in China. 1.4.
Income derived by non-tax resident from China shall What is the range of the applicable tax rates for legal
be taxed for IIT in China. entities on profit and capital?

IIT rates vary from category to category. CIT rate for regular enterprises is 25%. Qualified high
tech enterprises can enjoy a preferential CIT rate at
1.2. 15%. CIT rate for qualified small enterprises with low
What is the range of the applicable tax rates for indi- profit ranges from 5% to 10%.
viduals on income and wealth?
1.5.
Comprehensive income includes wages and salaries, What kind of valuation is generally accepted in respect
service remuneration, author remuneration and royal- of certain assets (such as art) by the tax authorities?
ties which should be combined for IIT calculation. The
progressive rates are from 3% to 45%. In general, Chinese tax authorities accept asset ap-
praisal conducted by qualified appraisal institutions
Income derived from business operation by sole pro- which carry out the business independently, objec-
prietorship shall be taxed at the progressive tax rate tively and fairly. Industrial guide-line for asset apprais-
from 5% to 35%. al methods is still in the stage of public consultation.
Nevertheless, it is still very referential in practice. As-
Income derived from interests, dividends, or income set appraisal methods mainly include market method,
from lease of property, transfer of property and con- in-come method and cost method.
tingent income shall be taxed at the rate of 20%.
For the specific area of arts, market method would be
1.3. more recommended compared with the other two
How are profit and net equity taxed in your country? methods but it still lacks legal basis. Market activeness,
similarity of references and how close the transaction
Profit tax treatment for different legal form is the same time of the reference object is to the base date of the
except for partnership in China. Partnership is treated appraisal shall be taken into consideration.
as transparent, and profit tax shall be levied on its part-

2. Taxation of Art

2.1. Individuals There is no explicit obligation for voluntary or man-

Is there an obligation of declaring | disclosing private datory disclosure to the Chinese tax authorities about
artworks to the tax or other authorities (list of inven- owning works of art. Tax is only imposed upon the

China tories or alike)? transfer of artworks.

32 33
WTS Global Guide on Taxation of Artwork | China WTS Global Guide on Taxation of Artwork | China

2.1.1. Income taxes original value is the actual payment made for pur-
4. VAT | Customs
Is income generated from the sale of artworks taxed chasing the works of art.
in your country? If yes, please indicate how (i.e. capital → If the artwork is obtained from an auction, the orig-
gains tax | income from self-employment). inal value is the actual payment and taxes borne. When selling or dealing with works of art within your When works of art cross the border of your country
→ If it is obtained from inheritance or gift, the original country what other tax implications have to be consid- what needs to be considered regarding VAT | customs?
Royalty: value is the tax paid for obtaining the artwork ered?
Income obtained by an author from an auction of an For artworks purchased from overseas, a Chinese im-
original copy or photocopies of manuscripts of literary For sellers who fail to provide documentation (such VAT applies to sales of the artworks within China. The porter is liable to import duty, import VAT and con-
works is treated as royalty income and included in the as the contract, invoice and etc.) of original values, or applicable VAT rate is 13% for general VAT payers or 3% sumption tax (if any) at the customs. Import duty de-
comprehensive in-come of the year for Individual In- the original values are not accepted by the tax authori- for small-scale VAT payers (such as individual sellers). pends on the HS codes of the artworks. The average
come Tax (IIT). The seller prepays the IIT at the rate of ties, IIT at 3% would be levied based on the transaction customs duty rate on consumer goods including art-
20%, based on the transaction value - RMB 800 or 20% value. Transactions with cultural relics returned from Artworks refer to a wide range of works including works has been reduced from 15.7% to 6.9%. It is worth
of the value. The seller makes an annual IIT filling dur- over-seas can benefit from a preferential IIT rate at 2%. painting, calligraphy, sculpture, fine jewellery, an- noting that import duty rates for a series of art-works,
ing 1 March to 30 June in the following year, and a 3%- tiques etc. The Chinese tax authority imposes a con- including oil paintings (HS 97011019.00) and sculp-
45% progressive IIT rate will be applicable. 2.1.2. Wealth taxes sumption tax on high-end consumer goods at specific tures of other materials (HS 97030000.90), have been
Does your country know any specific categories of clas- stages. For example, retailers which sell fine jewellery reduced to 1% for most favoured nations.
Income from business operations: sification of artworks (e.g. tax-exempt personal be- made of gold, silver, platinum or diamonds in China
Income from sales of artworks obtained by a profes- longings | household)? must pay consumption tax at 5% when retailing them. In case the artworks are imported temporarily for ex-
sional art dealer, who owns a registered sole-proprie- Artworks made of gemstones, pearls or diamonds hibition in China, the foreign owner can apply for a
torship enterprise, are deemed to be income of a busi- China does not enact any rulings on the wealth taxes. (classified into specific 21 HS codes), antique cars and bonded treatment. No tax is then paid in China unless
ness operation for IIT purposes. The tax basis is the total In China, owning artworks is not subject to the tax in yachts are subject to consumption tax on importation the artworks are sold in China after the exhibition.
income of the dealer (total revenue - reasonable costs China. Tax is triggered, if the ownership is transferred at 10%, 3%-20% depending on displacement of the car
recognised by tax authorities for the dutiable period). (e.g. sales, inheritance or gift). and 10% respectively. The Chinese government exercises a strict control on
The tax rate is within a 3%-35% progressive range. the exportation of certain artworks. State-owned cul-
2.1.3. Gift | Inheritance taxes Agreements on the transfer of artworks are subject to tural relics, non-state-owned precious cultural relics
Other situations: In case of an inheritance or gift will there be any tax stamp duty at 0.05% based on the con-tract value. Both and other cultural relics are prohibited from export,
Except for the above two situations, sales of artworks levied? parties to the agreement are liable to the stamp duty. except for exhibition in accordance with the relevant
are treated as a transfer of property. The applicable IIT law or unless approved by the State Council.
rate is 20%. The tax base is the balance after the orig- For artworks received as a gift, IIT at 20% is levied on
inal value of the property and reasonable expenses the amount of income.
have been deducted from the transaction proceeds.
Artworks inherited from the legator with kinship are
The original value is determined as follows: non-taxable in China. Inheritance received from the
legator with no kinship are treated as a gift, and the
→ If the artworks are purchased from a gallery, the donee pays IIT on the income.

3. Taxation of legal entities (as owner of the artworks)

3.1. Corporate income taxes In China, a natural person or a legal entity is not liable
How are profits deriving from the sale of artworks to the taxes for owning artworks. If a legal entity sells
taxed? an artworks, the profit obtained by the legal entity is
subject to the CIT and other relevant taxes in China. The
The profit obtained from sales of artworks by a legal private shareholder is subject to the income tax for div-
entity is subject to the applicable tax rate. idends. The Chinese tax authorities do not offer any tax
incentive treatment to the legal entity for sales of art-
Are there any general advantages of a legal entity as works. Thus, there is no general advantage of a legal
owner of artworks instead of a private ownership? entity to own the artworks.

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WTS Global Guide on Taxation of Artwork | China WTS Global Guide on Taxation of Artwork

Maggie Han
Associate Partner

[email protected] +86 21 5047 8665 206

Specialization
→ Support for excutive private clients
→ Tax optimized asset and income structuring for private clients
→ Advisory on immigration and relocation related issues
for private clients
→ Tax advisory on individual income tax
→ Tax advisory for private clients for M&A cases
→ Foreign Exchange and Customs Advisory

Isabelle Han
Consultant

[email protected] +86 21 5047 8665 ext. 227

Specialization
→ Advisory on income structuring for expariates
→ Routine executives’ income tax review and filing
→ Share transfer analysis for individuals
→ Tax compliance advisory for individual LP of funds

WTS China
Unit 06-07, 9th Floor, Tower A, Financial Street Hailun Center,
No.440 Hailun Road, Hongkou District, Shanghai, China 200080

WTS Global in China, WTS China.

36 37
Mary Heilmann – Untitled WTS Global Guide on Taxation of Artwork | Costa Rica
2016 | 5 hollow silver disks, lacquered
Chain: silver with matte finish
70 x 31 x 1.4 cm / 27 1/2 x 12 1/4 x 1/2 in
© Mary Heilmann | Photo: Thomas Barratt
Courtesy Mary Heilmann, 303 Gallery, and Hauser & Wirth

1. Legal Framework

1.1. 1.4.
How are income and wealth taxed in your country? What is the range of the applicable tax rates for legal
entities on profit and capital?
If the taxpayer performs a lucrative activity in accord-
ance with the definitions of the Income Tax Law (ITL), Corporate income tax:
should be declare a tax return including its income and
expenses to calculate the taxable base. Legal entities:
If the activity is not lucrative, the tax provision applica- Small business (those legal entities whose gross in-
ble would be the capital gains rules. come in the fiscal period does not exceed $168.776
approx.)
1.2.
What is the range of the applicable tax rates for indi- Thirty percent (30%)
viduals on income and wealth? → Up to $83.905 of gross income: 10%
→ Up to $168.776: 20%
Over the wealth there is no taxation, the rules are re-
lated to salary in dependency relationship or if it also Capital gains: tax rate 2.25% over the sale price if the
performs a lucrative activity or receive non-lucrative assets were bought before July 1st, 2019; if not the tax-
income (specific rents defined by the law or capital able rate would be 15% by the difference of sale price
gains). and acquisition cost.

Ranges if the person performs profit-making activity: 1.5.

What kind of valuation is generally accepted in respect
Taxpayer: of certain assets (such as art) by the tax authorities?
Individuals (net income rules)
There are no rules, but can we say that an assessment
Range: prepared by a professional or appraiser should be re-
→ Income up to $5.606 per year will not be subject to viewed by the Tax Administration.
tax.
→ On the excess of $5.606 per year and up to $8.372
per year, ten percent (10%).
→ On the excess of $8.372 per year and up to $13.965
per year fifteen percent (15%).
→ On the excess of $13.965 per year and up to $27.986
per year twenty percent (20%).
→ On the excess of $27.986 per year, twenty-five per-
cent (25%).

1.3.
How are profit and net equity taxed in your country?

Refer to question 1.1 in relation to profit.

In regards to the net equity, there is no taxation.

Costa Rica
38 39
WTS Global Guide on Taxation of Artwork | Costa Rica WTS Global Guide on Taxation of Artwork | Costa Rica

2. Taxation of Art 3. Taxation of legal entities (as owner of the artworks)

2.1. Individuals There are no specific categories for classification of art- 3.1. Corporate income taxes A legal entity has to file a tax return with respect to
Is there an obligation of declaring | disclosing private works. The Tax Administration can ask about the origin How are profits deriving from the sale of artworks certain artworks (see above). If an individual holds the
artworks to the tax or other authorities (list of inven- of the artworks, how they were bought, in order to re- taxed? works of art, there is no such obligation. There is thus
tories or alike)? view if the funds used to buy them were subject to tax. no general advantage for a legal entity to hold works
According to the Income Tax Law, if the individual or of arts instead of private ownership.
As per the current income tax law, if the taxpayer per- Is there an obligation to declare works of art in the tax entity performs an economic activity on a habitual ba-
forms a habitual economic activity selling artworks, return? Please indicate how this is done resp. if there is sis, the income received would be subject to corporate
there is an obligation to register this activity with the any other obligation of declaration. income tax (CIT), tax rate 30%, taxable base being in-
Tax Administration and he must disclose assets, liabili- come minus deductible costs and expenses.
ties, equity, income and expenses. There is also an ob- If the taxpayer performs a business activity, he should
ligation to keep annual accounts. disclose the works of art in his tax re-turn. Are there any general advantages of a legal entity as
owner of artworks instead of a private ownership?
According to the new charter regarding capital gains, After July 1st, 2019, there would be an obligation to
any sale of artworks (even if the taxpayer does not declare the sales of the artworks as well. In case of self-employment the tax brackets would be
perform a habitual activity) should be declared in a tax 10-15-20-25% based on the net income (gross income
return regarding the sale of the assets. If the taxpayer is an inactive entity (corporation or Ltd) minus deductible expenses)
and owns artworks, there is an obligation to file the
There is no obligation to disclosing / filing private art- value of the asset. The value to use is the original cost,
works if the taxpayer is an individual and does not per- but if there is a lack of in-formation about this it is like-
form an economic activity selling artworks. ly that an appraisal would be used, which can be chal-
lenged by the tax administration. 4. VAT | Customs
2.1.1. Income taxes
Is income generated from the sale of artworks taxed How are works of art valued for tax purposes in your
in your country? If yes, please indicate how (i.e. capital country? Are there any common and accepted valua- When selling or dealing with works of art within your When works of art cross the border of your country
gains tax | income from self-employment). tion methods, i.e. at cost, insured value, market price? country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?

Before July 1st, 2019 the income is taxable based on The value to use is the original cost, but if there is a lack Under the current VAT Law the artworks would be The export of artworks is not subject to customs tax-
self-employment under the principle of habituality. of information about this an appraisal could be used, subject to VAT, if the taxpayer sells the as-sets in the es or VAT. In case of imports, and de-pending on the
The income received would be subject to the corporate this can be challenged by the tax administration. framework of a habitual economic activity. type of the artworks, customs taxes will amount to be-
income tax (CIT), tax rate 30%, taxable base: Income tween1% and 9%, plus VAT at 13%.
minus deductible costs and expenses. The re-valuation of the assets is not allowed for tax pur- After July 1st, 2019 the taxable event is based on the
poses. After July 1st, 2019, and under the capital gains same criteria mentioned above. The tax rate is 13%.
After July 1st, 2019, the sale of artworks would be sub- chapter, the original cost of the assets would be adjust-
ject to CIT (assets used in a business activity) or capital ed using price ratios issued by the Tax Administration.
gains (assets not used in a business activity)
2.1.3. Inheritance | gift taxes
2.1.2. Wealth taxes In case of an inheritance or gift will there be any tax 5. Voluntarily disclosure program
Does your country envisage any specific categories of levied?
classification of artworks (e.g. tax-exempt personal
belongings/household)? After July 1st, 2019, under the new capital gains chap- What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
There is no wealth tax in Costa Rica. Only CIT or capital ter, an inheritance and donations would be exempt. viously not properly declared art works and what are disclosure programme?
gains tax on the sale of works of art might be applica- the expected consequences?
ble as from July 1st, 2019. There is no a non -punishable voluntary programme.
There is no voluntary disclosure program in place.
The mere buying of artworks does not trigger any tax, If there were obligations to file an income tax return
as we mentioned above, only if the tax-payer performs for the sale of artworks, there is a reduction of the
an economic activity or sells them in a non-business fines if the Tax Administration issued an adjustment of
context, capital gains should be deemed taxable. the income tax.

40 41
WTS Global Guide on Taxation of Artwork | Costa Rica WTS Global Guide on Taxation of Artwork | Costa Rica

6. Special provisions re taxation of arts

There are no special tax provisions. Erik Ramírez

Senior Tax Manager

[email protected] +506 2105 3609

Specialization
→ Tax advisory
→ Corporate and tax reorganization, design and implementation
→ M&A transactions
→ Wide knowledge in Corporate Income Tax and Value Added Tax.
→ Tax Compliance, Tax Accounting and Tax litigation, administrative stage
→ capital gain of artworks sold by individuals

WTS – Faycatax, S,A.

La Sabana, Sabana Business Center floor 11th,
San José

WTS Global in Costa Rica, Facio & Cañas.

42 43
Matthew Day Jackson – Unicursal Labyrinth WTS Global Guide on Taxation of Artwork | Denmark
2014 | Oil on panel, stainless steel frame
247.7 x 191.8 x 7.6 cm / 97 1/2 x 75 1/2 x 3 in
© Matthew Day Jackson | Courtesy the Matthew Day Jackson and Hauser & Wirth

1. Legal Framework

1.1. amounting to DKK 55,300 (double for married couples)

How are income and wealth taxed in your country? are taxed at a rate of 27% and any such income above
this amount is taxed at a rate of 42%.
Individuals who are resident in Denmark or who stay
in Denmark for six months consecutively are subject to Property value tax is 1% of the real estate value, and
full tax liability to Denmark. This applies as a general 2% for real estates with value above DKK 3,040,000.
rule for all earned income – personal income (salary
etc.) as well as capital income. Furthermore, the rule 1.3.
applies on world-wide income, meaning all income How are profit and net equity taxed in your country?
deriving from both Denmark and abroad. Howev-
er, limitation to full tax liability may apply due to tax Legal entities in Denmark are subject to taxation on all
agreements between Denmark and other countries. income and may deduct expenses which are related to
the operations of the company.
A limited tax liability to Denmark applies to individuals
without residence in Denmark, but with in-come from 1.4.
Denmark. What is the range of the applicable tax rates for legal
entities on profit and capital?
There is no wealth tax in Denmark except for property
value tax for real estate owners. Legal entities must pay corporate income tax of 22% of
their profits.
The Danish tax system is progressive in relation to both
personal income and capital income. 1.5.
What kind of valuation is generally accepted in respect
1.2. of certain assets (such as art) by the tax authorities?
What is the range of the applicable tax rates for indi-
viduals on income and wealth? In general, assets must be valued at its fair market val-
ue which is defined as the objective market value of
The Danish taxation system distinguishes between an asset and equals the price which could be received
personal income and capital income. All rates and in case of a sale of the asset to a third party on arm’s
amounts stated below apply for the year of 2020. length conditions.

Personal income up to DKK 45,800 is tax free due to There are various ways to valuate assets (including art
a personal allowance. Above the allowance and up works) and include the latest purchase price, valuation
to DKK 531,000, the income tax rate average is 45.7% made by an art appraiser or an auditor. The insurance
which consists of various types of taxes including labor value, data-bases, gallery catalogues or auction re-
market contribution (in Danish AM-bidrag), church tax sults may give an indication of the value in terms of
and municipality tax and varies depending on the re- sales prices for comparable art and may be used if con-
spective municipality tax rates. An additional tax rate sidered relevant.
of 15% is levied for all personal income exceeding DKK
531,000. However, a maximum tax rate cap of 52.06% Please see section 2.1.2 for elaboration of valuation of
applies when labor market contribution is not relevant art works.
and 55.9% when paying labor market contribution but
no church tax.

Capital income is taxed between 37.7% and 42.7% de-

pending on the income amount.

Denmark Capital gains on shares and dividend payments

44 45
WTS Global Guide on Taxation of Artwork | Denmark WTS Global Guide on Taxation of Artwork | Denmark

2. Taxation of Art to difficulties in classification. In general, a household the parties are able to either cancel the sale or follow
artwork should serve residential purposes and fur- the valuation made by the Danish Tax Agency with no
nish/decorate the home, and not primarily be held as unintended tax consequences for the parties. Such tax
2.1. Individuals does not necessarily mean that it is considered to be an investment. If the artwork is not part of the business reservation must be made at the same time as the sale,
Is there an obligation of declaring | disclosing private speculation. The term speculation implies that the as- and not seen as purchased for speculation purposes, and it should therefore be part of the sales agreement.
artworks to the tax or other authorities (list of inven- set in question was acquired for the purpose of realiz- the artwork will most likely be seen as personal be- The tax reservation is only relevant if the Danish Tax
tories or alike)? ing a profit on resale. Both the criterion of intent to re- longings/household goods. But this must be assessed Agency reacts to the transfer.
sell and the criterion of realizing a profit on the resale on a case-by-case basis. Please see 2.1.1.
As a main rule, works of art are considered to be must be met when acquiring the art. Speculation can 2.1.3. Inheritance | gift taxes
tax-exempt household goods. However, if the private only be established from a tax point of view if both cri- Is there an obligation to declare works of art in the tax In case of an inheritance or gift will there be any tax
individual buys and sells art on a professional level, teria are met. When assessing whether there is a case return? Please indicate how this is done resp. if there is levied?
this is part of his business and in this case the artworks of speculation, it is necessary to consider whether the any other obligation of declaration.
must be included in the tax return of the business that asset in question is an asset which would normally be Danish inheritance tax is only relevant if the deceased
must be pre-pared each year, including both income expected to be sold at a profit. Speculation is generally Income from artworks which are part of the business/ was domiciled in Denmark at the time he or she passed
and values of the artwork. As mentioned above, there a permanent factor or systematic in nature, and it only speculation must be included in the tax return. Tax re- away and was thus under Danish jurisdiction. Please be
is no wealth tax for individual taxpayers on assets ex- occurs in infrequent cases. turns are prepared annually and include both income aware that the assessment of whether the deceased is
cept for real estates. and values of the artwork. domiciled in Denmark is different from the assessment
If selling artwork is considered a business, any profit is of whether a person is domiciled for tax purposes in
Furthermore, when an individual dies all assets, in- taxed as personal income at a tax rate up to 55,9%. In If the artwork is transferred as a gift and exceeds the Denmark. Danish inheritance tax is also relevant if the
cluding all artwork, and all liabilities are to be includ- this case, any losses are generally deductible when the threshold, the gift must be declared and gift tax levied deceased had certain assets in Denmark at the time he
ed in the estate inventory and in the division of the personal income is calculated. Even though selling and to the Danish Tax Agency. It is also included in the state or she passed away. Such assets are real estate in Den-
inheritance between the heirs. Also, if the artwork is buying art is done on a regular basis, it could be seen as inventory when some-one dies. mark or business assets in Denmark. Furthermore, if
transferred as a gift to a child, grandchild, parents etc. a hobby for the individual if in general the “business” If the artwork is a household good, it is not declared in part of or the entire estate is administered in Denmark,
(the list is not exhaustive) and the yearly gifts exceed is loss-making. In this case, any gains will be taxable the tax return. Danish inheritance tax is also relevant.
DKK 67,100 (2020), the gift must be declared to the while any losses cannot be deducted. These losses
Danish Tax Agency and gift tax levied no later than 1 may only be brought forward to reduce any future How are works of art valued for tax purposes in your Inheritance between spouses is tax-exempt. Close
May in the following the year in which the gift is given. gains made on the artwork “business”. Under certain country? Are there any common and accepted valua- family such as children, grandchildren, parents etc.
circumstances, it may be possible for a business to opt tion methods, i.e. at cost, insured value, market price? (the list is not exhaustive) pay a 15% inheritance tax on
2.1.1. Income taxes for a special tax scheme where the business income the inheritance. All other heirs pay 36.25%. The estate
Is income generated from the sale of artworks taxed is separated and only taxed at a tax rate of 22% on an In general, any asset, including artworks, must be val- has a threshold amount of DKK 301,900 (2020) (before
in your country? If yes, please indicate how (i.e. capital ongoing basis, until the business is no longer active ued at its fair market value. The fair market value is the inheritance tax is calculated).
gains tax | income from self-employment). or any income or assets are transferred to the private defined as the objective market value of an asset and
individual. The difference between 55,9% and 22% is equals the price which could be received in case of a Danish gift tax is always relevant if either the donor or
Capital gains on an individual’s sale of artworks which then taxable. sale of the asset to a third party on arm’s length con- the recipient is domiciled in Denmark at the time the
are considered to be household goods are not taxable, ditions. gift is given and therefore under Danish jurisdiction.
and losses are not tax deductible. This is generally the If selling art is classed as speculation, any profit is taxed The valuation may be made in a number of different Please be aware that the assessment of whether the
case, regardless of the size of the profit. as personal income but the labour market contribution ways, e.g. latest purchase price, valuation made by donor or recipient is domiciled in Denmark is different
(in Danish: AM-bidrag) is not relevant. Therefore, the an art appraiser, or an auditor etc. Also, the insurance from the assessment of whether a person is domiciled
On the other hand, if the individual is considered to relevant tax rate varies up to 52.06%. As speculation is value, databases, gallery catalogues or auction results for tax purposes in Denmark. Furthermore, even if
trade art as a business, any capital gain is taxable. not considered a business, a loss is only deductible as may give an indication of the value in terms of sales neither the donor nor the recipient is domiciled in Den-
Please see section 3.1. regarding deduction of costs, a deductible expense when computing the taxable in- prices for comparable art and may be used if consid- mark, Danish gift tax is relevant if the gift consists of
depreciation and deductible losses depending on come and has a deduction value of approximately 25% ered relevant. It is also possible to request a binding real estate in Denmark or business assets in Denmark.
whether trading artworks is part of the core business of the loss. ruling from the Danish Tax Agency on the fair market Gifts between spouses are not subject to gift tax. Close
or artworks are purchased for other reasons. Trading of value. Arguments and documentation that support this family such as children, grandchildren, parents etc.
art could be seen as a business, if an individual sells art 2.1.2. Wealth taxes valuation must be included. However, the Danish Tax (the list is not exhaustive), but not siblings, pay a 15%
on a regular basis which could be compared to a small Does your country envisage any specific categories of Agency may refuse to issue a binding ruling if they find gift tax on the gift. Each year one donor may give a
business operation, or if the income is significant. classification of artworks (e.g. tax-exempt personal that they do not have enough grounds to do so. tax-exempted gift to one of the above-mentioned re-
belongings/household)? The valuation is subject to scrutiny (and changes) by cipients up to a capitalized value of DKK 67,100 (2020).
If the artworks are sold in a speculative manner, any the Danish Tax Agency, as they are not bound by an Any gift with a value exceeding this amount is subject
capital gain is taxable. Please be aware that the fact There is no specific category envisaged for personal expert valuation. It is possible to insert a tax reserva- to gift tax at 15%.
that purchasing the artwork was a good investment belongings/household assets in the law. This may lead tion clause in the sales agreement to the effect that

46 47
WTS Global Guide on Taxation of Artwork | Denmark WTS Global Guide on Taxation of Artwork | Denmark

Any other person, including siblings, receiving a gift tal income. The labour market contribution (in Danish:
4. VAT | Customs
will pay income tax on the gift. There is no threshold AM-bidrag) is not applicable to the gift, and therefore
except the general annual tax-exempt allowance, the relevant tax rate varies up to 52,06% not including
which is currently a total annual amount of DKK 46,500 church tax. When selling or dealing with works of art within your Definition of art
(2020) which can be deducted once in the person’s to- country what VAT implications have to be considered? The Danish VAT definition of art is mainly based on Ar-
ticle 311 of the VAT Directive. We note that Denmark
The supply of art is subject to VAT at a rate of 25%. has not chosen to narrow the definition, as envisaged
in Article 311 (2). However, the actual supply of art
Supplies made by the creator should always be further reviewed.
3. Taxation of legal entities (as owner of the artworks) The first-time supply of artworks by the creator or his/
her successors in title is subject to a reduced VAT taxa- The definition of art (as by definition from a VAT point
ble amount of 20% of the sales price. Example: An art- of view) includes:
3.1. Corporate income taxes The rules do not apply if the legal entity purchases the work has a sales price of DKK 10,000. The reduced VAT
How are profits deriving from the sale of artworks art from an artist who is related to or in any other way taxable amount is 20% of DKK 10,000 = DKK 2,000. The → Goods under the CN-code 97 01-97 02,
taxed? a party closely related to the owner of the legal entity. VAT amounts to 25% of DKK 2,000 = DKK 500. → Sculptures under CN-Code 97 03 (Provided the art
In the case of artworks which are hung up or mount- was produced by the artist in a series of no more
If a legal entity sells artworks, the profits derived from ed in the entity’s premises, a deduction can be made Taxable threshold is DKK 300,000 than 8 examples /copies (exemptions apply)),
the sale are taxable. The corporate tax rate is 22%. It is of up to 25% of the costs per year. Artistic decoration of The artist or his/her successors in title are not liable to → Tapestry etc. under CN-Code 58 05 & CN-Code 63 04
necessary to make a distinction between a legal entity buildings (i.e. the art is an integrated part of the build- register for and pay VAT before the accumulated turno- (provided the art was made by hand by the artist
whose business is the trading of artworks, and a legal ing) can, however, be depreciated by 4% annually. ver in the current or previous calendar year has exceed- and in series of no more than 8 copies), the list is not
entity that is just purchasing art for decoration of the ed DKK 300,000. The first supply could be VAT-exempt, exhaustive.
business premises etc. Costs and losses are generally Are there any general advantages of a legal entity as even if exceeding the threshold, as only subsequent → Unique ceramics
deductible if the business is trading artworks. In the owner of artworks instead of a private ownership? supplies will be liable to VAT. → Certain enamel on copper work – and only 8 copies
following paragraphs, the rules are explained for pur- → Photography signed and up to 30 prints
chasing artworks for other purposes. The tax rate is lower for a company than for an individ- Auctions and agents
ual if the individual ends up being taxable on the gains The above-mentioned VAT rules governing reductions When works of art cross the border of your country
Legal entities purchasing art cannot usually deduct the of selling artwork. or exemptions on the supplies of art made by the cre- what needs to be considered regarding VAT | customs?
costs. The reason is that the value of artwork does not ator are also applicable if such transactions take place
normally deteriorate. There is, however, an exception. Please note that there may be a tax risk for the indi- during an auction or via a disclosed agent. Except for the above-mentioned rules, the supply of
To support artists, the tax rules include a special set of vidual shareholder owning the legal entity which pur- artwork is generally treated as a supply of goods. This
rules which under certain conditions allow companies chases the artworks. If the artwork is not considered If auctions or other transactions are concluded via an means that normal rules on cross-border supplies ap-
to de-duct or depreciate the costs for the purchase of to be purchased in the legal entity’s interest or for its undisclosed agent, the intermediary is considered buy- ply, e.g. possible zero-rating of IC supplies (Intra-Com-
art. business purposes, i.e. if the artwork is located in the ing and reselling in their own name. Therefore, the ex- munity supplies, i.e. EU-supplies) is possible.
shareholder’s private home or in an office at the legal emptions will not apply.
The special rules only apply to original artworks. Art- entity where no customers ever visit, if the purchase of
works include paintings, sculptures, graphics, photo- artworks generally generates losses or if proportion- Disclosed agents who have the art in commission must
graphic art, installation art and the like. A distinction is ately large amounts are spent purchasing art, the indi- pay 25% VAT on the service rendered.
made between artworks which are hung up or mount- vidual shareholder could be taxed as receiving a ben-
ed, and artworks which are an integrated part of a efit from the legal entity. The taxable amount would Trading using the art - margin scheme
building. most likely be an amount equal to what it would cost As stated, the supply of art is as a main rule subject
to rent such art-work. This income would be taxed as to VAT. However, businesses may apply the margin
With regard to graphic and photographic art, special personal income at a tax rate of up to 55.9% (with de- scheme on art purchased by non-taxable persons. The
requirements apply, including a requirement that the ductions for the salary cost at the legal entity) or as a margin scheme on art also applies on cross border
art should be numbered and signed by the artist and dividend with a tax rate at 27/42% (with no deduction transactions. The effect of the margin scheme is that
only produced in a limited edition. Reproductions are in the company). the purchaser is not able to recover any VAT amounts
not included under these rules. (hidden) in the purchase price but calculates the VAT
based on the profit (difference between sale and pur-
The art must be a first-time buy and must be purchased chase price).
directly from the artist or a gallery selling the art on
commission.

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WTS Global Guide on Taxation of Artwork | Denmark WTS Global Guide on Taxation of Artwork | Denmark

5. Voluntarily disclosure program

What is the procedure in a voluntary disclosure of pre- vidual will generally avoid paying any fines as long as Malene Overgaard
viously not properly declared art works and what are it is considered to be gross negligence at worst. The Attorney-at-Law
the expected consequences? burden of proof of it not being gross negligence is less
strict in case of voluntary disclosure. Tax and interests [email protected] +45 2524 5105
It is possible for an individual to make a voluntary dis- are still due.
closure, if it turns out that an income item is taxable Specialization
after all. In general, an individual may reopen his tax If a voluntary disclosure is not made and the Danish Tax → General focus on Danish and international tax law
return before 1 May in the fourth year following the Agency contacts the individual, fines up to an amount → Experience in advising principal shareholders including economy/pay-
relevant income year. The Danish Tax Agency may reo- equal to the tax to be paid may be imposed if the Dan- ments between the company and the shareholder and in connection
pen the assessment during a period of up to 10 years if ish Tax Agency finds that the individual has acted with with the planning and completion of relocations to and from Denmark
they find that the individual has acted with gross negli- gross negligence. If they find that he or she has acted → Advises private clients in relation to drafting of marriage agreements
gence or intent to commit tax fraud. with the intent to commit tax fraud, the fine may be and wills, granting of gifts and taxation hereof
double for part of the avoided tax to be paid and im- → Vast experience in advising on individual taxation and rules on social
Voluntary disclosure means that the individual must prisonment may also be the result, depending on the security
contact the Danish Tax Agency on his or her own initia- amount of tax to be paid. → Organization and implementation of a large number of ownership
tive. Avoidance of tax must not be known to the Danish transfers for both companies and privately owned businesses
Tax Agency at the moment of the disclosure. The taxa- Does your country have a non-punishable voluntary → Advises on and implements tax-exempt restructurings and group
ble individual must unconditionally inform and active- disclosure programme? structures
ly help the Danish Tax Agency in order to determine all
income. Also, the relevant tax must be paid. Denmark has previously had a non-punishable vol-
untary disclosure programme, but this is no longer in
Principally, if the above conditions are met, the indi- place. However, please see above.

6. Special provisions re taxation of arts

[Trust | foundation]

The special tax rules applicable for deduction of art

works are specified in section 44a of the Danish Act
on Depreciation and Amortization. For an elaboration
hereof, please see section 3.1.

Lundgrens Law Firm P/S

Tuborg Boulevard 12
2900 Hellerup

WTS Global in Denmark, Lundgrens Law Firm.

50 51
Bharti Kher – The Chimera (3) WTS Global Guide on Taxation of Artwork | Estonia
2016 | Wax, concrete, plaster, hessian fibre, brass | Unique
116 x 29 x 29 cm / 45 5/8 x 11 3/8 x 11 3/8 in
© Bharti Kher | Courtesy Bharti Kher and Hauser & Wirth

1. Legal Framework

1.1. ceipt and reinvested profits are not subject to CIT.

How are income and wealth taxed in your country?
This leads to an unlimited carry-forward of losses and
The income of individuals who are tax residents in Es- unlimited depreciation for tax purposes. A similar tax
tonia is taxed at the state level with flat rate income treatment applies to permanent establishments of for-
tax on their world-wide income, irrespective of the or- eign entities (including branches).
igin of the income.
A reduced CIT rate (14%) applies to regular dividend
Most items of personal income are taxed on a gross payments. The amount of the dividend subject to the
basis, mainly through withholding at source, whereas reduced rate is the arithmetical average amount of
business income and capital gains are taxed on a net the dividends paid in the last three years. Additional
basis subject to certain conditions. The annual basic ex- 7% personal income tax applies to dividends subject to
emption (non-taxable amount) for resident individuals 14% when distributed to a natural person, but no addi-
is up to 6,000 EUR per year, but decreasing depending tional CIT is applied when dividends are distributed to
on the total income amount. Where the tax-able in- a corporate entity.
come per year exceeds 14,400 EUR, the following for-
mula for calculating the non-taxable amount applies: 1.4.
6000-6000/10800x(amount of income – 14400). If the What is the range of the applicable tax rates for legal
total amount of all income items is 25,200 EUR or more entities on profit and capital?
in a year, there is no right to the basic exemption at all.
Profit distributions, paying non-business expenses,
Capital gains on the sale of privately held household conferring fringe benefits and making gifts are taxed
goods are tax exempt. at 20% on the gross amount.

There is no wealth tax or local taxes on income. The reduced CIT rate in the amount of 14% applies to
regular dividend payments, in which case the compa-
1.2. ny must withhold an additional 7% from the dividend
What is the range of the applicable tax rates for indi- payments to natural per-sons.
viduals on income and wealth?
1.5.
Estonia has a proportional (i.e. flat) tax rate of 20%, What kind of valuation is generally accepted in respect
which applies to all items of income de-rived by a res- of certain assets (such as art) by the tax authorities?
ident taxpayer.
In general, privately held assets are valued at their fair
Dividends received from a company are not taxed on market value. There is no legislation in this respect, thus
a personal level. Dividends that have been subject to the valuation theme entails difficulties and there is no
the reduced rate of 14% at the level of the distributing certainty.
Estonian company will be subject to additional WHT at
7% . The fair market value is defined as the objective market
value of an asset and equals the price which could be
1.3. achieved in case of a sale of the asset in the ordinary
How are profit and net equity taxed in your country? course of business. Friendship prices or sentimental
values are therefore irrelevant. The fair market value is
Resident companies pay corporate income tax (CIT) usually an estimated value or a comparable figure, ex-
on a deferred basis when distributing profits, paying cept for assets subject to regular trade. For the latter, the
non-business expenses, conferring fringe benefits and fair market value is usually available.

Estonia making gifts. Business income earned (including inter-

est, royalties, inbound dividends) is not taxed on its re- When it comes to art pieces, which are usually unique

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items, there is normally neither a periodic return on the method used to value the art pieces. In practice, there classification of artworks (e.g. tax-exempt personal country? Are there any common and accepted valua-
asset nor is there a liquid market with regular trade. The is the possibility to get an expert opinion, contact da- belongings/household)? tion methods, i.e. at cost, insured value, market price?
valuation of art pieces can therefore not be conducted tabases, gallery catalogues or auction results. All these
by means of a comparable fair market value or purchase auxiliary factors may be taken into account in order to According to the Income Tax Act, sale of the household In general, privately held assets are valued at their fair
price. determine an art piece’s value. Insurance value might goods is tax free. This may lead to difficult questions market value. There is no legislation in this respect,
be taken in account if there are no other value deter- regarding the classification of household goods and thus the valuation theme entails difficulties and there
It is evident that the valuation of art pieces entails sub- mining factors present. It is the taxpayer’s right to prove investment assets. is no legal certainty.
stantial legal uncertainty in Estonia. There is no certain another value than the insurance value.
There are no explanations or technical notes issued The fair market value is defined as the objective mar-
by the tax authorities regarding this distinction in Es- ket value of an asset and equals the price which could
tonia. Based on the explanation given regarding the be achieved in case of a sale of the asset in the ordi-
investment “gold” it can be assumed that the decision nary course of business. Friendship prices or sentimen-
2. Taxation of Art as to whether a good classifies as household good or as tal values are therefore irrelevant in verifying the fair
taxable asset is made on grounds of the function of the market value . The fair market value is usually an esti-
good and if the good is “consumable” in everyday life. mated value or a comparable figure, except for as-sets
2.1. Individuals is considered to be a privately held household good The value of an art piece or collection should generally subject to regular trade. For the latter, the fair market
Is there an obligation of declaring | disclosing private and when an investment asset. The general approach not be crucial but it can be referred to and considered value is usually available.
artworks to the tax or other authorities (list of inven- that an investment as-set qualifies as non-consuma- by the tax authorities in making the distinction. House-
tories or alike)? ble good does not provide any clarity in terms of art hold goods are items serving residential purposes in When it comes to art pieces, which are usually unique
works. If the sale of art work is considered to be for the house, as everyday objects, such as furniture, rugs, items, there is normally neither a periodic return on
There is no general obligation to declare or disclose investment purposes then the profit is taxable but the paintings. Such household goods are personal belong- the asset nor is there a liquid market with regular
the ownership of private artworks in Estonia. There is individual can deduct the purchase price and costs re- ings that serve the taxable person in everyday life and trade. The valuation of art pieces can therefore not be
no voluntary list of inventories or alike present for dis- lated to the sale in the annual income tax return. are not primarily held as a capital investment. This conducted by means of a comparable fair market value
closing purposes. means that an art piece, serving as a decorative ob- or purchase price. However, factors like cost or insur-
The sale of the art work can be considered as income ject like an item of furniture, may well be a household ance value could become relevant in case of conflicts.
If the artwork is sold, the classification of an art piece from self-employment if the artist is habitually provid- good, but this is not considered the sole argument that It is evident that the valuation of art pieces entails sub-
as (tax exempt) household good or (taxable) invest- ing his/hers living by selling own artworks or the indi- tax authorities would base their opinion on. stantial legal uncertainty in Estonia. There is no certain
ment asset is crucial when deciding whether or not the vidual is selling art works in a way of dealership in art method used to value the art pieces. In practice, there
art piece has to be declared in the tax return. business. Items which are serving capital investment purposes is the possibility to get an expert opinion, contact da-
are no longer classified as household goods. tabases, gallery catalogues or auction results. All these
There are no technical notes available regarding which When is an individual considered to be a professional auxiliary factors may be taken into account in order
privately held goods are considered household goods art dealer and what are the consequences under this There are no specific criteria of classification used in to determine an art piece’s value. It is the tax-payer’s
and which are considered assets for investment pur- qualification (e.g. social security, deductibility of loss- Estonia, and a case-by-case approach is applied by the right to prove another value than the insurance value
poses. An explanation of the tax authorities is availa- es and expenses etc.)? tax authorities. or value estimated by the tax authorities.
ble according to which the investment “gold” is a tax-
able asset because it is not consumable, but currently If the sale happens as an act of management of private Is there an obligation to declare works of art in the tax 2.1.3. Inheritance | gift taxes
there is no guidance regarding artworks. assets and does not exceed the “common” manage- return? Please indicate how this is done resp. if there is In case of an inheritance or gift will there be any tax
In order to prevent conflicts, it is recommended to de- ment of assets, i.e. the owner of artwork has made any other obligation of declaration. levied?
clare the sale of art pieces, if they are considered as in- capital gain from a randomly arisen opportunity which
vestment assets, in the annual tax return. has been exploited, the capital gain is generally tax In general, the classification of an art piece as (tax ex- The receipt of an inheritance is tax exempt. The sale of
free. empt) household good or (taxable) in-vestment asset the inherited assets is liable to personal income tax.
2.1.1. Income taxes is crucial when deciding whether or not the art piece The documented costs related to the inheritance are
Is income generated from the sale of artworks taxed However, if the sale happens to be in the course of car- has to be declared in the tax return. deductible.
in your country? If yes, please indicate how (i.e. capital rying on a business by an individual such income from
gains tax | income from self-employment). the sale of artworks could be seen as income from There is no obligation to disclose taxable private art Gifts between natural persons are tax exempt. Gifts
self-employment in which case the profits received pieces to the tax authorities. In order to prevent con- made by companies to natural persons are liable to
Capital gains resulting from the sale of privately held, would be charged with social contributions and in- flicts, it is however recommended to declare the sale corporate income tax and considered as non-business
movable assets are generally tax ex-empt. Income come tax. of art pieces, if they could be considered as investment expenses and taxed accordingly on the corporate lev-
from the sale of investment assets is taxable. assets, in the annual tax return. el. Gifts received from non-resident companies are
2.1.2. Wealth taxes taxable unless the taxpayer proves that the tax was
There is currently no legal certainty when the art work Does your country envisage any specific categories of How are works of art valued for tax purposes in your paid abroad.

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WTS Global Guide on Taxation of Artwork | Estonia WTS Global Guide on Taxation of Artwork | Estonia

3. Taxation of legal entities (as owner of the artworks) 5. Voluntarily disclosure program

3.1. Corporate income taxes Are there any general advantages of a legal entity as What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership? viously not properly declared art works and what are disclosure programme?
taxed? the expected consequences?
In case of investment items the benefit arises from the Estonia does not have non-punishable voluntary dis-
Estonian companies pay CIT on a deferred basis i.e. deferred taxation of the companies, whereas the indi- There is no obligation to declare the art works in Esto- closure program available.
when distributing profits, paying non-business ex- viduals must declare the sale in their annual tax return nia. Currently there is no practise for voluntary disclo-
penses, conferring fringe benefits and making gifts. and consequently pay income tax on the profit. sure for art works. It means that even if the person vol-
Business income earned from the sale of art works is unteers to declare the artworks then there is no special
therefore not taxable on receipt but is deferred until If a legal entity works in the field of art trade, the risk of declaration or registry available for such disclosure.
the profit distribution. CIT is 20% of the gross payment. the natural person, who has contributed the art pieces
to the company, of being classified as self-employed,
diminishes.

6. Special provisions re taxation of arts

4. VAT | Customs [Trust | foundation]

Currently there are no special regimes such as trusts of

When selling or dealing with works of art within your taxable value of the supply is the difference between foundations applicable to taxation of arts in Estonia.
country what VAT implications have to be considered? the sales price and purchase price of the goods which
has been reduced by the value added tax.
Turnover generated by art trade through legal entities
is taxable. When works of art cross the border of your country
what needs to be considered regarding VAT | customs?
The Estonian VAT Act para. 41 enacts special arrange-
ments for imposing VAT on the resale of original works International art trade entails numerous formal re-
of art. quirements. If art pieces outside of EU are crossing the
border to Estonia with the purpose of being displayed
A taxable person that acquires original works of art in a museum or gallery or for educational purposes,
with a view to resale and does not use the goods may, then the import can be arranged tax free, i.e. with no
upon resale, apply the special arrangement procedure import tax charges.
for the calculation of the taxable value on the condi-
tion that the taxable person acquired the goods: The import of art pieces from non-EU Member States
for purposes other than display in the museum or gal-
→ from a person of Estonia or another Member State lery or for educational purposes is subject to the regu-
who is not a taxable person; lar import procedure.
→ from a taxable person of Estonia or another Mem-
ber State who did not add value added tax to the
price of the goods upon transfer of the goods and
who could not deduct input value added tax paid
upon acquisition of the goods;
→ from a taxable person of Estonia or another Mem-
ber State, in so far as the resale of original works
of art by that other taxable person was subject to
value added tax.

If the above-mentioned conditions are met then the

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WTS Global Guide on Taxation of Artwork | Estonia WTS Global Guide on Taxation of Artwork

Kärt Anna Maire Kelder

Counsel, Head of Private Clients

[email protected] +7 985 967 4485

Specialization
→ Corporate transactions
→ Mergers and acquisitions
→ International real estate deals
→ Royalty and patent transactions
→ Taxation of entertainers and internationally mobile individuals
→ Taxation of Art
→ Art law
→ Private Wealth

Sorainen
Pärnu mnt. 15 Kawe Plaza,
7th floor, 10141 Tallinn

WTS Global in Estonia, Sorainen.

58 59
Martin Creed – Work No. 2927 WTS Global Guide on Taxation of Artwork | France
2018 | Wool | 57.7 x 57.9 cm / 22 3/4 x 22 3/4 in
© Martin Creed. All Rights Reserved, DACS 2021
Photo: Todd-White Art Photography | Courtesy Martin Creed and Hauser & Wirth
© 2021, ProLitteris, Zurich

1. Legal Framework

1.1. income or CG: taxation or tax exemption depends upon

How are income and wealth taxed in your country? the provisions of the relevant tax treaty.

French tax residents (FTR) are subject to income tax (IT) 1.3.
on their worldwide income unless otherwise provided How are profit and net equity taxed in your country?
by a tax treaty (TT). Non-FTR are subject to IT on their
FR source income only (subject to TT). The taxable net Taxable income is the aggregate of the net results of
income is subject to IT based on a progressive tax rate each of the taxpayer’s category of income. The net re-
schedule. sult of each category is basically the gross income less
all tax deductible expenses related to such income.
Capital gains (CG) on privately held movable and im-
movable assets are subject to IT based on flat tax rates. Net equity is not taxable.
A specific tax regime applies to the sale of artworks.
1.4.
Private Real estates located in France are subject to What is the range of the applicable tax rates for legal
wealth tax (WT) based on a progressive tax schedule entities on profit and capital?
when their net value exceeds 1’300k€. Artworks are
outside the scope of WT. Depending upon the turnover of the company, corpo-
ration tax (CIT) rates ranges from 15% to 27,5% (25% as
1.2. from 2022):
What is the range of the applicable tax rates for indi-
viduals on income and wealth? Companies qualifying as Small and Medium Enterpris-
es (SME) whose turnover does not exceed 10M€ are
IT rates ranges from 11% to 45%. Taxpayers whose “fis- subject to CIT based on their Taxable Profit (TP) at the
cal reference income” exceeds 250k€ (single) or 500k€ rates of 15% up to a TP à 38k€ and 26,5% above (25% as
(married couple) are subject to an extra taxation which from 2022)
ranges from 3% to 4%
Companies whose turnover exceeds 10M€ and is be-
Dividends, interest and CG from the sale of Shares, low 250M€ are subject to CIT based on their TP at the
Bonds and similar Securities (SBS) are in principle sub- rate of 26,5% (25% as from 2022)
ject to (i) a flat income tax of 12,8% plus (ii) social tax-
es of 17,20%, i.e. an overall taxation of 30%. However, Companies whose turnover exceeds 250M€ are sub-
taxpayers may opt for these three types of income to IT ject to CIT based on their TP at the rate of 27,5% (25% as
at ordinary progressive rates. If such option is made: (i) from 2022)
eligible dividends may benefit from a 40% allowance,
i.e. only 60% of the dividends are taxed and (ii) CG from 1.5.
the sale of SBS purchased before 2018 may benefit What kind of valuation is generally accepted in respect
from a lump-sum base reduction the amount of which of certain assets (such as art) by the tax authorities?
depends upon the holding period.
Valuation of artworks arises mainly for the purposes of
Real estate CG tax rate amounts to 19% plus social con- inheritance and gift taxes.
tributions (17.2%). Real estate taxable CG exceeding
50k€ is subject to an extra CG tax which ranges from The valuation method of private artworks comprises,
2 to 6%. in order of preference:

WT rates ranges from 0.5% to 1.50%. → The net price under a public sale occurring within

France As to non-resident individuals receiving French source

two years of a death;
→ In the absence of a public sale, the highest of the

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WTS Global Guide on Taxation of Artwork | France WTS Global Guide on Taxation of Artwork | France

→ values shown: 2. or in an insurance contract; sification of artworks (e.g. tax-exempt personal be- There are usually tax allowances on gifts or inheritances.
1. either in an estimated deed showing the value 3. or in the absence of 1 and 2 above, any detailed longings | household)?
of the asset on the date of death (e.g. inventory, and estimated statements made by the taxpay- Inheritance/Gift tax rates are progressive and depend
etc.) issued within five years of the death; ers. Artworks owned by individual do not fall within the on the degree of kinship, i.e. the further the kinship,
scope of wealth tax. the higher the tax rate (from 0% to 60%).

Is there any obligation to declare artworks in a tax re- Inheritance tax is to be borne by the heir. Gift tax is in
turn? principle borne by the donee but if gift tax is paid by
2. Taxation of Art the donor, such payment is not considered as an extra
Artworks owned by individual do not fall within the taxable gift.
scope of wealth tax. As a result there is no obligation to
2.1. Individuals der the standard CG regime: declare artworks in a tax return. The taxable value of private artworks is determined as
Is there an obligation of declaring/disclosing private → the gross CG (difference between sale net price explained above § 1.5
artworks to the tax or other authorities (list of inven- and purchase cost) is reduced by a 5% allowance As a specific exception, a French tax resident who is
tories or the like)? for each year of ownership as from the third year, Settlor or Beneficiary of a foreign trust holding art- For inheritance tax purposes, furnishings (those used
meaning that CG is tax exempted after 22 years of works would be required to file each year a specific for the adornment of a dwelling) can be valued at 5%
Except for inheritance and gift tax purposes: no decla- ownership; declaration mentioning the assets of the trust (includ- of the gross value of the Deceased’s other assets. Un-
ration / disclosure obligation → the taxable net CG is subject to a flat tax of 19% and ing the artworks) and their value. less they are placed in collections of galleries or spe-
to social contributions (17,20%). cial rooms, paintings, art objects or antiques are con-
By exception, a French taxpayer who is Beneficiary How are works of art valued for wealth tax purposes? sidered as furniture and can be included in this flat
or Settlor of a foreign trust is required to declare the When is an individual considered to be a professional 5% basis. However, the FR tax administration may use
existence of such a trust and reveal each year the as- art dealer and what are the con-sequences under this Artworks owned by individual do not fall within the market value if it can prove that furnishings ‘value (in-
sets owned by the trust (including artworks if any) and qualification (e.g. social security, deductibility of loss- scope of wealth tax. cluding artworks) is higher than the flat 5% basis.
their value. es and expenses etc.)?
As to the valuation of artworks for inheritance and gift Is it possible to pay certain taxes with works of art?
2.1.1. Income taxes There is a commercial profession when a taxpayer tax purposes (see above § 1.5)
Is income generated from the sale of artworks taxed usually buys artworks with the intention of reselling If inheritance tax or gift tax exceeds 10K€, it is possible
in your country? If yes, please indicate how (i.e. capital them. In order to determine whether an individu- 2.1.3. Inheritance | gift taxes to pay all or a part of it in kind by the delivery of pri-
gains tax/income from self-employment). al which sells artworks carries out a professional art In case of an inheritance or gift will there be any tax vate artworks (“dation en paiement”) subject to a prior
dealing activity (i.e. a commercial profession), the levied? agreement of the FR administration.
Sale of artworks as well as “non-temporary” expor- tax administration takes into account several criteria, Payment with artworks made by living artists is in prin-
tation of artworks outside the E.U by non-profession- mainly: number, frequency and size of transactions, Inheritance tax and gift tax are basically subject to the ciple excluded, but they may, however, be accepted
al-individuals who are French tax residents are in prin- short time between purchases and sales. same tax rules. subject to the authenticity of the proposed work, the
ciple (with limited exceptions) subject to Capital gain level of the artist’s international reputation, his level
(CG) tax if the sale price or custom value exceeds 5k€. A taxable professional commercial income is equal to There is no French inheritance tax on Estate between of recognition on the international art market and his
the difference between income and expenses incurred spouses and PACS partners (contractual civil union be- standing, the artistic quality and/or historical impor-
The taxable sale / exportation is subject to a flat tax of during the taxable period (in principle calendar year) tween two adults), but lifetime gifts between them tance of the work, the absence or rarity of equivalent
6% (plus a social tax of 0,5%) based on the sale price / and recorded in principle on an accrual accounting ba- are subject to gift taxes. works in national collections.
custom value (“taxe forfaitaire sur les objets précieux” sis.
- TFOP).
Such professional taxable income is subject to progres-
The TFOP is due by the Vendor / Exporter (V/E). How- sive income tax rates (c.f. § 1.2) and social taxes.
ever, if an intermediary is involved in the transaction
3. Taxation of legal entities (as owner of the artworks)
or if the buyer is liable to VAT in France, the latter are If the professional taxpayer is not member of an ac-
responsible for the payment of the TFOP. credited accounting office which handles and controls
his accounts, the taxable income is increased by 15% 3.1. Corporate income taxes penses in respect of the sales are generally tax deduct-
Subject to option of the V/E, artworks may be subject in 2021 and 10% in 2022 (surcharge cancelled as from How are taxed profits deriving from the sale of art- ible.
to the standard CG tax regime (applicable to the sale 2023). works?
of movable assets) provided V/E (i) may prove the pur- Is the taxation of legal entities which buy and sell art-
chase date and price of the artwork or (ii) the V/E has 2.1.2. Wealth taxes Legal entities’ net profits deriving from sales of art- works more advantageous compare to the taxation of
been holding the artwork for more than 22 years. Un- Does your country know any specific categories of clas- works are subject to corporate income tax (CIT). Ex- a professional individual artwork dealer?

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WTS Global Guide on Taxation of Artwork | France WTS Global Guide on Taxation of Artwork | France

When buy and sell is a professional activity, taxation of (i.e. 1/5th per year). The amount of the deduction cannot applicable to transactions concerning works of art, the EU customs territory) both being issued by the
legal entities appears to be more advantageous: exceed a limit calculated as follows: 20k€ or 5‰ of the including intra-Community supplies of goods and in- Ministry for Culture and Communication.
company’s turnover (if higher) less the amount of cer- tra-Community acquisitions. → National treasures can only leave France temporar-
→ Corporations are subject to CIT at rates ranging from tain gifts made by the Company to qualified non-profit- ily, with a mandatory return. They are always sub-
15% to 27,5% (25% as from 2022) and net profits are able organizations which give rise to CIT reduction. When artworks cross the border of your country what ject to a Temporary Exit Authorization.
not subject to social charges provided they are not needs to be considered regarding VAT | customs?
distributed (dividends being subject in principle to Companies liable to CIT may benefit from a tax reduction An exemption from the certificate and temporary exit
a flat tax of 30% in the name of the recipient individ- equal to 90% of the payments made to contribute to the International artworks trade entails numerous formal authorization is provided for cultural goods that have
ual taxpayer – see § 1.2) , purchase of: requirements: been in France for less than two years or those placed
→ whereas individual who are professional artwork under the temporary admission regime. Furthermore,
dealers are subject to (i) Income tax (IT) at rates → Cultural goods that are considered as national → For the transportation of an artwork whose value in the case where a work of art is transported by its
ranging from 11% to 45% as well as (ii) professional treasures and for which the French Administration and/or age are below legal threshold: the artwork author, the national and European accompanying doc-
social charges (FAD) has refused to issue an export certificate and may leave the national customs territory (France) uments are not required. With regard to customs for-
has made a purchase offer; without any prior authorization; malities, a simplified detailed inventory procedure is
Moreover, companies subject to CIT (or tax transparent → Cultural property located in France or abroad → If the cultural property leaves France and moves available.
commercial partnerships) can deduct from their taxable whose acquisition would be of major interest to the within and outside the EU customs territory, it is re-
income the acquisition cost of original artworks of liv- national heritage from a historical, archaeological quired to apply for a certificate (to leave the nation- There is a flat-rate tax on precious objects (TFOP) on ex-
ing artists purchased before 31/12/2022 and recorded and artistical point of view. al customs territory) and an authorization (to leave ports of works of art. The tax rate is set at 6%.
as fixed assets (not as inventories), provided that the
artworks remain on display to the public or in a places Such payments, which are not deductible from the com-
accessible to employees (except office rooms) during pany’s taxable income, must have been accepted by
all the fiscal deduction period. The acquisition price is the FAD. The tax reduction may not exceed 50% of the
deductible in equal parts from the Company’s taxable amount of CIT due for the year during which the compa- 5. Voluntarily disclosure program
profit of the purchase year and the four following years ny’s contributions occurred.

There is no voluntary disclosure program specifically

applicable to artworks that have not been declared in
France.
4. VAT | Customs

When selling and dealing with artworks within your → Sale of artworks by the artist or his right holder,
country what VAT issues have to be considered? unless they can benefit from the free base of VAT 6. Special provisions re taxation of arts
regime.
In France, to be considered as artworks, the goods
should be defined as such under provision of Article 98 The VAT rate of 10% applies to: There are no specific provisions for the taxation of arts
of Appendix III of the French Tax Code. → Occasional sales performed by companies (other other than those already mentioned in this document
than professional dealers) who, as part of patron-
Some transactions related to artworks may benefit age (“mécénat d’entreprise”), have purchased art-
from VAT reduced rates (5.5% or 10%). works that they have recorded as fixed assets and
for which they have had a right to deduct, partially
The VAT rate of 5.5% applies to : or fully, input VAT.
→ Importation of artworks from countries outside the
EU; Under certain conditions, sales of artworks by profes-
→ Intra-Community acquisitions of artworks, by a sional dealers (PROs) are subject to VAT based only on
VAT-taxable person or a non-taxable entity, who the gross profit margin (i.e. sale price less purchase
had previously imported the artwork in another price) but in that case input VAT is not deductible.
European Union (EU) Member State;
→ Intra-Community acquisitions of artworks which However (if more tax efficient), PROs may choose to
have been supplied to another EU Member State by apply VAT on the total selling price and deduct input
a VAT-taxable entity not acting as an art-dealer; VAT if any. In this situation, the standard VAT rules are

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WTS Global Guide on Taxation of Artwork | France WTS Global Guide on Taxation of Artwork | France

Christian Reynaud-Fourton Filiz Alparslan

Tax Partner / Practice Leader WTS Private Clients - Family Office Services Tax Partner / VAT

[email protected] +33 1 55 68 16 43 [email protected] + 33 1 55 68 19 29

Specialization Specialization
→ Real estate tax: structuring; acquisition & sale (share and asset deal); SIIC → Filiz is an Indirect Tax Partner within Fidal Law Firm.
→ M&A Tax → She works on every VAT issue (advise, litigation, lobbying) and is deeply
→ Private family businesses: property acquisition, shareholding structur- involved in Financial/Insurance services, real estate issues, specific VAT
ing, M§A, restructuring regimes (VAT margin/used goods).
→ Real estate advices to French and Foreign private individuals → She also has a specific knowledge for indirect taxation in the French
→ LBO Tax overseas departments as well as VAT issue of public bodies.
→ Gift tax / inheritance tax / Wealth tax → She also provide with specific VAT internship session at company’s places
→ Tax audit
→ Transfer of tax domicile in and outside France
→ Tax regularisation of foreign undisclosed assets

Valérie Harnois-Mussard
Tax Partner / Head of HNWI / Private Clients - Family Office services

[email protected] + 33 1 47 38 90 01

Specialization
→ Valerie heads the International Tax / HNWI / Private Clients department
of Fidal Paris
→ She collaborates with BFM Business and Les Echos

Fidal
4-6 avenue d’Alsace,
92982 Paris

WTS Global in France, Fidal.

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Martin Creed – Work No. 3435, EVERYTHING IS GOING TO BE ALRIGHT WTS Global Guide on Taxation of Artwork | Germany
2020 | Neon | 44 x 1250 cm / 17 3/8 x 492 1/8 in
© Martin Creed. All Rights Reserved, DACS 2021
Photo: Sim Canetty-Clarke | Courtesy Martin Creed and Hauser & Wirth
© 2021, ProLitteris, Zurich

1. Legal Framework

1.1. A private or public limited company is legally required

How are income and wealth taxed in your country? to keep books and records under the Commercial Code.
The basis for the profit taxation is the profit and loss
The income of individuals who are resident or have statement, to which certain adjustments can be made
their habitual abode in Germany is taxed at ordinary that differ from the treatment under commercial law,
progressive rates. For income resulting from trade, a but are allowed from a tax perspective (e.g. losses car-
municipal trade tax is also imposed. Capital gains from ried forward, participation exemption for dividends).
the disposal of privately held assets is tax exempt, at
least if held for more than one year or if commodity 1.4.
items are concerned. If items are used to generate in- What is the range of the applicable tax rates for legal
come the holding period after which a sale can be tax entities on profit and capital?
free is prolonged to ten years. The gain from the sale of
assets held for a shorter period is subject to income tax Tax rates on profits and capital depend on the legal
at ordinary tax rates. Losses generated within the tax- structure.
able holding period may be offset against gains from
other speculative transactions. Capital gains and losses Corporate income tax is levied at the uniform rate of
generated within a business are generally taxable and 15% and is then subject to a solidarity surcharge of
can be offset against other income. 5.5%. Trade Tax at the rates mentioned under 1.2. is
The taxation of the net income is progressive, but also levied, however, it is not deductible from the cor-
capped at a maximum rate. porate income tax.

A wealth tax is currently not levied in Germany. A partnership is viewed as a transparent entity for Ger-
man income tax purposes and there-fore underlies the
1.2. tax regime which is applicable to the partner (person-
What is the range of the applicable tax rates for indi- al income tax or corporate income tax). In the case of
viduals on income and wealth? commercial partnerships capital gains are always tax-
able irrespective of the holding periods.
The rates for income tax vary from 0% to 45%. Above
a basic allowance, tax rates start at 14% and rise to If the legal entity is a corporation a special exemption
45%. On top of income tax, a solidarity surcharge in the applies to capital gains from the sale of shareholdings.
amount of 5.5% is levied (from 2021 progressively only Capital gains from the sale of all other assets are al-
for about the 10% of the population with the highest ways taxed at the flat tax rate mentioned above.
in-come).
Investment income and capital gains on privately held 1.5.
securities can, if certain requirements are met, be What kind of valuation is generally accepted in respect
taxed at a special tax rate of 25% plus solidarity sur- of certain assets (such as art) by the tax authorities?
charge of 5.5% (also from 2021 onwards).
In general, privately held assets are valued at their fair
Trade Tax is levied by the municipalities and varies be- market value. There is very little legislation in this re-
tween the legal minimum of 7% and 31.5%. In 2018, the spect, thus the valuation entails difficulties and there
average tax rate was 14.07%. In bigger cities it ranges are considerable federal differences.
between 14% and 17%. Up to a certain level, Trade Tax
can be deducted from the income tax. The fair market value is defined as the objective mar-
ket value of an asset and equals the price which could
1.3. be achieved in case of a sale of the asset in the ordinary
How are profit and net equity taxed in your country? course of business according to the nature of the asset.

Germany The profit of a legal entity is taxed at the federal level.

Friendship prices or sentimental values are therefore
irrelevant. The fair market value is usually an esti-

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mated value or a comparable figure, except for assets In any case, it is strongly recommended that each pur- How are works of art valued for tax purposes in your The full tax exemption can apply, if in addition to the
subject to regular trade. For the latter, the fair market chase be appropriately inventoried and that its classi- country? Are there any common and accepted valua- above mentioned criteria, the taxpayer is prepared to
value is usually available. But when we look at highly fication as a work of art worth preserving be obtained tion methods, i.e. at cost, insured value, market price? subject the objects to the applicable provisions of the
individual art works, true valuation is a difficult task. from an accredited art expert by means of expert re- preservation of monuments and the objects have been
All circumstances which might influence the price have ports. Attention should also be paid to proof of prov- Please see above. in the possession of the family for at least 20 years or
to be considered. Unusual or personal circumstances enance and its authenticity should also be confirmed have been entered in a list of nationally valuable cul-
may not be considered, which is almost impossible in by an art expert. Thus, each new purchase with proof 2.1.3. Inheritance | gift taxes tural property pursuant to the Cultural Property Pro-
respect of questions of the condition and the compara- of purchase and proof of provenance must be kept and In case of an inheritance or gift will there be any tax tection Act.
bility of real-time sales. documented by stating the date of acquisition, cost, levied?
insurance expertise. This also applies to the old stock As another unwritten requirement, the tax authorities
The complexity of valuing an art collection continues which the collector wants to amplify with new acqui- In Germany, inheritance and gift tax are levied, but require that the works of art be located in the domestic
when we consider the different value reached by add- sitions. The archiving of each individual work of the art there is a tax-exempt amount depending on the re- or EU / EEA area during the minimum ten-year holding
ing together all works of art with a discount as against collection is recommendable, not only for their evalu- lation to the deceased person or donor and certain/ period.
the value of all individual pieces on their own. ation. partial tax exemptions exist, de-pending on the object
which is donated or passed on. The tax debtor is the An art collection within the meaning of the inheritance/
transferee in the event of an inheritance, in the event gift tax law consists of art objects. This refers to works
of a donation the donee as well as the donor. of fine art such as high-quality paintings, engravings,
sculptures, but not to objects of arts and crafts or re-
2. Taxation of Art Does your country envisage any specific categories of productions. Reproductions are only objects of art if
classification of artworks (e.g. tax-exempt personal their production itself is an act of artistic creation.
belongings/household)?
2.1. Individuals tion of making a profit, market participation) an indi- In order to become an art collection, artistic objects of
Is there an obligation of declaring | disclosing private vidual might be viewed as professional art dealer, and German tax law has three main tax exemptions for the same kind must be brought together out of artis-
artworks to the tax or other authorities (list of inven- thus he/she may be liable to pay income tax and trade personal belongings/household items and for usual tic or scientific interest or as a hobby and be arranged
tories or alike)? tax on the earnings. In this situation he/she can gen- occasional gifts, and there is also a tax exemption for according to a certain collection-defining leitmotif.
erally deduct all income-related expenses and claim collections of art work. However, the selection criteria do not have to be based
In general, there is no such obligation. However, in losses. Losses can also be carried forward if they can- on strict scientific standards. A numerical limit does
case of a gratuitous transfer or a transfer for consider- not be deducted or set off against gains in the same There are tax exemptions for personal belongings/ not exist, which means that even a small number of
ation the art piece has to be declared in a tax return. year. household which apply to gifts and inheritances as individual pieces can be deemed to be a collection, de-
well as foundations. Movable (luxury) art objects can pending on their rarity and their value.
2.1.1. Income taxes In a general case as mentioned above, the social secu- also be household items, as long as they hang in the
Is income generated from the sale of artworks taxed rity system does not apply to individuals engaged in premises of the home environment and are objectively It is recommendable to be able to prove the necessary
in your country? If yes, please indicate how (i.e. capital business. suited to serve the private household and life. requirement of the 20-year ownership. In this regard,
gains tax | income from self-employment). everything should be documented as early as possible
2.1.2. Wealth taxes Moreover, there is a provision regarding partial or even on the basis of evidence, e.g. by original receipts of
The sale of artwork can be taxed / can generate taxa- Does your country know any specific categories of clas- full tax exemption for real estate or parts of property, purchase.
ble income in Germany. As the normal tax rules apply, sification of artworks (e.g. tax-exempt personal be- works of art, art collections, scientific collections, li-
the sale of artwork can lead to income (either trade longings/household)? braries and archives. But these tax exemptions are lim- The willingness to mandate works of art under the
income or so-called miscellaneous income). In gener- ited by a holding period of ten years, during which the applicable provisions of monument protection should
al, the sale of a privately held artwork is exempt from Although a wealth tax exists in Germany, it has not conditions for tax exemption must be met at all time. also be reported in writing to the competent monu-
income tax. Taxation applies only when sold within a been levied since 1997. So far there has been no po- ment authority (authority at the place where the art
holding period of up to one year or up to ten years (if litical majority for the reintroduction of a wealth tax. The partial tax exemption can apply if the preservation collection was located or promptly carried to at the
the artwork has been used to generate income). However, a reintroduction is part of the programs of of these objects is in the public interest because of their time the tax was incurred). The general formulation of
various parties. The next federal parliamentary elec- importance for art, history or science, the annual costs the readiness to comply with the basic requirements
When is an individual considered to be a professional tions will take place in the fall of 2021. usually exceed the income obtained and the objects of monument protection (i.e. appropriate treatment,
art dealer and what are the con-sequences under this are made available or will be made available in the fu- conservational care and possibly scientific research) is
qualification (e.g. social security, deductibility of loss- Is there an obligation to declare works of art in the tax ture for the purposes of research or popular education sufficient. This declaration may also be made by impli-
es and expenses etc.)? return? Please indicate how this is done resp. if there is in a proportionate scale. The annual costs usually ex- cation, for example by concluding a permanent loan
any other obligation of declaration. ceed the income obtained, especially if no revenue is and cooperation agreement with a relevant public or
If the trade with artwork exceeds a certain threshold generated in relation to the mentioned items. private museum or foundation. It is sufficient to take
(main criteria: independent, repeated activity; inten- Please see above. these measures within six months from knowledge of

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the acquisition by the acquirer. How are works of art valued for tax purposes in your
4. VAT | Customs
country? Are there any common and accepted valua-
Another tax exemption can be claimed for usual oc- tion methods, i.e. at cost, insured value, market price?
casional gifts (for instance for birthdays, Christmas or When selling or dealing with works of art within your When works of art cross the border of your country
weddings). Since “occasional gifts” is an undefined le- In general, privately held assets are valued at their fair country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?
gal concept, any relevant circumstances have to be ac- market value, whereby determining the fair market
knowledged in the specific case. Tax courts have made value can face difficulties in practice. For more detailed VAT implications are only to be considered if art is trad- With regard to VAT, a distinction must be made be-
certain restrictions concerning the maximum value of information please see Cf. 1.5. ed as part of a business activity. tween transactions inside Germany, inside the EU and
usual occasional gifts, which has to be considered in re- outside the EU. Each transaction can have VAT implica-
lation to the economic capacity of the donor. Proceeds of sales and services effected in Germany tions. Cross border transactions leaving the EU or en-
which exceed the threshold of 22,000 € per year, are tering the EU can lead to import and export sales tax.
Is there an obligation to declare works of art in the tax subject to VAT under the common system of the EU at a Cross border sales within the EU and to third countries
return? Please indicate how this is done rep. if there is general rate of 19%. are tax-free if certain formal requirements regarding
any other obligation of declaration. documentation and accounting are met.
A tax exemption rule is applicable for revenues mainly
For inheritance or gift tax declarations, in general, of museums and similar institutions. Import and export operations have to be declared at
there is always an obligation to declare and list each Customs. In case of exhibitions taking place abroad
item in order to determine the value of the assets. A VAT rate of 7% can apply to the sale of works of art only temporarily, it is useful to be able to prove that
only if the sale is effected by the originator or his/her the works of art that are carried there and back are
legal successors. The reduced VAT rate does not apply if identical items, so that no import/export sales tax can
the seller is a so-called reseller. However, resellers can be assessed. The formal aspect in form of evidence,
benefit from a specific provision according to which certificates and forms is essential in VAT and Customs
3. Taxation of legal entities (as owner of the artworks) only the margin, i.e. the difference between sales price matters.
and purchase price, will be subject to VAT.

3.1. Corporate income taxes With regard to inheritance/gift tax, tax exemptions or Besides this, special tax law consequences apply to du-
How are profits deriving from the sale of artworks a tax remission may apply to certain business assets, ty-free warehouses. For instance, there is a duty-free
taxed? holdings in agriculture and forestry and shares in cor- warehouse in Meiningen in Thuringia, from which
porations. works of art are sent duty-free for exhibitions and auc-
Profits deriving from the sale of artworks have to be tions all over the world.
taxed as ordinary income of the corporation with cor- From a tax point of view, there are no specific fiscal ad-
porate income tax plus solidarity surcharge and trade vantages to owning artworks through a legal entity.
tax (for details, please cf. 1.2-1.4). Expenses in respect However, there may be non-tax reasons, like for in-
of the sale are in general tax deductible. stance social security or confidentiality considerations,
to hold the artworks through a legal entity. 5. Voluntarily disclosure program
Are there any general advantages of a legal entity as
owner of artworks instead of a private ownership?
What is the procedure in a voluntary disclosure of pre- The voluntary disclosure system is “punishable” in a
The answer depends on the individual legal entity. In viously not proper declared art works and what are the financial way due to the taxes and inter-est the tax-
general, private ownership can lead to the advantage expected consequences? payer should have paid to the tax authorities. In some
that a sale of artwork can be tax-free, whereas a cor- cases, the penalty consists of an additional surcharge.
poration always has to pay tax on undisclosed reserves If an existing declaration / obligation has not been If managed correctly, the voluntary disclosure can be
in the event of a sale. fulfilled, a voluntary disclosure should be considered. free from penal law charges. If the taxable events are
In this case, the taxpayer has to make a full declara- not declared correctly or are detected by the tax au-
There are advantages for non-profit foundations (con- tion and pay full taxes and interest (and in some cas- thorities prior to the disclosure, a voluntary disclosure
cerning corporate income tax, trade tax, inheritance/ es an additional penal surcharge). Depending on the nevertheless results in penal and tax law consequenc-
gift tax). amount, even penal law consequences have to be es. It is therefore highly recommended to discuss the
faced. For further information please cf. below. content of the disclosure and the general conditions
(e.g. the type of tax concerned and the assessment pe-
Does your country have a non-punishable voluntary riods of the evaded taxes which will be affected) with
disclosure programme? a specialist lawyer/tax advisor.

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6. Special provisions re taxation of arts

[Trust | foundation] Dr. Tom Offerhaus

Partner, Lawyer
Concerning trusts and foundations, there are no special
provisions re taxation of arts. The transfer of any asset [email protected] +49 89 286 46 148
including works of art to a German charitable founda-
tion, however, does not trigger any gift or inheritance Specialization
tax charges. Furthermore, the donor might be able to → Private Client Services (legal and tax advice)
claim an income tax deduction when transferring as- → Corporate succession and Private Asset succession
sets to a charitable foundation. → Immigration and removal advice
→ “Asset Protection” solutions
→ Charity law (tax-related support of foundations and associations)
→ Counseling in voluntary disclosure proceedings
→ Tax optimization of real estate and capital investments

WTS Group AG Steuerberatungsgesellschaft

Thomas-Wimmer-Ring 1-3
80539 Munich

WTS Global in Germany, WTS Germany.

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Anna Maria Maiolino – Untitled, from the Conta-Gotas (Dropper) series WTS Global Guide on Taxation of Artwork | Hungary
2016 | Indian ink on paper | 76.6 x 56 cm / 30 1/8 x 22 in
87.8 x 68.8 x 3.5 cm / 34 5/8 x 27 1/8 x 1 3/8 in (framed)
© Anna Maria Maiolino | Photo: Romulo Fialdini | Courtesy Anna Maria Maiolino and Hauser & Wirth

1. Legal Framework

1.1. 15% and in some cases, social security payments can

How are income and wealth taxed in your country? apply (currently, from 1 July 2020, 15,5%).

Income is taxable in Hungary (tax base and deducti- 1.4.

bility of costs vary according to income types). There What is the range of the applicable tax rates for legal
is no specific wealth tax system i.e. there is no annual entities on profit and capital?
wealth tax on the owner-ship of tangibles. However,
stamp duty can apply if certain tangibles are acquired For corporations, the income tax rate is 9%, while there
(e.g. cars, homes, holiday homes, etc.) is a 2% local business tax, where the tax base is the net
sales revenue decreased by some special items (e.g.
1.2. material costs, intermediary or subcontractor servic-
What is the range of the applicable tax rates for indi- es). Capital is not taxed, and the disposal of shares can
viduals on income and wealth? be exempted from Hungarian taxation under certain
circumstances.
There is a 15% flat personal income tax rate. In some
cases, the so-called simplified public contribution pay- 1.5.
ment (“EKHO”) can be chosen (there is an activity list What kind of valuation is generally accepted in respect
and income threshold for this special taxation type). of certain assets (such as art) by the tax authorities?

1.3. Market based valuations performed by third party in-

How are profit and net equity taxed in your country? dependent valuators are generally accepted by the tax
authority.
The profit realized by individuals is taxed at a rate of

2. Taxation of Art

2.1. Individuals costs may be deducted from the revenue). Social secu-
Is there an obligation of declaring | disclosing private rity payments may also be due. Generally, if the yearly
artworks to the tax or other authorities (list of inven- revenue from sale of tangible properties does not ex-
tories or alike)? ceed HUF 600,000 (app. EUR 1,600), no tax is payable
on the income (even if taxes are due, small portion of
There is no such obligation in Hungary except for the taxes does not have to be paid). If the activity is carried
wealth disclosure forms of parliamentary representa- out in a commercial manner on a frequent basis then
tives. the sale by the private individual will be subject to VAT
(HUF 12 million, which is approximately EUR 37,000,
2.1.1. Income taxes can be considered as VAT exempt without the right to
Is income generated from the sale of artworks taxed deduct input VAT). Additionally, a sole proprietorship,
in your country? If yes, please indicate how (i.e. capital or the above mentioned EKHO taxation may apply.
gains tax | income from self-employment).
2.1.2. Wealth taxes
Income is taxed at a rate of 15% (there are no special Does your country envisage any specific categories of
taxation for artworks) and the tax base depends on the classification of artworks (e.g. tax-exempt personal

Hungary facts, if the private person generates income as a sole

proprietor or as an independent private person (some
belongings/household)?

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WTS Global Guide on Taxation of Artwork | Hungary WTS Global Guide on Taxation of Artwork | Hungary

There is no such rule in Hungary. 2.1.3. Inheritance | gift taxes

5. Voluntarily disclosure program
In case of an inheritance or gift will there be any tax
Is there an obligation to declare works of art in the tax levied?
return? Please indicate how this is done resp. if there is What is the procedure in a voluntary disclosure of pre- taxpayer can face a tax penalty up to 50% of the tax
any other obligation of declaration. A stamp duty is levied on inheritances/gifts in Hunga- viously not properly declared art works and what are shortage or, if it is certified that the income was hidden
ry. Transactions between Direct family members (“first the expected consequences? intentionally, the tax penalty can be 200%.
There is no such obligation in Hungary. row”) and siblings can be exempted from stamp duty.
Stamp duty rates vary between 9% (real estate) and If the income related to artworks has not been de- Does your country know a non-punishable voluntary
How are works of art valued for tax purposes in your 18% (other tangibles). clared and taxes are not settled, the taxpayer can disclosure programme?
country? Are there any common and accepted valua- make a self-revision (attracting self-revision interest)
tion methods, i.e. at cost, insured value, market price? before the starting of a potential tax inspection. If the At this moment, there is no such system in Hungary.
tax shortage is revealed during a tax inspection, the
There is no such rule or guideline in Hungary (methods
leading to the market price should be acceptable).

6. Special provisions re taxation of arts

3. Taxation of legal entities (as owner of the artworks)
[Trust | foundation]

3.1. Corporate income taxes Are there any general advantages of a legal entity as There are no special provisions regarding the taxation
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership? of arts in Hungary.
taxed?
If the artwork generates royalty income then there is
The general corporate income tax rate (without any a special system in Hungary making the utilization or
special regulation on taxation of artworks) is 9% (plus realization by using a Hungarian company more bene-
2% local business tax levied on a different basis). ficial than utilizing it as a private individual.

4. VAT | Customs

When selling or dealing with works of art within your When works of art cross the border of your country
country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?

If the artwork is not subject to the special EU VAT rules Please note that this topic needs to be reviewed on a
(CHAPTER 4 Special arrangements for second-hand case-by-case basis, since it is possible that elements of
goods, works of art, collectors’ items and antiques), the artwork may attract special treatment (e.g. it con-
the sale is subject to VAT unless the taxpayer is a small tains gold, etc.)
taxpayer where the annual VAT exempt (without de-
duction) turnover is less than HUF 12 million.

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WTS Global Guide on Taxation of Artwork | Hungary WTS Global Guide on Taxation of Artwork

Tamás Gyányi
Partner

[email protected] +36 1 887 3736

Specialization
→ Experience in tax consultancy and compliance
→ Assisting private clients in various business sectors
→ Managing tax structures fro private persons
→ Due diligences: providing company reviews for private persons
acquiring Hungarian companies or group of companies
→ Providing personal income tax return services to Hungarian
and foreign private persons

WTS Klient Tax Advisory Ltd.

Stefania ut 101-103,
1143 Budapest

WTS Global in Hungary, WTS Klient.

80 81
Paul McCarthy (b. 1945) – Henry Moore Bound to Fail (Bronze) WTS Global Guide on Taxation of Artwork | India
2004 | Bronze | 600 x 410 x 304 cm / 236 1/4 x 161 3/8 x 119 5/8 in
Installation view Hauser & Wirth Somerset, 2016 | © Paul McCarthy
Photo: Ken Adlard | Courtesy Paul McCarthy and Hauser & Wirth

1. Legal Framework

1.1. transferred. There is also a concept of ‘indexed cost of

How are income and wealth taxed in your country? acquisition’ to provide for the enhanced cost of acqui-
sition based on the inflation prevailing in the country.
→ The global income (including capital gains) of any
person ‘resident’ in India is subject to income tax at There is no concept of taxation on net equity in India.
the federal level by the Central Government of In-
dia. In respect of a ‘non-resident’, in-come which is 1.4.
sourced in India or is received in India is subject to What is the range of the applicable tax rates for legal
income tax in India. The State Governments have no entities on profit and capital?
power to levy income tax.
→ Capital gains on the transfer of privately held mov- The profits of a company are taxed at a rate between
able assets are generally tax exempt. How-ever, 15% and 30% (plus applicable surcharge and cess) de-
jewellery, archaeological collections, drawings, pending on various factors such as the nature of the
paintings, sculptures or any work of art, even if per- business activity, turnover, availability of certain in-
sonally held, attract capital gains tax. centives, etc.
→ Prior to 1 April 2015, Wealth Tax at 1% of ‘net wealth’
was levied on certain assets. However, with effect The rates of tax for various other forms of entities differ
from financial year 2015-16, Wealth Tax has been depending on the type of entity and taxable profits.
abolished in India.
→ There is no inheritance tax levied in India. 1.5.
What kind of valuation is generally accepted in respect
1.2. of certain assets (such as art) by the tax authorities?
What is the range of the applicable tax rates for indi-
viduals on income and wealth? Valuation rules in India differ based on various criteria
such as the nature of the asset, whether the person is
The taxation of the total income for individuals is pro- the buyer of the asset or its seller, etc.
gressive but capped at a maximum marginal rate. Net
income up to INR 250,000 is completely exempt from In the case of the transferor / seller of the assets in the
income tax. Thereafter, the rate of income tax is be- nature of archaeological collections, drawings, paint-
tween 5% and 30% (plus applicable surcharge and cess) ings, sculptures or any work of art, there is no specific
depending on the total income. The highest income tax requirement of a valuation to be done for computation
rate for individuals earning total income above INR 50 for capital gains tax purposes. The tax is payable on the
million could be 42.74% (including surcharge and cess). gain made based on the actual price realized by the
seller.
1.3.
How are profit and net equity taxed in your country? In the case of the transferee / buyer of the above-men-
tioned assets, where the fair market value (‘FMV’) ex-
Business profits are taxed on a ‘net income’ basis, i.e. ceeds the amount paid for acquiring such asset, the dif-
after allowance of eligible expenditure incurred for ference between the FMV of the asset and the amount
undertaking the business activity. The basis for the tax- actually paid for acquisition is taxable in the buyer’s
ation of business profits is generally the statement of hands at the regular rate of tax applicable. The FMV in
profit and loss, to which certain adjustments are made such case is the estimated price which the asset would
from a tax perspective (e.g. losses carried forward, dif- fetch if sold in the open market. The valuation can be
ferent rates of depreciation for taxation purpose, etc). made by any registered valuer as prescribed under the
law.
Similarly, capital gains are subject to income tax after

India deducting the cost of acquisition and other incidental

expenses from the sale consideration for the assets
However, where the asset is purchased from a regis-
tered dealer, the invoice value of the as-set is the FMV.

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WTS Global Guide on Taxation of Artwork | India WTS Global Guide on Taxation of Artwork | India

2. Taxation of Art 3. Taxation of legal entities (as owner of the artworks)

2.1. Individuals and any expenditure incurred towards improvement 3.1. Corporate income taxes Are there any general advantages of a legal entity as
Is there an obligation of declaring | disclosing private of the asset. Where the asset is passed on to the sell- How are profits deriving from the sale of artworks owner of artworks instead of a private ownership?
artworks to the tax or other authorities (list of inven- er by way of a gift / inheritance, the cost of the asset taxed?
tories or alike)? to the previous owner is deemed to be the cost of the While an individual is taxed at a progressive rate i.e.
asset and is to be deducted while computing capital Under the Indian domestic income tax law, a work of from 5% to 30%, a corporate entity (being the owner
Where total income of an individual exceeds INR 5 mil- gains. art is taxed only upon its transfer to/receipt from an- of artwork) could be taxed at a rate between 22% and
lion in a financial year, he/she is required to declare the other person. The transferor is liable to pay capital 30% (depending upon the turnover, regime adopted,
details (including cost) of archaeological collections, Where the asset has been held by the seller for more gains tax at 20% for long-term capital gains and at etc). However, the sale of artwork would be taxed at
drawings, paintings, sculptures or any work of art in than three years prior to the date of such transfer, the regular rates applicable for short-term capital gains. these rates only if the entity / individual is engaged
his/her Return of Income filed to the Indian tax author- resultant gain is taxed at 20% as a ‘long-term capital Further, the transferee pays tax only where the consid- entirely / predominantly in the business of trading in
ities. gain’. Gains from as-sets held for three years or less are eration paid is less than the FMV, and in this case the the same (i.e. artwork held as stock-in-trade). In other
termed ‘short-term capital gains’ and are taxed at the deemed income is taxed at a rate between 22% and cases (i.e. artwork held as investment), the gain would
Further, the Return of Income also requires disclosure regular rate of tax applicable to the taxpayer in gen- 30% (depending upon the turnover, regime adopted, be subject to capital gains tax irrespective of the legal
of any capital assets held outside India by a taxpayer eral. etc. by the corporate entity). status of the entity.
resident in India (irrespective of income threshold).
From the perspective of the buyer of the asset, where
2.1.2. Income taxes the FMV exceeds the amount paid for such asset,
Is income generated from the sale of artworks taxed the difference between the FMV of the asset and the
in your country? If yes, please indicate how (i.e. capital amount actually paid for acquisition is taxable in the
4. VAT | Customs
gains tax | income from self-employment). buyer’s hands at the regular rate of tax applicable.

Under the Indian domestic income tax law, a work of When selling or dealing with works of art within your When works of art cross the border of your country
art is taxed only upon its transfer to/receipt from an- 2.1.3. Wealth taxes country what VAT implications have to be considered? what needs to be considered regarding GST | customs?
other person. While the transferor is liable to pay capi- Does your country know any specific categories of clas-
tal gains tax at 20%, the transferee pays tax only where sification of artworks (e.g. tax-exempt personal be- The Goods and Services Tax (‘GST’) law does not pro- The import of goods into India attracts customs duty
the consideration paid is less than the FMV, and in this longings | household)? vide for any specific exemption on the supply of art- based on their HSN classification and re-quires the
case the deemed income is taxed at a progressive rate works within India and hence, such sale could be liable fulfilment of certain import procedures. The general
of tax for individuals. As discussed above, Wealth Tax has been abolished in to GST at rates generally varying from 5% to 28% based rate of customs duty is 30.98%. A museum or art gal-
India effective from1 April 2015. on their HSN classification. Further, a person can sell lery importing artworks by itself for public exhibition
However, where the transferee receives such asset as a the art-works without payment of GST if the aggregate can claim exemption from customs duty, provided that
gift (i.e. without any consideration) from certain spec- turnover of such person does not exceed INR 2,000,000 the prescribed procedures are followed and the im-
ified relatives, under a will or as an inheritance, on the in a financial year. There would also be requirements ported artworks are not sold or traded. Certain specific
occasion of marriage, in contemplation of death of a to comply with e-Way Bill procedures for the move- exemptions from customs duty have also been grant-
payer / donor, etc, the same are not to be considered ment of artworks within India for exhibition purposes. ed on goods imported into India for display or use at
as taxable income in the hands of the recipient of the exhibitions, conferences, etc. subject to fulfilment of
asset and consequently, no tax is required to be dis- In the event that a seller who is located outside India prescribed conditions such as re-export of such goods
charged on the same. and has no fixed place of business or residence in India within a period of six months, etc.
sells artworks after importation into India for exhibi-
While personal effects are not regarded as a capital as- tion purposes, he could be required to obtain a tempo- Hence, if in the event the artworks are sold or not
set, the law specifically includes archaeological collec- rary GST registration in order to discharge his GST liabil- re-exported within the prescribed time limit, then
tions, drawings, paintings, sculptures, or any work of ity, if any, on such sales. Further, the aforesaid turnover the aforesaid exemptions would be regarded as with-
art within the area of capital assets which are subject limit of INR 2,000,000 would not apply in this case. drawn and the customs duty would become payable
to capital gains tax. with interest. The GST element of such customs duty
A person from India selling artworks in an exhibition can be used as credit while making payment of GST at
While computing capital gains tax in the hands of the held outside India can claim such sale to be an export, the time of the sale of artworks to a person in India.
seller, the actual consideration received / accrued is i.e. not liable to GST.
considered as the sale value. From such value, the sell-
er can make a deduction of the actual cost of the asset

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WTS Global Guide on Taxation of Artwork | India WTS Global Guide on Taxation of Artwork | India

5. Voluntarily disclosure program

While filing a Return of Income before the Indian tax Further, the Return of Income also requires a disclosure Ashish Agrawal
authorities, there is an obligation upon every entity of the capital assets held outside India by the taxpayer. Principal, International Tax advisory and Litigation expert
/ individual to declare the value of the archaeologi-
cal collections, drawings, paintings, sculptures or any [email protected] + 91 22 6108 1065
work of art held by it / him.
Specialization
→ More than 17 years experience in cross-border tax advisory
and investment structuring, both, inbound and outbound
→ Highly experienced in assisting High Net-worth Individuals (HNI)
6. Special provisions re taxation of arts in strategizing and managing their taxes
as well as related compliances
→ Represents clients before revenue authorities in tax compliance
Where the sale of a painting is made by a taxpayer to Note: All rates mentioned in this note are headline tax and litigation matters at various levels and appellate forums
the Government or a University or the National Muse- rates (other than VAT and Customs). Depending on the sta-
um, National Art Gallery, National Archives or any such tus of the taxpayer, net taxable income, etc. a surcharge
other public museum or institution as may be notified ranging from 2% to 37% is levied. An additional health
by the Central Government, the same shall not be re- and education cess of 4% is levied over and above the sur-
garded as a transfer of a capital asset and accordingly charge.
not be chargeable to capital gains tax.

There are no special income tax provisions relating to

purchase and sale of artwork in the hands of individ-
uals (other than those specified above and discussed
earlier).

In addition, if the sale of artwork is undertaken through

any agreement / document, it may be necessary to
evaluate the stamp duty implications of the same.

Dhruva Advisors LLP

1101, One World Center, 11th Floor, Tower 2B, 841,
Senapati Bapat Marg, Elphinstone Road (West), Mumbai - 400 013

WTS Global in India, Dhruva Advisors.

86 87
Zhang Enli – Blue Brushwork WTS Global Guide on Taxation of Artwork | Italy
2016 | Oil on canvas | 249.5 x 199.5 x 4.3 cm / 98 1/4 x 78 1/2 x 1 3/4 in
© Zhang Enli | Photo: Birdhead | Courtesy Zhang Enli, Hauser & Wirth and ShanghART Gallery

1. Legal Framework

1.1. items, cannot be taken into account when determining

How are income and wealth taxed in your country? the IRAP taxable base. The labour costs of permanent
employees are now fully deductible for IRAP purposes.
The main income tax levied on individuals is the per-
sonal income tax (IRPEF). Regional and municipal sur- There is no tax on the net equity
charges apply.
1.4.
Personal income tax is levied at progressive tax rates. What is the range of the applicable tax rates for legal
The rates of regional and municipal surcharges depend entities on profit and capital?
on the region and on the municipality of residence.
For companies subject to ordinary taxation, the stand-
There is no general wealth tax. Real property is subject ard rates are 24% for IRES and 3.9% for IRAP. Regions
to a municipal property tax (IMU) and financial assets are allowed to increase or decrease the standard IRAP
are subject to annual stamp duty of 0.2%. rate by up to 0.92%.

Capital gains on privately held and movable assets 1.5.

are generally tax exempt. Assets held out-side Italy What kind of valuation is generally accepted in respect
are subject to the rules of foreign asset disclosure (RW of certain assets (such as art) by the tax authorities?
Form).
In general, profits and capital gains are determined
1.2. on the basis of the difference between the sale price
What is the range of the applicable tax rates for indi- and the purchase price. In some cases, income tax rules
viduals on income and wealth? provide for the alternative reference to market values.
This happens, e.g. in the case of a barter, a contribu-
The national income tax for individuals is in a range of tion into an entity, cross-border related party business
between 23% and 43%. The regional income tax rate transactions or the assignment of assets by a company
ranges from 1.23% to 3.33%. The municipal income tax to its shareholders. Market value is also relevant under
rate ranges from 0% to 0.8%. accounting principles in specific circumstances.

1.3. Furthermore, reference to the market value is to be

How are profit and net equity taxed in your country? found in inheritance and gift taxation and in customs
rules.
Italian entities are subject to a corporate income tax
(IRES) and to a regional business tax (IRAP). The evaluation of artworks poses special difficulties for
different reasons: they are usually unique items, there
The taxable base for IRES is determined according to is no liquid market with regular trade and prices are
the worldwide taxation principle, on the basis of the often undisclosed and influenced by personal prefer-
accounting profits to which certain adjustments are ences and individual intentions of collectors. Of course,
made under tax rules. artworks also do not generate income to which actual-
isation methods can be applied.
There are different methods of computation for the
IRAP taxable base, depending on the nature of the busi- Italian tax administrative practice and case law do not
ness carried out by the taxpayer. Special rules apply provide any specific guidance. In this scenario, in order
to financial institutions. For sales and manufacturing to determine the value of an art piece, reliance can be
companies, IRAP is calculated on the “net added value” placed upon expert opinions, databases, gallery cata-
of production, as defined by the relevant tax rules (but logues and auction results.

Italy basically derived from the statutory accounts). Provi-

sions for liabilities and risks, as well as extraordinary

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2. Taxation of Art levied? The tax base of the inheritance and gift tax, as a rule, is
the market value of the assets and rights at the time of
As a general rule, if the deceased / donor is resident in the transfer of ownership.
2.1. Individuals purpose of the sale and the existence of a space for the Italy, the inheritance and gift tax is due on the assets
Is there an obligation of declaring | disclosing private sale and the marketing of the artworks. held in Italy and abroad, while if the deceased / donor For inheritance of artworks, article 9 of the inheritance
artworks to the tax or other authorities (list of inven- For example, the tax authorities have excluded the is not resident in Italy the tax is due only on the assets and gift tax law provides for a lump-sum criterion (in-
tories or alike)? commercial nature of income that a non-profit associ- held in Italy. cluding artworks held in private houses by resident in-
ation (which, for Italian income tax purposes, is com- dividuals).
For the individuals (private collector) there is no spe- parable to an individual) has obtained from the sale of The applicable rates are the following: The assets are presumed to be included in the heredi-
cific obligation to disclose private artworks to the tax artworks received as donations. In the opinion of the tary assets “for an amount equal to 10% of the total net
authorities. tax authorities, the sale does not constitute a commer- → 4% for transfers made in favour of the spouse or rel- taxable value of the estate line” even if not declared or
However, the Cultural Heritage Code (after the re- cial activity (and, as such, is not taxable), since it is not atives in a straight line (ascending and descending) declared at a lower value.
cent reform of art. 1, sub paragraph 175-176 of law n. possible to find “the element of intermediation in the to be applied on the total net value exceeding, for
124/2017) provides for certain control procedures for exchange of goods but a simple operation of disposal each beneficiary, the threshold of 1 million euros; This incentive scheme does not apply if the artworks
the international circulation of artworks (in particular, of assets”(see Resolution n. 5/2001). → 6% for transfers made in favour of brothers or sisters are stored in places other than the main dwellings (for
artworks realized between 50 and 70 years ago are to be applied on the total net value exceeding, for example, safety vaults); in this case, the ordinary rate
considered of exceptional artistic and historical inter- 2.1.2. Wealth taxes each beneficiary, the threshold of 100,000 euros; is applied to the market value.
est and are subject to special protection acts). Does your country envisage any specific categories of → 6% for the transfers in favour of other relatives up to
An electronic registry has been established (for control classification of artworks (e.g. tax-exempt personal the fourth degree, kindred in the collateral line up If the artworks are subject to restrictions (based on
purposes by the administration) dedicated to the usual belongings/household)? to third degree, to be applied to the total net value, specific provisions of the Cultural Heritage Code) they
dealers of antiques and used goods. without any thresh-old; are exempt from inheritance and donation tax; fur-
As indicated in the answer to question 2.1. there are no → 8% for the transfers to all other parties on the total thermore, transfers to other particular subjects (e.g. to
2.1.1. Income taxes specific reporting obligations. Moreover, in Italy there net value, without application of any threshold. some kind of charity) are not subject to tax.
Is income generated from the sale of artworks taxed is no wealth tax.
in your country? If yes, please indicate how (i.e. capital However, and as mentioned, individuals resident in It-
gains tax | income from self-employment). aly must declare investments in artworks that are held
outside Italy. The section to be filled in in the declara-
In Italy, the income generated by the sale of artworks tion form is the RW and the value to be declared is the
3. Taxation of legal entities (as owner of the artworks)
is taxed in three different ways depending on how the historical cost or the market value.
subject is classified.
Is there an obligation to declare works of art in the tax 3.1. Corporate income taxes ital gain or deductible capital loss, determined as the
In particular: return? Please indicate how this is done resp. if there is How are profits deriving from the sale of artworks difference between the sales price and the non-depre-
any other obligation of declaration. taxed? ciated cost.
1. if the subject is an “art dealer” (professionally and
normally carries out trade in art-works) the income In principle there are no specific reporting obligations. There is no specific provision, so the general rules ap- Are there any general advantages of a legal entity as
generated is considered as “business income” (pur- However, individuals resident in Italy must declare in- ply under which it is necessary to distinguish if the pur- owner of artworks instead of a private ownership?
suant to article 55 of the TUIR, the income tax law) vestments in artworks that are held outside Italy. chase and sale of artworks represent the core business
and is subject to VAT (article 4 of Presidential Decree of a legal entity or not. As mentioned, the sale of artworks carried out by pure
n. 633/72); How are works of art valued for tax purposes in your collectors does not involve any income taxation. A le-
2. if he is an “occasional speculator” the income gen- country? Are there any common and accepted valua- In the first case (core business), artworks are record- gal entity would conversely always be taxable.
erated is considered as “other in-come” (article 67, tion methods, i.e. at cost, insured value, market price? ed as inventories and the difference between the ini-
paragraph 1 of the TUIR) but he is not subject to VAT tial and final inventories is considered part of taxable As a result, the ownership of artworks through legal
(as the activity is not usual); As in Italy there is no general wealth tax, works of art corporate income, as well as the purchase cost and the entities is not advisable for pure collectors from a tax
3. if the subject is a “private collector” he will not be are not taken into account for wealth tax purposes. On sale price. point of view, even if it might be taken into considera-
subject to any taxation. the other hand, individuals resident in Italy must de- tion for other reasons (e.g. privacy or asset protection).
clare investments in art-works that are held outside In the second case (not core business), artworks are re-
In cases 1) and 2), the maximum tax rate (IRPEF) is 43%. Italy and the value to be declared is the historical cost corded as non-current assets. How-ever, under Italian For art dealers, a comparison should be made be-
or the market value. accounting principles, the purchase cost cannot be de- tween the personal income tax rates and the corporate
To understand if and how the income is taxable, it is preciated, due to the particular and unique nature of income tax rates, also taking into account the taxation
therefore necessary to analyse factual elements such 2.1.3. Inheritance | gift taxes the asset and its undefined economic life. At the time of distributed dividends.
as the number of sales, their frequency, the ultimate In case of an inheritance or gift will there be any tax of the sale, the legal entity is attributed a taxable cap-

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4. VAT | Customs 6. Special provisions re taxation of arts

When selling or dealing with works of art within your reduction and exemption from customs duties. A tax allowance, so-called Art Bonus, has been intro- This incentive is aimed at promoting the maintenance,
country what VAT implications have to be considered? duced by Law Decree n. 83/2014, regarding cash dona- protection and restoration of public art assets, and
For VAT purposes for the importation of art piece, an- tions to public art institutions. The Art Bonus is equal does not apply to cash donations made in favour of pri-
Art pieces can be stored in Customs Warehouses (any tiques or collectibles, the rate is reduced to 10% instead to 65% of the donation and applies both to individuals vately owned art works.
premises authorised by the customs authorities) or in of 22%. A tabular list of all art pieces that benefit from and legal entities. Depending on the type of benefi-
Free Ports (duty-free warehouses) for an unlimited pe- VAT reduction is attached to Decree Law n.41 of 1995. ciaries, different maximum limits are provided.
riod of time. During the storage there is a temporary
suspension of VAT and customs duty payments, and it The import of art pieces, collectibles or antiques is ex-
is not subject to other charges related to the import of empt from customs duty, both for exhibitions or fairs
goods or to commercial policy measures (such as im- (temporary admission), and in the case of importation
port licenses). for sale. All items listed in HS Nomenclature Chapter 97
are exempt from customs duty.
Owners pay no import taxes or duties until the pieces
are definitively imported at their final destination. Some art pieces not included in HS Nomenclature
chapter 97 may not benefit from the above and must
When works of art cross the border of your country be assessed on a case-by-case basis. In principle, all
what needs to be considered regarding VAT | customs? the items made entirely by hand, antiques being more
than one hundred years old, pieces in a limited edition
The import of art pieces into Italy can cover a wide not exceeding a set number of copies, benefit from the
number of cases. In general, artworks benefit from tax tax reduction and duties exemptions.

5. Voluntarily disclosure program

What is the procedure in a voluntary disclosure of pre- this case, a correct tax return has to be filed voluntar-
viously not properly declared art works and what are ily by the tax payer and the ordinary penalties can be
the expected consequences? reduced from one ninth to one sixth of the minimum
provided by the law (i.e. 3% for “white listed” coun-
As mentioned in par. 2.1.2, only artworks held outside tries and 6% “black listed” countries).
Italy have to be disclosed in the tax re-turn (through
the filing of the RW form) by individuals who are res- Does your country have a non-punishable voluntary
ident in Italy for tax purposes. disclosure programme?

If artworks held outside Italy are not properly de- There is no specific voluntary disclosure programme in
clared, Italian tax authorities can issue a tax assess- force at the moment (apart from the ordinary one de-
ment notice to the tax payer, applying penalties equal scribed above), although in the past specific voluntary
to a percentage of the value not declared for each tax disclosure laws have been introduced in Italy several
period (from 3% to 15% if artworks are held in a “white times
listed” country, from 6% to 30% if artworks are held in
a “black listed” country).

The tax payer has the possibility to voluntarily rectify

the tax return which was not properly filed, as long as
the tax authorities have not notified to him about the
beginning of a tax audit on such specific tax period. In

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Federico Innocenti Giovanni Rolle

Partner, Chartered accountant and auditor, Tax lawyer Partner

[email protected] +39 02 7636931 [email protected] +39 011 433 83 51

Specialization Specialization
→ Domestic and international reorganization → Corporate reorganizations and business restructuring
→ Family-owned business issues → Tax treaty law
→ Trust → Cross border inheritance and gift taxation,
→ estate planning and lifetime asset transfers, ownership structuring, individual tax incentives
domestic and crossborder issues;
→ transfer of businesses and ownership structure,
domestic and crossborder issues;
→ transfer of residence to / from Italy and connected favourable regimes.

Francesco Nobili
Partner, Chartered Accountant and Auditor, Tax Lawyer

[email protected] +39 02 7636931

Specialization
→ Domestic and international restructuring
and family-owned related issues
→ Member of “Fisco” and “Fisco Internazionale” groups of Confindustria
(National Association of manufacturing and service companies)
→ Member of STEP Italy (Society of Trust and Estate Practitioners)
→ Inheritance and gift tax: crossborder issues;
→ Reorganization of entrepreneurial assets and estate:
domestic and crossborder issues;
→ Favourable tax regimes for individuals
which become tax resident in Italy.

Studio Legale Tributario Biscozzi Nobili Piazza WTS R&A Studio Tributario
Corso Europa n. 2, Corso Re Umberto, 10
20122 Milano 10121 Turin

WTS Global in Italy, Studio Biscozzi Nobili Piazza & WTS R&A. WTS Global in Italy, Studio Biscozzi Nobili Piazza & WTS R&A.

94 95
Phyllida Barlow – untitled: venicerackaxle; 2017 WTS Global Guide on Taxation of Artwork | Luxembourg
2017 | Bonding, cardboard, cement, fabric, hessian scrim, PVA, plywood, sand, spray paint, steel, timber
170.5 x 159 x 130 cm / 67 1/8 x 62 5/8 x 51 1/8 in
© Phyllida Barlow | Photo: Alex Delffane | Courtesy Phyllida Barlow and Hauser & Wirth

1. Legal Framework

1.1. However, when the piece of art can be considered as

How are income and wealth taxed in your country? being held in the scope of a business activity, then the
rules of taxation of the “business income” category
Individual taxpayers are considered a Luxembourg tax will apply. According to the Luxembourg tax law, this
resident when they have their tax domicile or usual should be the case when the activity is lucrative, car-
place of abode in Luxembourg. ried out in a permanent and independent way, and
when it can be viewed as a participation to the general
Luxembourg resident taxpayers are subject to Luxem- economic life. These four criteria need to be cumula-
bourg personal income tax on their worldwide income tively met.
but Luxembourg does not levy any wealth tax on the
wealth directly owned by individuals. 1.2.
What is the range of the applicable tax rates for indi-
Luxembourg personal income is assessed on the in- viduals on income and wealth?
come realised by the taxpayer’s house-hold during a
period corresponding to the civil year. The rate is pro- Luxembourg income tax for individuals is calculated
gressive and applies on the overall net income realized according to a progressive tax schedule that ranges
in each of the eight different categories of income pro- from 0% to 42%.
vided by the tax law, which are the following:
Single individuals are taxed in class 1. Married couples
→ Business income; or partners are taxed in class 2 and therefore benefit
→ Income from agriculture and forestry; from a reduced rate on their collective income (which
→ Income from a liberal profession; corresponds to the rate of the class 1 applicable to half
→ Employment income; of their income).
→ Income from pensions and annuity income;
→ Income from movable capital; Although not exhaustive, the below table is intended
→ Rental income and royalties; and to give the reader an idea of the schedule’s progressiv-
→ Miscellaneous income. ity (class 1):

The rules of taxation applicable to certain categories €11,266 (as from) 8% €45,897 39%
of income (notably employment income and income €15,009 10% €100,002 40%
from movable capital) provide for a taxation by way of €26,457 20% €150,000 41%
withholding tax. Although considered as final in cer- €36,177 30% €200,004+ 42%
tain cases, these are usually treated as advances on the
tax finally assessed. A surcharge for the employment fund of 7% or 9% (9%
for income exceeding EUR 150.000 in class 1 or EUR
Individuals who are not tax residents in Luxembourg 300.000 for taxpayers in class 2) is also levied.
are only subject to Luxembourg personal income tax
on their Luxembourg source income. The maximum overall rate amounts to 45.78% (class 1).

Luxembourg does not provide for specific regimes re- 1.3.

lating to the taxation of art, hence the rules of taxation How are profit and net equity taxed in your country?
apply depending on the type of the activity carried.
For Luxembourg corporate income tax purposes, a cor-
When a piece of art is “passively” held by an individual, porate entity is deemed a Luxembourg tax resident
the taxation will usually occur under the “miscellane- when it has its statutory seat or its central administra-
ous income” category which includes capital gains or tion in Luxembourg.

Luxembourg under the “rental income” category provided that such

rental activity remains non-professional.

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Luxembourg resident corporate entities are subject Tax losses carried forward as from 1st January 2017 can less following its acquisition by a Luxembourg resident How are works of art valued for tax purposes in your
to the Luxembourg corporate income tax (“CIT”) and be carried forward during a limited period of 17 years. individual, the realised capital gain is taxable at the country? Are there any common and accepted valua-
municipal business tax (“MBT”) on their worldwide net normal tax rate (i.e. up to 45.78%). tion methods, i.e. at cost, insured value, market price?
profits, as reflected in their profit and loss statement, 1.4.
from which certain tax adjustments are made. What is the range of the applicable tax rates for legal Capital gains, realised upon the disposal of a piece of There is no wealth tax in Luxembourg for individuals
entities on profit and capital? art more than six months after its acquisition, are not and this section is therefore not applicable.
Profits realized through a foreign permanent estab- taxable.
lishment (“PE”) are in principle exempt (in presence of Tax rates on profit and capital depend on the legal 2.1.3. Inheritance | gift taxes
a double tax treaty) from Luxembourg CIT and MBT and structure of the entity. However, capital gains realised upon the sale of a In case of an inheritance or gift will there be any tax
losses realized through such PE are taken into account piece of art, realised in the scope of a business activi- levied?
for the determination of the Luxembourg CIT / MBT Profit from resident corporate entities are subject to ty, should be considered as part of the business income
rates. Luxembourg CIT at the rate of 17% (15% when yearly and therefore taxed at the normal tax rate (i.e. up to In case of a gift, registered by a Luxembourg notary,
profits do not exceed 175.000 EUR). Additionally Lux- 45.78%). the tax varies from 1.8% to 14.4% (1.8% to family mem-
Corporate entities are also subject to the net wealth embourg MBT is levied at a rate ranging from 6.75% to bers in direct line / 4.8% between spouses).
tax (NWT) on their unitary value as at the 1st January of 10.5% depending on the city where the company is es- 2.1.2. Wealth taxes
the year. The unitary value corresponds roughly to the tablished. Does your country envisage any specific categories of Gifts not registered by a Luxembourg notary (“dons
net asset value with certain adjustments such as the NWT is levied at the rate of 0,5%. Corporate taxpayers classification of artworks (e.g. tax-exempt personal manuels” or gifts realised in front of a notary abroad)
exemption of certain assets (mainly wealth attributa- are subject to an annual minimum NWT ranging from belongings/household)? are not subject to gift tax in Luxembourg.
ble to a foreign PE as well as qualifying participations). 535 EUR to 32.100 EUR depending on the total of their
Non-resident entities are only subject to tax on their balance sheet. There is no wealth tax in Luxembourg for individuals Inheritance tax rates range from 0% to 15% (lega-
Luxembourg source income and wealth (Real estate or and this section is therefore not applicable. cies received by family members in direct line or by a
assets attributed to a Luxembourg PE) located in Lux- Taxpayers liable to CIT can however usually reduce spouse or partner are in principle not subject to inher-
embourg. their NWT up to the amount of their CIT liability by the Is there an obligation to declare works of art in the tax itance tax).
creation of a special unavailable reserve to be main- return? Please indicate how this is done resp. if there is
Luxembourg implemented ATAD rules such as interest tained in their balance sheet during five years. any other obligation of declaration. Legacies exceeding a net value of 10,000 EUR are how-
limitation, general anti-abuse rule, hybrid mismatch, ever subject to a surcharge leading to an overall rate
or controlled foreign entities, the tax impacts of which 1.5. There is no wealth tax in Luxembourg for individuals of up to 48% (for legacies with a net value exceeding
also needs to be carefully monitored. What kind of valuation is generally accepted in respect and this section is therefore not applicable. 1,750,000 EUR).
of certain assets (such as art) by the tax authorities?
Luxembourg partnerships are usually considered as
tax transparent entities and are not subject to CIT. They As a general rule, assets, including pieces of art, have
are also only subject to MBT when carrying a business to be valued at their fair market value, corresponding
activity, or deemed to be carrying a business activity, to the price a third-party would agree to pay to acquire 3. Taxation of legal entities (as owner of the artworks)
i.e. when a general partner that is a joint-stock compa- such assets.
ny holds more than 5% of the shares in the partnership.
3.1. Corporate income taxes → the transferred assets qualify as a non-depreciable
How are profits deriving from the sale of artworks fixed asset;
taxed? → the transferred assets have been held for more
than 5 years;
2. Taxation of Art Profits realised on the sale of artworks by a Luxem- → the sale price is fully reinvested into other fixed as-
bourg corporate entity are included in its profits and sets acquired by the taxpayer (in case of partial re-
subject to CIT and MBT at the overall rate of 24.94% for investment of the sale price, the roll-over relief is to
2.1. Individuals Is income generated from the sale of artworks taxed the city of Luxembourg. be reduced proportionately);
Is there an obligation of declaring | disclosing private in your country? If yes, please indicate how (i.e. capital → the reinvestment must be performed before the
artworks to the tax or other authorities (list of inven- gains tax | income from self-employment). Dividends distributed by a Luxembourg corporate enti- end of the second year following the transfer of the
tories or alike)? ty are usually subject to a 15% withholding tax. artworks.
Non-professional income generated by the sale of art-
No, there is no such obligation under Luxembourg tax works is usually subject to the rules of taxation provid- Capital gains upon the transfer of artworks, realized by Are there any general advantages of a legal entity as
law. ed for the “miscellaneous income” category. corporate entities (or individuals in the scope of their owner of artworks instead of a private ownership?
business activities) may qualify for a roll-over relief
2.1.1. Income taxes In case of disposal of a piece of art within 6 months or under certain conditions, being mainly that: Luxembourg corporate (non-tax transparent) entities

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do not provide sound advantages for the ownership of deemed to own the assets of the partnership directly Transported from a non-EU country (“Importation”): ductible at the time the goods are supplied under the
artworks. They are subject to Luxembourg net wealth for tax purposes up to their level of interest), such ve- Any VAT due on importation will have to be remitted normal VAT regime.
tax, which may be more of a disadvantage compared hicle may be worth considering. by the importer. It the importer is registered in Luxem-
to direct ownership. bourg, no VAT will be in principle be paid to the Cus- It is possible to benefit from a suspension of VAT and
Certain Luxembourg investment funds such as the toms Authorities, as the VAT due will be declared and customs duties on pieces of art if they are introduced
Luxembourg partnerships, which are usually tax trans- Luxembourg Specialized Investment Fund (“SIF”) also in principle deducted (based on the recovery right) in into the Luxembourg Freeport. Inaugurated in Sep-
parent entities, may be more relevant for that purpose. present some advantages. The SIF is only subject to an the VAT return. If the importer is not VAT registered in tember 2014, the Freeport in Luxembourg is mostly
Indeed, in addition to the fact that they are in principle annual subscription tax of 0.01% of its net asset val- Luxembourg, VAT will be collected by the Customs Au- used for storage, trade of pieces of art, precious met-
more flexible from a le-gal point of view, they are also ue. It is however (lightly) regulated and subject to the thorities. als, wine, jewellery and other valuable goods.
usually not subject to Luxembourg CIT and NWT. principle of risk-spreading. Investment in a SIF is re-
served for well-informed investors (i.e. professionals The applicable VAT rate on importation of pieces of art VAT and customs duties are suspended on storage and
Depending on the situation of the partners (which are and individuals investing at least 125k EUR). is 8%. other additional linked services as long as goods re-
main at the Luxembourg Freeport. The Luxembourg
The taxable payer may opt for the margin scheme Freeport is under the supervision of the Luxembourg
when importing the pieces of art into Luxembourg. Customs Authorities, which inspect the goods that en-
The taxable payer must file a formal option with the ter or exit the Freeport. No regularisation is required
4. VAT | Customs VAT authorities which will be valid for 2 years. Should if the goods are exported to a non-EU destination. For
this be the case, import VAT is not deductible upon im- other cases, an assessment of the conditions of the exit
portation of the pieces of art. Should the seller opt for should be made to determine whether VAT needs to be
When selling or dealing with works of art within your artist or are imported. the normal VAT regime, import VAT paid becomes de- regularised.
country what VAT implications have to be considered?
Whatever the case, it remains possible to opt for the
The purchase of works of art with the intention to re- normal VAT regime in respect of each sale of an individ-
sell it at an appropriate moment in the future is an eco- ual piece of art. No specific format is required.
nomic activity within the scope of VAT. As regards to
5. Voluntarily disclosure program
VAT, this activity confers on the company/independent When works of art cross the border of your country
individual the status of taxable person. Thus, the fol- what needs to be considered regarding VAT | customs?
lowing duties / obligations have to be fulfilled: What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
When pieces of art are transported to Luxembourg be- viously not proper declared art works and what are the disclosure programme?
→ To register for VAT in Luxembourg fore their sale, the VAT treatment of the acquisition is expected consequences?
→ To file VAT returns and account for VAT in Luxem- as follows: Luxembourg does not have a non-punishable volun-
bourg on the sales of art pieces that take place in Although such a programme applied during a tempo- tary disclosure programme and any voluntary disclo-
Luxembourg Transported from another EU country (“Intra-Commu- rary period lasting from 1 January 2016 to 31 Decem- sure may trigger the application of the penalties, in-
nity acquisition”): ber 2017, Luxembourg does not currently provide any cluding possible criminal penal-ties, provided for by
To register for VAT, the taxable person has to submit possibility to proceed with a voluntary disclosure. the law for fiscal offenses.
an initial declaration with the Luxembourg VAT au- Intra-Community acquisitions of pieces of art are not
thorities (Administration de l’enregistrement, des do- subject to VAT when the goods are subject to VAT in the
maines, et de la TVA) within fifteen days following the country of departure under the margin scheme.
beginning of its VAT taxable activity.
If the pieces of art were not subject to VAT in the coun-
6. Special provisions re taxation of arts
The taxable person supplying pieces of art in Luxem- try of departure (under the margin scheme), they will
bourg as a taxable dealer will be subject to the mar- be subject to VAT in Luxembourg (normal regime). The
gin scheme regime in which VAT is charged only on the VAT will be due by the person making the Intra-Com- [Trust | foundation]
profit margin and in which the company will not be en- munity acquisition of works of arts in Luxembourg. A
titled to recover input VAT paid on related costs. reduced VAT rate of 8% applies if the piece of art is sup- Luxembourg law does not provide specific provisions
plied by the artist or his successors. in this respect.
This profit margin scheme regime is automatically ap-
plicable for the pieces of art purchased from non-tax- It is possible to benefit from a suspension of VAT on
able persons without VAT or purchased from another pieces of art if they are introduced into the Luxem-
retailer under the margin scheme. It is applicable with bourg Freeport (see hereafter)
an option if the pieces of art are purchased from the

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Ngoc-My Nguyen
Senior Associate

[email protected] +352 27 47 51 24

Specialization
→ Indirect Tax

Maxime Grosjean
Senior Associate

[email protected] +352 27 47 51 18

Specialization
→ Corporate & individual tax
→ International tax law
→ Structuring of shareholder’s interests
→ Migration of high net worth individuals from or into Luxembourg

Tiberghien Luxembourg
23 Boulevard Joseph II
L-1840 Luxembourg

WTS Global in Luxembourg, Tiberghien Luxembourg.

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Phyllida Barlow – untitled: GIG WTS Global Guide on Taxation of Artwork | Netherlands
2014 | Fabric, paper, cord
110 x 110 x 110 cm / 43 1/4 x 43 1/4 x 43 1/4 in
© Phyllida Barlow | Photo: Alex Delfanne, All Rights Reserved
Courtesy Phyllida Barlow and Hauser & Wirth

1. Legal Framework

1.1. shareholding.
How are income and wealth taxed in your country?
Box 3, income from savings and investments, replaces
Individuals, who are (tax) residents of the Netherlands, ordinary taxation of types of income from capital, oth-
are in general subject to personal in-come tax (“PIT”) er than the deemed income from one’s primary resi-
on their worldwide income. Under certain specific con- dence and dividends and capital gains from substantial
ditions, however, resident individuals can, under the shareholdings. Taxation of Box 3 is based on a weight-
so-called 30%-ruling, opt for a maximum period of 5 ed notional yield on net assets, taxed at a flat rate.
years to be taxed as
In 2020 the first EUR 72,797 of net assets is deemed to
non-residents for certain categories of income. yield 1.789 %. The net assets in excess of EUR 72,797 but
Non-residents are only subject to PIT on their Dutch below EUR 1,005,572 are deemed to yield 4.185 % and
source income. the net as-sets in excess of EUR 1,005,572 are deemed
to yield 5.28 %. However there is an income threshold
Whether an individual is a tax resident of the Nether- of EUR 30,846.
lands, has to be assessed based on all relevant facts
and circumstances. Under the case law of the Dutch 1.2.
Supreme Court there is not one decisive factor. One What is the range of the applicable tax rates for indi-
can however state that the following circumstances viduals on income and wealth?
are considered particularly relevant: the availability
of a permanent home, the place where the spouse and Box 1 income is taxed at progressive rates, in general
(minor) children live and the place with which the per- starting from 37.10% for income up to EUR 68,507 and
sonal and economic relations are the closest. 49.50% for income in excess of EUR 68,507.

The Dutch PIT system is a scheduler system, that dis- Box 2 income is taxed at a flat rate of 26.25%, which
tinguishes three categories of income, divided in so- will increase to 26.90% as per 2021.
called boxes, that are each taxed differently. In gen-
eral, the positive or negative income from one box Box 3 income is taxed at a flat rate of 30%, which will
cannot be offset against the income, taxed according increase to 31% as per 2021.
to the rules of an-other box.
1.3.
Box 1, income from employment and dwellings, in- How are profit and net equity taxed in your country?
cludes the income from: (a) present and past employ-
ment, (b) business activities as a self-employed entre- As noted above, the income and wealth of a resident
preneur, (c) periodical payments and pensions and (d) individual is subject to PIT. Legal entities, such as com-
one’s primary residence. panies, are in principle subject to Corporate Income
Tax (“CIT”). In general, the commercial profit and loss
Box 2, income from substantial shareholdings, includes statement is the basis for the calculation of the taxable
dividends and capital gains derived from substantial result on which CIT is due.
shareholdings in resident and non-resident compa-
nies. An individual has a substantial shareholding in a 1.4.
company, if he owns 5% or more of the paid-up capital What is the range of the applicable tax rates for legal
of a company. In certain other situations, such as in the entities on profit and capital?
case where an individual holds call options, which en-
title him to acquire 5% or more of the shares of a com- Ordinary companies are taxed at a rate of 16.5% on
pany, there may also be a substantial shareholding. profits up to EUR 200,000 and 25% for profits above this

Netherlands We would always recommend contacting a Dutch tax

advisor to ascertain whether one holds a substantial
amount. The first rate will decrease from 16.5% to 15%
in 2021.

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1.5. mentioned above under paragraph 1.1., will be calcu- tion methods, i.e. at cost, insured value, market price? idency is limited to one year and only applies for gift
What kind of valuation is generally accepted in respect lated on this FMV. tax purposes.
of certain assets (such as art) by the tax authorities? As indicated in paragraph 1.5, artworks should be val-
Companies subject to CIT are allowed to value their ued at their FMV. According to established case law, the The tax rate for receipts in any given calendar year from
For Box 3 purposes (and thus for PIT), assets should assets at (a) the historical acquisition price or (b) the FMV is defined as the price that can be obtained when “fiscal partners” or parents is 10% up to EUR 126,723
generally be valued at their fair market value (“FMV”) lower market value (which may result in a deductible the product or service is being offered in the most suit- (2020)and 20% for amounts in excess of this. For re-
on 1 January of any given year. The notional yield, write-off). able way with the best preparation. ceipts from others than your fiscal partner or parents
the tax rates are 30% (up to EUR 126,723) and 40%.
2.1.3. Inheritance | gift taxes
In case of an inheritance or gift will there be any tax Public Benefit Organisations (i.e. organisations that
levied? have obtained the so-called ‘ANBI’ qualification, which
2. Taxation of Art stands for ‘Algemeen Nut Beogende Instelling’) are ex-
Dutch gift tax or inheritance tax is levied on the (world- empt from inheritance or gift tax on inheritances and
wide) value received from a person who was resident gifts that the institution uses in the public interest.
2.1. Individuals artworks in a way that this should be regarded as a or deemed to be resident in the Netherlands at the
Is there an obligation of declaring | disclosing private trade or business, the income and capital gains could time of the donation or at the time of his or her pass- The receipt of artworks is not exempt from gift or in-
artworks to the tax or other authorities (list of inven- be subject to PIT in box 1. ing. The place of residence or nationality of the person heritance tax. Please note however, that there are,
tories or alike)? receiving the value is irrelevant. just as in some other countries in Europe, possibilities
2.1.2. Wealth taxes to pay to the government (part of) the inheritance tax
In general, artwork is exempt from the taxable base Does your country know any specific categories of clas- As we have indicated in paragraph 1.1, the place of res- that is due with (the received) artworks. This facility,
of savings and investment (Box 3 of PIT) and therefore sification of artworks (e.g. tax-exempt personal be- idence of an individual is determined based on all rel- which is beneficial because the inheritance tax due is
does not have to be included in the PIT return, unless longings/household)? evant facts and circumstances. Individuals with Dutch credited with an additional 20% on top of the FMV of
the artwork is primarily being held as a form of in- nationality are deemed to be residents of the Neth- the artworks used to pay the assessment, is referred
vestment. In determining whether or not the artwork We refer to the previous paragraphs. Privately owned erlands for inheritance and gift tax purposes only for to as the “remission arrangement”. The arrangement is
is primarily being held as an investment, all relevant artworks are in principle exempt from PIT, provided a period of 10 years after emigration. For individuals available for artworks with a national cultural histori-
facts and circumstances should be taken into account. they are not held as an investment and are not made without Dutch nationality, this period of deemed res- cal or art historical interest.
available to a company in which a substantial share-
2.1.1. Income taxes holding is held.
Is income generated from the sale of artworks taxed
in your country? If yes, please indicate how (i.e. capital If the artworks are made available to a third party for
gains tax | income from self-employment). cultural and scientific purposes, the ex-emption may
3. Taxation of legal entities (as owner of the artworks)
still apply. If a fee is being charged for the lease of the
As we have indicated under paragraph 2.1, artworks artworks, we would recommend contacting a tax ad-
are subject to PIT (according to the rules for Box 3, see visor. 3.1. Corporate income taxes ductible for CIT purposes.
paragraph 1.1. above) if these are being held as a form How are profits deriving from the sale of artworks
of investment. Any capital gains arising from the dis- Furthermore, please note for the sake of completeness taxed? Are there any general advantages of a legal entity as
posal of artworks are considered to be included in the that the exemption for artworks only applies when owner of artworks instead of a private ownership?
weighted notional yield and are thus not separately the individual has full (and legal) ownership of the art- Some entities such as foundations are only subject to
taxed. works. The beneficial ownership of artworks, for ex- CIT when the entity conducts business activities, there- As there is no exemption applicable to artworks being
ample via a Dutch foundation, is not tax-exempt. In the fore it is essential to first determine if the entity which held by a corporate entity, it is more beneficial to hold
Please note for completeness however that the actual Netherlands foundations are regularly used (for exam- is the owner of the art-works is subject to CIT. If not, the artworks privately, especially when the artwork is
income (including capital gains) realized on (the dis- ple) to ensure that artworks stay within the family. one can in general state that the entity is tax transpar- not being held as an investment.
posal of) artworks may under some very specific con- ent for CIT purposes. The assets and liabilities of such
ditions be subject to PIT under the rules for Box 1. This Is there an obligation to declare works of art in the tax an entity (as for example the foundation that does not
is for example the case if the artworks are made avail- return? Please indicate how this is done resp. if there is conduct business activities) are subsequently attribut-
able (in Dutch: ‘ter beschikking gesteld’) to a company any other obligation of declaration. ed to the ultimate beneficial owners.
in which the taxpayer holds a substantial sharehold-
ing. Artworks are deemed to have been made availa- We refer to paragraph 2.1. Entities with capital that is divided into shares are ful-
ble if they hang in the company’s office. ly liable to CIT. The profits that these entities derive
How are works of art valued for tax purposes in your from the sale of artworks is taxed with CIT. Expenses
Furthermore, should a taxpayer regularly buy and sell country? Are there any common and accepted valua- incurred in relation to the sale of the artworks are de-

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4. VAT | Customs Works of art which are in principle classified in Chapter 1 of Regulation (EC) no. 116/2009.
97 of the EU Combined Nomenclature are subject to the
applicable conditions. This chapter applies to the fol- Certain formalities must be performed on importa-
When selling or dealing with works of art within your The starting point is that such a supply is subject to the lowing items: tion. An import declaration must be filed; this must
country what VAT implications have to be considered? special provision of Article 311 et seq of the EU VAT Di- be done in name of a person established in the EU. It
rective (Articles 28B-28D of the Dutch VAT Act). In that → Paintings, drawings and pastels, executed entirely is possible to engage a logistical service provider, such
The supply of works of art is subject to the Dutch 9% case the VAT is levied in the EU Member State of the by hand, other than drawings of heading 49.06 and as a customs broker, to take care of these formalities.
reduced VAT rate, provided that these works of art are supplier and levied only on the margin of the supplier. other than hand-painted or hand-decorated man- On importation, in principle VAT on importation is due,
supplied by the maker or artist (or a person who must This transaction does not fall under the scope of an in- ufactured articles; collages and similar decorative which in the Netherlands is levied at a rate of 9% (Ar-
be considered to have taken his place, for instance in tra community transaction (ICT). plaques; ticle 20, section 2, sub a, jo. Annex I, sub a.29, of the
case of an inheritance) or a supplier who is entitled to → Original engravings, prints and lithographs; Dutch VAT Act).
a full deduction of input VAT and who does not apply It is however possible for the supplier to opt in. In that → Original sculptures and statuary, in any material;
the special provision of Article 311 et seq of the EU VAT case the transaction is on the basis of Article 28 of the → Postage or revenue stamps, stamp-postmarks, Supplies of works of art out of the EU are subject to the
Directive (Articles 28B-28D of the Dutch VAT Act). Dutch VAT Act treated as an ICT (provided that the re- first-day covers, postal stationery (stamped paper), 0% VAT rate of (Article 9, section 2, sub b, jo. Annex II,
quirements for such an ICT are met). Such an ICT con- and the like, used or unused; sub a.2, of the Dutch VAT Act). There are also formali-
Note that if the art is sold through the intermediation sists of an intra community supply (ICS) in the EU Mem- → Collections and collectors’ pieces of zoological, ties to be carried out on the exportation of works of art
of a gallery, the gallery in principle has to apply the ber State of the supplier, which is subject to a 0% VAT botanical, mineralogical, anatomical, historical, also. In addition to the export license referred to above
general VAT rate of 21% on its intermediation fee. rate, followed by an intra community acquisition (ICA) archaeological, palaeontological, ethnographic or which may have to be obtained, an export declaration
in the EU Member State of the consignee. The consign- numismatic interest; and must be filed, which can be done by using a logistical
In case the reduced VAT rate cannot be applied, subject ee self-assesses VAT. In the Nether-lands such an ICA → Antiques of an age exceeding 100 years. service provider, such as a customs broker.
to prior authorization from the competent tax inspec- would be subject to the Dutch 9% VAT rate (Article 9,
tor it is possible to apply the special provision of Article section 2, sub a of the Dutch VAT Act), provided that the All products which are classified under one of the sub-
311 et seq of the EU VAT Directive (Articles 28B-28D of requirements for the application of this reduced VAT headings of this chapter are subject to a 0% import duty
the Dutch VAT Act). In that case the VAT is only charged rate are met. Otherwise the general VAT rate of 21% rate. In the EU no export duties are levied on the ex-
on the profit margin of the supplier. This provision also applies (Article 9, section 1, of the Dutch VAT Act). portation of works of out of the EU.
applies in case of sales through commissionaires or
auctions. On the basis of Article 4c of the Ministerial In case a supplier travels from his EU Member State Importation and exportation of works of art which are
Decree this profit margin is to be determined on the to the Netherlands, the bringing of the goods is only considered “cultural objects” may be subject to a li-
basis of the difference of the total amounts paid and a (deemed) ICT if the works of art are sold here. If the cense on the basis of Regulation (EC) no. 116/2009 and
received in the period to which the VAT return refers goods are returned to the EU Member State of the sup- its implementing regulation. Such an export license
(“globalisation”). Any VAT paid by the supplier as input plier, then no (deemed) ICT will have to be declared. can be applied for in the Netherlands through the ‘Cen-
VAT cannot be deducted (Article 28e of the Dutch VAT trale Dienst In- en Uitvoer’ (CDIU) of Dutch Customs .
Act). If and when the works of arts are sold by the supplier in This regulation not only applies to works of art in the
the Netherlands, then the bringing of the works of art sense of Chapter 97 of the EU Combined Nomenclature,
This provision could also apply on sales through com- is considered a deemed supply in the sense of Article 3a but also to the other ‘cultural goods’ included in Annex
missionaires or auctions. of the Dutch VAT Act, subject to the special provision of
Article 311 et seq of the EU VAT Directive. The margin of
On the basis of Article 28f of the Dutch VAT Act, the sup- that transaction can be set at an amount of 0. The sub-
plier can opt to apply the normal provision and calcu- sequent supply to the purchaser also falls within the
late the VAT chargeable on the basis of the remuner- scope of this special provision. It should be noted that 5. Voluntarily disclosure program
ation received for the works of art supplied (Article 8 with regard to that supply, the general reverse charge
of the Dutch VAT Act). In that case the supplier can (ret- provision of Article 12, section 3 of the Dutch VAT Act
roactively) de-duct any input paid for the works of art does not apply. Instead, the supplier must charge What is the procedure in a voluntary disclosure of pre- originally due. However, the fine can rise to as much as
which are supplied by him. Dutch VAT in accordance with the provisions of Articles viously not properly declared art works and what are 300% if it concerns Box 3 assets that should have been
28B-28D of the Dutch VAT Act (see also the Ministerial the expected consequences? included in the PIT return, such as art that is being held
When works of art cross the border of your country decree of 17 July 2014, no. BLKB 2014/546M). as an investment.
what needs to be considered regarding VAT | customs? When a tax return is not submitted on time or is delib-
Transactions with third countries erately submitted incorrectly or incompletely, a fine Does your country have a non-punishable voluntary
Transactions within the EU For the importation and exportation of works of art can be imposed by the tax authorities. In case of gross disclosure programme?
In case works of art are supplied to consignees in other into and out of the EU the following customs aspects negligence or an intentional act, the tax authorities
EU Member States then the following applies. are of importance. can impose a fine of maximum 100% of the tax that was If the taxpayer submits a complete and correct tax re-

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WTS Global Guide on Taxation of Artwork | Netherlands WTS Global Guide on Taxation of Artwork | Netherlands

turn within two years after he submitted an incorrect income from savings and investments that originates
or incomplete tax return (or should have submitted from a foreign country). In case of voluntary dis-clo-
the tax return) and before he knows or should rea- sure after this two-year period, a reduced fine may be
sonably suspect that the tax inspector was or will be- imposed, as voluntary improvement provides a reason Sebastiaan Janssen
come aware of the incompleteness or inaccuracy of for mitigation of the maximum amount of the fine. Counsel
the return, no fine will be imposed (unless it concerns
[email protected] +31 20 237 62 96

Specialization
→ (international) High-net worth individuals
6. Special provisions re taxation of arts → (international) Wealth structuring
→ Family businesses
→ Charity
[Trust | foundation] → Inheritance and gift tax / estate tax planning
→ Tax audit, tax litigation
We refer to paragraph 2.1.2 As mentioned in paragraph
2.1, artwork does not have to be included in the PIT re-
turn, unless the artwork is primarily held as a form of
investment or made available to a company in which
the taxpayers holds a substantial shareholding.

Atlas Tax Lawyers

Weteringschans 24,
1017 SG, Amsterdam

WTS Global in the Netherlands, Atlas.

110 111
Mary Heilmann – Geometric Break WTS Global Guide on Taxation of Artwork | Norway
2020 | Acrylic on canvas
30.5 x 29.8 x 4.2 cm / 12 x 11 3/4 x 1 5/8 in
© Mary Heilmann | Photo: Thomas Barratt
Courtesy Mary Heilmann, 303 Gallery, and Hauser & Wirth

1. Legal Framework

1.1. the level of the entity but is a part of the owner’s net
How are income and wealth taxed in your country? wealth.

Individuals who are resident in Norway for tax pur- 1.4.

poses will be liable to pay tax to Norway on all assets What is the range of the applicable tax rates for legal
and income, whether located or earned in Norway or entities on profit and capital?
abroad. Tax agreements with other countries may limit
taxes to Norway. Profit is taxed at a rate of 22 %. Capital gain is not taxed
under the participation exemption method, howev-
The taxation of the net income is progressive, but er, if ownership is less than 10%/2 years or in low-tax
capped at a maximum rate. Net wealth is taxed at a flat counties (<14.67% tax) the 22% tax applies.
rate of 0.85 % of all net assets above NOK 1,500,000.
1.5.
1.2. What kind of valuation is generally accepted in respect
What is the range of the applicable tax rates for indi- of certain assets (such as art) by the tax authorities?
viduals on income and wealth?
In general, privately held assets are valued at their in-
Net income is taxed at progressive rates, the maximum surance value, if the assets are not insured the replace-
rate is 46.4 %. Net wealth is taxed at a flat rate of 0.85 % ment value is used. Normally the insurance or replace-
of all net assets above NOK 1,500,000. ment value is equal to the marked value.

1.3. The total value is only included as net wealth if assets

How are profit and net equity taxed in your country? of more than NOK 1,000,000 are owned. Assets be-
tween NOK 1,000,000 and NOK 1,400,000 are valued at
The profit of a legal entity was taxed at a rate of 22 % 20 % of their insurance value and all assets above NOK
in 2019. The net equity of a legal entity is not taxed at 1,400,000 are valued at 40 % of their insurance value.

2. Taxation of Art

2.1. Individuals Gains from the sale of artworks are not taxed if the art
Is there an obligation of declaring | disclosing private is considered to be part of a person’s private assets. If
artworks to the tax or other authorities (list of inven- the artworks are sold as a part of a commercial busi-
tories or alike)? ness or the art has been an investment and not for pri-
vate use, the gains are taxed as income at a rate of 22 %
There is an obligation to give correct and complete in- (in 2020).
formation in the tax return, therefore all individuals
have to give information regarding the value of their 2.1.2. Wealth taxes
privately held assets. However, a list of the artworks is Does your country know any specific categories of clas-
not necessary. sification of artworks (e.g. tax-exempt personal be-
longings/household)?
2.1.1. Income taxes
Is income generated from the sale of artworks taxed Personal belongings are tax exempt if the value is NOK

Norway in your country? If yes, please indicate how (i.e. capital

gains tax | income from self-employment).
1,000,000 or less. See point 1.5 for further information
on taxation of personal belongings.

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WTS Global Guide on Taxation of Artwork | Norway WTS Global Guide on Taxation of Artwork | Norway

Is there an obligation to declare works of art in the tax Art is valued at market and insurance value, which the
5. Voluntarily disclosure program
return? Please indicate how this is done resp. if there is tax authorities presume is the same.
any other obligation of declaration.
2.1.3. Inheritance | gift taxes What is the procedure in a voluntary disclosure of pre- years up to the last ten years. Penalty tax is not levied
The value of the art has to be declared in the tax return. In case of an inheritance or gift will there be any tax viously not properly declared art works and what are if the disclosure is voluntary.
This is a personal responsibility for all taxable individ- levied? the expected consequences?
uals. Does your country have a non-punishable voluntary
No, at this point Norway does not have inheritance or If a person voluntarily discloses the wealth related to disclosure programme?
How are works of art valued for tax purposes in your gift tax as this was abolished in 2014. A change of par- previously not properly declared art works, without
country? Are there any common and accepted valua- liament in 2021 could change this. any control measures from the tax authorities, the con- Yes
tion methods, i.e. at cost, insured value, market price? sequence is that the wealth is taxed for the undeclared

3. Taxation of legal entities (as owner of the artworks) 6. Special provisions re taxation of arts

3.1. Corporate income taxes Are there any general advantages of a legal entity as [Trust | foundation]
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership?
taxed? None
This depends on whether the artworks are for person-
Profits are taxed at a rate of 22 % in 2020. al use or a part of a commercial business. Private own-
ership results in a lower wealth taxation as described
above.

4. VAT | Customs

When selling or dealing with works of art within your

country what VAT implications have to be considered?

The general principle is that 25 % VAT is to be charged

on all sales of art. However, under specific conditions
an exception applies for sales made by the artist or in
the name of the artist.

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WTS Global Guide on Taxation of Artwork | Norway WTS Global Guide on Taxation of Artwork

Ulf H. Sørdal
Partner

[email protected] +47 55 301017

Specialization
→ Private clients tax optimization included global re-location
and advising Private Wealthy Families with generation planning
→ Transfer Pricing Tax Planning and Design
→ Restructuring and Reorganization

Advokatfirma SANDS DA
P.O. Box 1150 Sentrum,
5811 Bergen

WTS Global in Norway, SANDS.

116 117
Geta Brătescu – Jocul Formelor (Game of Forms) WTS Global Guide on Taxation of Artwork | Pakistan
2015 | Collaged paper, ballpoint pen and graphite on paper (11 parts)
Dimensions variable
© The Estate of Geta Brătescu | Photo: Ștefan Sava
Courtesy the Estate of Geta Brătescu, Ivan Gallery, Bucharest and Hauser & Wirth

1. Legal Framework

1.1. Net equity taxation is implicit in the taxation regime

How are income and wealth taxed in your country? for profits i.e. any accretion in the net equity of busi-
ness not represented by the profits of business are
The tax liability of a person is influenced by his / her res- charged to tax as additional income from business.
idential status. A non-resident person is subject to tax
in respect of his Pakistan-source income only, whereas 1.4.
a resident person is taxed on his world-wide income. What is the range of the applicable tax rates for legal
The tax liability is determined by applying the relevant entities on profit and capital?
tax rate on the taxable income. The taxable income is
the sum of income under all heads of income including For legal entities (Companies), the rate of corporate
Salary, Income from Property, Income from Business tax on taxable income is 29%. The tax rate for a Small
and Capital Gains as reduced by the admissible deduc- company is 22% (Tax Year 2021) declining by 1% each
tions and allowances. There is no tax on wealth. year up to tax year 2023.

1.2. 1.5.
What is the range of the applicable tax rates for indi- What kind of valuation is generally accepted in respect
viduals on income and wealth? of certain assets (such as art) by the tax authorities?

The tax rates for individuals are based on a progressive There is no special rule governing the value of art
scale ranging from 0% to 35%. work. Generally, the value represents the sum of the
following:
1.3. → the total consideration given by the person for the
How are profit and net equity taxed in your country? asset, including the fair market value of any consid-
eration in kind determined at the time the asset is
Business Profit is subject to Federal Income Tax on the acquired;
basis of the taxable income of the person. The taxable → any incidental expenditure incurred by the person
income is determined after making certain adjust- in acquiring and disposing of the as-set; and
ments to the profit according to the accounts (e.g. de- → expenditure incurred by the person to alter or im-
preciation and initial allowance, brought forward tax prove the asset. No loss is recognized upon disposal
losses, provisions). In case of a company, tax liability of art work.
may not be lower than 17% of the profit according to
the accounts.

2. Taxation of Art

2.1. Individuals 2.1.1. Income taxes

Is there an obligation of declaring | disclosing private Is income generated from the sale of artworks taxed
artworks to the tax or other authorities (list of inven- in your country? If yes, please indicate how (i.e. capital
tories or alike)? gains tax | income from self-employment).

The artwork owned by an individual is required to be The gain on the sale of private artwork is taxed as Cap-
declared at its historical cost in the Statement of Assets ital Gains. If the capital asset is held for more than one

Pakistan and Liabilities filed along with the Tax Return. year, only 3/4th of the gain is subject to tax. Where art-
work is sold on a commercial basis, the income may be

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WTS Global Guide on Taxation of Artwork | Pakistan WTS Global Guide on Taxation of Artwork | Pakistan

subject to tax under the head Income from Business How are works of art valued for tax purposes in your
5. Voluntarily disclosure program
or Commission, depending upon the facts and circum- country? Are there any common and accepted valua-
stances of the sale. tion methods, i.e. at cost, insured value, market price?
What is the procedure in a voluntary disclosure of pre- Does your country know a non-punishable voluntary
2.1.2. Wealth taxes There is no Wealth Tax law in force in Pakistan. There- viously not proper declared art works and what are the disclosure programme?
Does your country envisage any specific categories of fore, no valuation method is applicable for artwork for expected consequences?
classification of artworks (e.g. tax-exempt personal wealth tax purpose. At present, no non-punishable voluntary disclosure
belongings/household)? At present, there is no voluntary disclosure program in program is in force.
2.1.3. Inheritance | gift taxes force for the declaration of undeclared artwork .
There is no Wealth Tax law in force in Pakistan. There- In case of an inheritance or gift will there be any tax
fore, there is no wealth tax leviable on the artwork. levied?

Is there an obligation to declare works of art in the tax There is no tax on assets passed on by inheritance or
return? Please indicate how this is done resp. if there is gift from certain relatives (grandparents, parents, 6. Special provisions re taxation of arts
any other obligation of declaration. spouse, brother, sister, son or a daughter). The cost of
the asset is taken at the fair market value prevailing at
There is no Wealth Tax law in force in Pakistan. There- the time of transfer. A piece of Artwork is classified as a Capital Asset for the
fore, there is no wealth tax declaration applicable for purpose of income tax. No loss is recognized on sale
the artwork. of capital asset representing artwork. Transfer of such
asset as a gift received from grandparents, parents,
spouse, brother, sister, son or a daughter is exempt
from income tax.

3. Taxation of legal entities (as owner of the artworks)

3.1. Corporate income taxes Are there any general advantages of a legal entity as
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership?
taxed?
In the case of a legal entity classified as a Small Com-
The profits from the sale of artwork on a commercial pany, a lower corporate tax rate of 22% can be applied.
basis are subject to Corporate Income Tax However, the dividend distribution by a small compa-
ny is subject to tax @ 15% of the gross amount.

4. VAT | Customs

When selling or dealing with works of art within your When works of art cross the border of your country
country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?

Selling or dealing with artwork on commercial basis is Export of art work is zero rated for VAT purposes.
considered as an activity liable to VAT (known as Sales
Tax) registration. Sales tax on goods is dealt with under
the Sales Tax Act, 1990. The normal rate of sales is tax
17% which is also applicable on sale of the art work.

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WTS Global Guide on Taxation of Artwork | Pakistan WTS Global Guide on Taxation of Artwork

Muzammal Rasheed
Co-founder, Chief Executive Officer / Managing Partner / Head of Practice

[email protected] +92 51 835 1551

Specialization
→ Tax Compliance & Planning (Domestic & International)
→ Property Tax
→ Partnership Taxation
→ Tax Investigations
→ Family Office & Governance
(Wealth tax, accounting & Advisory Services)
→ Restructuring, Reorganization, Capitalization & Liquidity
→ Tax Risk & Controversy Management
→ Indirect Taxes
→ Personal Tax (including Expatriate Tax)
→ Transaction Tax
→ Transfer Pricing

Enfoque Consulting (Pvt.) Ltd

144, 1st Floor, St. 82
E-11/2 Islamabad 44000

WTS Global in Pakistan, Enfoque Consulting.

122 123
Subodh Gupta – Wash before eating WTS Global Guide on Taxation of Artwork | Portugal
2018 | Oil paint on bronze, ceramic fountain, brass tap | Unique
60 x 45 x 22 cm / 23 5/8 x 17 3/4 x 8 5/8 in
© Subodh Gupta | Courtesy Subodh Gupta and Hauser & Wirth

1. Legal Framework

1.1. generally correspond to accounting profits adjusted

How are income and wealth taxed in your country? in accordance with the CIT Code (e.g. non-deductible
impairments, excessive depreciation, non-deductible
Resident individuals are subject to Personal Income Tax expenses).
(“PIT”) on a worldwide basis, which means that any in-
come obtained by a resident individual shall be subject Non-resident companies are subject to CIT on all Portu-
to PIT, regardless of its source (Portuguese or foreign). guese-sourced income, according to the categories of
Non-resident individuals are subject to PIT on all Portu- income as defined in the CIT Code.
guese-sourced income. PIT applies to specific items of
income that are expressly set forth under the PIT Code. 1.4.
What is the range of the applicable tax rates for legal
Please note, however, that non-resident individuals entities on profit and capital?
who transfer their tax residence to Portugal may be
eligible for the Non-Habitual Tax Resident Regime The taxable profits of resident companies are subject
(“NHTR”), as long as they have not been considered to to CIT at a general tax rate of 21%. However, for com-
be tax resident in Portugal in the preceding five years. panies located in the Azores, the CIT tax rate is 16.8%,
This special regime allows for a tax exemption and tax and for companies located in Madeira, the CIT tax rate
reductions on certain items of income. is 20%.

1.2. Companies that carry out an agricultural, industrial or

What is the range of the applicable tax rates for indi- commercial activity and that are classified as a small or
viduals on income and wealth? medium enterprise may benefit from a reduced rate of
17% applicable to a first bracket of up to €25k. Compa-
As a general rule, PIT tax rates are progressive, rang- nies located in the Azores and in Madeira that carry out
ing from 14.5% to 48%. For taxable in-come between € the above-mentioned activities and that are classified
80k and € 250k an additional surcharge of 2,5% applies as a small or medium enterprise may benefit from a re-
whereas for taxable income higher than € 250k an ad- duced rate of 13.6% and of 11.9% respectively.
ditional surcharge of 5% is also applicable. However, a
flat tax rate may apply to certain types of income (e.g. In addition to CIT, taxable profits are also subject to Mu-
interest and dividends). nicipal Surtax at up to 1.5% (depending on the munic-
ipality). State Surtax applies on top of CIT, but only if
Under the NHTR regime, passive income (e.g. divi- taxable profits exceed € 1.5m, as follows:
dends, interest and rental income) derived from out-
side Portugal is fully exempt in Portugal, irrespective → 3% on taxable profits exceeding €1.5m;
of the taxation applicable at source. Foreign-sourced → 5% on taxable profits exceeding €7.5m; and
active income may also be fully exempt, and Portu- → 9% on taxable profits exceeding € 35m.
guese-sourced active income may also benefit from a
flat rate of 20%, provided some specific conditions are Portuguese-sourced income obtained by non-resident
met. In addition, foreign-sourced pension income is companies is usually subject to a definitive withhold-
subject to tax at a flat rate of 10%. ing tax, at a fixed tax rate which depends on the type
of income.
There is not any wealth tax in force in Portugal.
1.5.
1.3. What kind of valuation is generally accepted in respect
How are profit and net equity taxed in your country? of certain assets (such as art) by the tax authorities?

Portugal The taxable profits of resident companies are subject

to Corporate Income Tax (“CIT“). The taxable profits
There is no specific tax legislation in respect to the val-
uation of artworks.

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WTS Global Guide on Taxation of Artwork | Portugal WTS Global Guide on Taxation of Artwork | Portugal

However, when it comes to taxation of corporate enti- behind the adopted method. 2.1.3. Inheritance | gift taxes However, Stamp Duty at a tax rate of 10% may apply to
ties, the CIT Code establishes that in-come and expend- In case of an inheritance or gift will there be any tax the gratuitous acquisition of assets located in Portugal,
iture deriving from inventory are calculated according The above explanation is also applicable to PIT on levied? which includes both inheritance and gifts. Spouses,
to valuation criteria for accounting purposes, namely: self-employment income earned by individuals, pro- co-habiting partners, descendants and forebears are
vided that the individual is taxed on the basis of their Portugal does not have an inheritance tax. exempt from Stamp Duty.
→ acquisition cost; organized accounts.
→ standard cost;
→ selling price less the estimated selling expenses. On other hand, the CIT Code establishes that the capital
gains derived from the sale of fixed assets correspond
Please note that the CIT Code also envisages the pos- to the difference between the sales price and the pur-
3. Taxation of legal entities (as owner of the artworks)
sibility of adoption of different valuation criteria, chase price less the depreciations and amortization
provided that a formal request is submitted to the deductible for tax purposes.
Portuguese Tax Authorities, explaining the reasoning 3.1. Corporate income taxes Are there any general advantages of a legal entity as
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership?
taxed?
From a tax point of view there are no general advan-
The taxable profits of resident companies are subject tages to owning artworks through a legal entity, apart
2. Taxation of Art to CIT. Non-resident companies are subject to CIT on all from the different taxation regimes applicable to in-
Portuguese-sourced income, according to the catego- dividuals and companies (please see section 1 above).
ries of income as defined in the CIT Code. However, if the artwork is indirectly held by an individ-
2.1. Individuals 2.1.2. Wealth taxes ual through a legal entity, any profits arising from such
Is there an obligation of declaring | disclosing private Does your country envisage any specific categories of Any profits derived from the sale of artwork are includ- artwork can be distributed to the individual share-
artworks to the tax or other authorities (list of inven- classification of artworks (e.g. tax-exempt personal ed in the taxable profits of resident companies. The holder as dividends.
tories or alike)? belongings/household)? taxable profits are subject to CIT at the following tax
rates: 21% (resident companies), 16,8% (companies lo- Dividends distributed to both resident and non-resi-
There is no obligation of declaring or disclosing private As there is not any wealth tax in force in Portugal, not cated in Azores) or 20% (companies located in Madeira). dent individuals are subject to a definitive withhold-
artworks to any Portuguese authority. specific categories for the classification of artworks are ing of 28%. Resident individuals may, however, benefit
established in the Portuguese law. (For more details, please see 1.3. and 1.4. above). from an exclusion from taxation on 50% of the divi-
2.1.1. Income taxes dend amount, provided that the individual opts for the
Is income generated from the sale of artworks taxed Is there an obligation to declare works of art in the tax aggregation of the income.
in your country? If yes, please indicate how (i.e. capital return? Please indicate how this is done resp. if there is
gains tax | income from self-employment). any other obligation of declaration. Please note that any withholding tax on dividends
received by non-resident individuals may be reduced
As a general rule, capital gains derived from the sale of As Portugal does not have any wealth tax, the individ- pursuant to the applicable DTT.
artworks are not subject to PIT. uals do not have to submit any wealth tax return. Fur-
thermore, the annual income tax return also does not
However, should an individual engage in a profession- require individuals to report any artworks.
al activity related to the sale of artworks, any capital
gains derived from the sales will be qualified as in- How are works of art valued for tax purposes in your
4. VAT | Customs
come from self-employment. In-come from self-em- country? Are there any common and accepted valua-
ployment obtained by resident individuals is subject to tion methods, i.e. at cost, insured value, market price?
the general progressive tax rates. On the other hand, if When selling or dealing with works of art within your paintings and drawings, executed entirely by hand
such income is obtained by non-resident individuals, it As there is not any wealth tax in force in Portugal, there country what VAT implications have to be considered? by the artist, hand-decorated manufactured arti-
is subject to a definitive withholding tax of 25%. is no specific legislation regarding the valuation of art cles, theatrical scenery, studio back cloths or the
for wealth tax purpose (the above mentioned in 1.5. VAT is levied on the supply of goods and services locat- like of painted canvas;
Please note that any PIT on self-employment income only applies to income taxes). ed within the Portuguese territory. The general VAT tax → original engravings, prints and lithographs, being
may be fully eliminated pursuant to the applicable rate is 23%, but a reduced rate of 6% may apply to the impressions produced in limited numbers directly
Double Tax Treaty (“DTT“). supply of works of art, as defined in specific legislation. in black and white or in colour of one or of several
The definition of works of art includes: plates executed entirely by hand by the artist;
→ original sculptures and statuary, in any material,
→ pictures, collages and similar decorative plaques, provided that they are executed entirely by the art-

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WTS Global Guide on Taxation of Artwork | Portugal WTS Global Guide on Taxation of Artwork | Portugal

ist; When works of art cross the border of your country

→ tapestries and wall textiles made by hand from what needs to be considered regarding VAT | customs?
original designs provided by artists;
→ individual pieces of ceramics executed entirely by VAT is levied on the import of works of art, at a 23% Tiago Marreiros Moreira
the artist and signed by him; or 6% tax rate, depending on whether it classifies as a Partner | Head of International Operations | Head of Tax |
→ enamels on copper, executed entirely by hand; and work of art according to specific Portuguese legislation Group Executive Partner Corporate Advisory & Tax
→ - photographs taken by the artist. (please see above).
[email protected] +351 213 113 400

Specialization
→ Tiago has been providing combined and co-ordinated international
5. Voluntarily disclosure program and domestic pragmatic value added corporate and tax advice, as well
as estate planning advice, on business and personal affairs to numer-
ous family offices, UHNWI, HNWI and international private banks for
What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary more than 20 years.
viously not properly declared art works and what are disclosure programme? → Admitted to the Portuguese Bar Association and
the expected consequences? recognized as a specialist lawyer in Tax Law.
As Portugal does not have any wealth tax, the above → Recommended as Tax Controversy Leader by
As Portugal does not have any wealth tax, the above question is not applicable. the International Tax Review.
question is not applicable.

6. Special provisions re taxation of arts João Riscado Rapoula

Managing Associate

There are not specific tax provisions in respect to the [email protected] +351 213113587
taxation of arts.
Specialization
→ Managing Associate at the Tax area of practice and actively involved in
corporate transactions, namely in international tax structuring and tax
litigation, as well as in EU law and social security matters.
→ Provides tax and legal assistance in private wealth transactions and
private client planning.

VdA | Vieira de Almeida & Associados

Rua Dom Luís I, 28
1200-151 Lisbon

WTS Global in Portugal, Vieira de Almeida & Associados.

128 129
Martin Creed – Work No. 2179, Portrait of Penélope Cruz WTS Global Guide on Taxation of Artwork | Russia
2015 | Acrylic on canvas
30.5 x 25 x 2 cm / 12 x 9 7/8 x 3/4 in
36.2 x 31.1 x 5 cm / 14 1/4 x 12 1/4 x 2 in (framed)
© Martin Creed. All Rights Reserved, DACS 2021 | Photo: Pedro Martinez de Albornoz
Courtesy Martin Creed and Hauser & Wirth | © 2021, ProLitteris, Zurich

1. Legal Framework

1.1. rate of 15%, unless otherwise provided by a relevant

How are income and wealth taxed in your country? tax treaty.

An individual’s tax residency status depends on the 1.3.

number of days spent in Russia in a period comprised How are profit and net equity taxed in your country?
of 12 consecutive months. However, according to the
current interpretation of the Ministry of Finance of the The following entities are subject to corporate income
Russian Federation and the tax authorities, an individ- tax (CIT):
ual’s tax residency status is based on the number of
days spent in a particular calendar year in Russia. The → Resident companies (Russian and foreign enterpris-
days of presence in Russia can be confirmed by the es that are tax residents)
cross-border stamps in an individual’s passport(s) used → Foreign companies operating through a perma-
for travelling to/from Russia. Based on the tax author- nent establishment -The definition of permanent
ities’ current interpretation of the tax residency rules, establishment is very similar to the definition given
an individual spending at least 183 days in Russia in a under the Organization for Economic Co-operation
calendar year is recognized as a tax resident. There are and Development (OECD) model tax treaty
no wealth taxes applicable in Russia. However, there
are property taxes levied on the ownership of trans- The resident companies are subject to tax on their
port, real estate and land that are not applicable to worldwide income. The taxable profit is determined
artworks. On September 17, 2020 a bill was submitted as gross income less deductible expenses incurred, ex-
to the Russian Parliament, according to which the in- empt income and depreciation allowances. The gross
come of a tax resident exceeding the amount of RUB 5 income, comprising income from
million is subject to increased income tax rate of 15%.
According to the bill, the increased tax rate is applica- → sale of goods (work and services) and
ble for income, received in periods starting on January → non-sales operations such as interest, profit/loss
1, 2021. from fluctuation of exchange rates, lease of prop-
erty, royalties etc.
1.2.
What is the range of the applicable tax rates for indi- is determined on an accrual basis. Some companies
viduals on income and wealth? that fall within the category of Small and Medium En-
terprises (SME) can apply a cash basis.
Tax residents are subject to taxation in Russia on their
worldwide income, at a 13% tax rate on most types of The Russian Tax Code (RTC) provides an open list of ex-
income. penses that are deductible for income tax purposes.
Generally, the expenses are deductible if they are i.
A 35% tax rate applies to interest income on bank de- economically justified; ii. supported by necessary doc-
posits exceeding the Central Bank’s refinancing rate uments; iii. directed at generating taxable income. The
increased by 5% points (in case of non-rouble deposits, RTC lists some of the expenses that are not deductible
exceeding 9%), certain prizes, lottery payments. and that fail to fulfil the aforementioned 3 criteria (for
example):
If an individual does not meet the presence test men-
tioned above, he is recognized as a non-resident. Tax → fines paid to budget due to a breach of tax legisla-
non-residents are taxable in Russia at a 30% tax rate on tion
their Russian-sourced income. Russian-sourced income → excess part of interest payments that are classified
is generally defined as income arising from assets in as hidden dividend distributions
Russia, or earned in Russia, irrespective of where the → the value of goods transferred free of charge, and

Russia income is paid. Dividends received by individuals that

are not tax residents of Russia are subject to tax at a
expenses related to such transfer.

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The net equity is not subject to CIT in Russia. evaluate certain assets, depending on the type of tax. earning activities. How are works of art valued for tax purposes in your
For example, the land tax is calculated on the basis of country? Are there any common and accepted valua-
No separate capital gains tax exists in Russia but gains the cadastral value, and where personal income tax is Alternatively, if such expenses cannot be supported by tion methods, i.e. at cost, insured value, market price?
from selling property and assets is taxed at the usual due on income received in kind, the tax base is deter- documents, deductions can be made in the following
CIT and PIT rates. Generally, the difference between mined based on the value of the transferred property, amounts: Income derived by an individual from the sale of art-
income from the sale and historical purchase costs is work performed, services rendered corresponding to works is subject to personal income tax. The general
taxable. their market price. → Creation of graphical artworks, photographic rule of the tax base determination applies: the price
works for publication purposes, works of architec- of the transaction agreed up-on by both parties is
1.4. Thus, with respect to the sale of assets such as art ture and design – 30% of income; deemed to be income. Unless proved otherwise, it is
What is the range of the applicable tax rates for legal works, in order to determine the market value of the → Creation of sculpture and monumental-decorative presumed that the price of the transaction is in line
entities on profit and capital? artwork an assessment is required that is carried out works, decorative and applied art works, easel art- with the fair market price level. Fair market price may
in accordance with the Federal Law “On appraisal ac- works, theatre and cinema decorations and graph- be determined by a professional evaluator.
Russia applies the flat income tax rate for both Russian tivities in the Russian Federation” No. 135-FZ dated ics – 40% of income.
and foreign legal entities. The basic corporate income 29.07.1998, Russian and International Valuation Stand- 2.1.3. Inheritance | gift taxes
tax rate amounts to 20%. Reduced income tax rates ards. Besides, authors of artworks are entitled to a 5% com- In case of an inheritance or gift will there be any tax
may also apply to residents of regions that provide pensation fee upon sale (re-sale) of their works by third levied?
special economic regimes. A formal assessment report is a document having legal parties which is subject to taxation at source, with the
force. amount of tax due being transferred to the budget of Income received by an individual (whether in cash or in
The Russian tax law provides for a special tax regime – Russia by the respective withholding agents. kind) by way of inheritance is not subject to taxation in
a simplified tax system – under which income received Art evaluation activity is not subject to license in Rus- Russia. However, an exception is made with regard to
by entities is taxed at lower tax rates: 6% (if costs are sia. However, evaluators are obliged to be members of 2.1.2. Wealth taxes compensation received by the heirs of the authors of
not deducted) or 15% (if costs are deducted from the a self-regulatory organisation and perform their activ- Does your country envisage any specific categories of scientific, literary or art works. Therefore, inheritance
taxable income). Legal entities and individual entre- ity in accordance with the standards stipulated by the classification of artworks (e.g. tax-exempt personal of an actual artwork (in kind) does not lead to any tax
preneurs can voluntarily opt to apply a simplified tax Russian laws. belongings/household)? implications, whereas the inheritance of a right to re-
system, subject, however, to certain conditions. ceive compensation related to authorship gives rise to
Moreover, if tax deductions are applicable, their value There are no wealth taxes applicable in Russia. an heir’s obligation to pay personal income tax.
1.5. may be determined as the historical (purchase) price
What kind of valuation is generally accepted in respect of an artwork for the purposes of the tax base calcu- Under the Russian tax legislation there is no categori- It should be noted, however, that the execution of the
of certain assets (such as art) by the tax authorities? lation. sation of private artworks. transfer of artworks by way of inheritance gives rise to
an obligation to pay a notary fee at the rate varying ac-
Russian legislation provides for a variety of ways to However, in cases of cross border transportation, cul- cording to the kin-ship relationships (or lack thereof)
tural valuables are legislatively classified into certain between the transferor and the transferee.
categories. For instance, cultural valuables included in
the register of the Russian Archive Foundation, Nation- There is no special gift tax in Russia. Gifts received by
al Library Foundation, regardless of whether publicly individuals are subject to general PIT rate 13%.
2. Taxation of Art or privately owned, cannot be exported from Russia
without their owners’ undertaking to return them to Gifts between individuals are tax exempted.
Russian territory within a specified period.
2.1. Individuals in your country? If yes, please indicate how (i.e. capital Gifts received by individuals from organizations, val-
gains tax | income from self-employment). Is there an obligation to declare works of art in the tax ued below RUB 4’000 are tax exempted. Value of the
Is there an obligation of declaring | disclosing private return? Please indicate how this is done or if there is present which exceeds RUB 4’000 is taxed at PIT rate of
artworks to the tax or other authorities (list of inven- Income generated from the sale of artworks is sub- any other obligation of declaration. 13%.
tories or alike?) ject to personal income tax in Russia. Art-works are
deemed to be the property of an individual owned by Individuals are generally not obliged to declare art- Gifts received in form of real estate, shares and vehi-
The Russian tax legislation does not provide for an obli- the latter. Income of an individual Russian tax resident, works in the tax return. However, if income is received cles are taxable at the rate 13%, except for gifts re-
gation of an individual to declare or in any other way to received from the sale of an artwork owned by such in- from the sale thereof, such income is subject to decla- ceived from close family members/relatives.
disclose information with respect to private artworks dividual for more than 3 years, is tax-exempt. ration in the tax return.
to the tax or other authorities .
Authors of artworks are entitled to a professional tax
2.1.1. Income taxes deduction in the amount of expenses incurred due to
Is income generated from the sale of artworks taxed the creation of an artwork and associated with the

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3. Taxation of legal entities (as owner of the artworks) 5. Voluntarily disclosure program

3.1. Corporate income taxes Are there any general advantages of a legal entity as What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership? viously not properly declared art works and what are disclosure programme?
taxed? the expected consequences?
There are no general advantages of a legal entity as an There is no non-punishable voluntary disclosure pro-
Income generated by an entity from the sale of an art- owner of artworks as opposed to private ownership. The Russian tax legislation does not envisage a volun- gramme in Russia with respect to art-works.
work is subject to corporate income tax in Russia. The However, ownership of artworks by an individual, rather tary disclosure of previously not properly declared art
tax base is determined as the difference between the than a company, can be more efficient for the purpose of works.
amount received upon disposal of an artwork and the taxation due to a lower tax rate (13%) applicable to in-
amount of deductible expenses (e.g. the amount paid come received by individuals in comparison to that lev-
upon the acquisition of an artwork). The corporate in- ied on income generated by companies (20%) and the
come tax is applied at the rate of 20%. individual’s right to exempt income from taxation due
to possession of an artwork for more than three years. 6. Special provisions re taxation of arts

[Trust | foundation]

4. VAT | Customs Prior to 01.01.2019 artworks were subject to corpo-

rate property tax at a maximum rate 2,2% applicable
to the average annual value of the artwork. Artworks
When selling or dealing with works of art within your When works of art cross the border of your country included in special register (Russian Museum Fund)
country what VAT implications have to be considered? what needs to be considered regarding VAT | customs? were exempted from corporate property tax. Starting
from 01.01.2019 artworks are not subject to corporate
Entities selling or dealing with artworks, such as the- Prior to an artwork being transported across the border property tax. However, during on-site tax audit, tax au-
atres, concert organisations, circuses, libraries, muse- of the Russian Federation (whether temporarily or per- thorities can recalculate and charge additional tax if any
ums, galleries, exhibitions, etc., are exempt from VAT. manently), documents giving permission to do so must violations of the tax law take place.
be obtained (stamp duties apply). Under certain legis-
Artworks classified as cultural valuables are VAT-ex- latively stipulated circumstances, however, issuance of
empt upon import into the Russian Federation. VAT such documents can be denied.
exemption is granted upon presentation of a relevant
expert opinion. It should be noted that artworks classified as cultural
valuables of significant importance are not allowed to
Artworks that do not qualify as cultural valuables are be exported from Russia on a non-return basis.
subject to VAT upon import into Russia.
Non-governmental organisations transporting artworks
to the territory of the Russian Federation enjoy tax ben-
efits if such artworks are officially qualified as cultural
valuables (a relevant expert opinion is required).

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Sergey Gerasimov Marina Vlasenko

Managing Partner Senior Manager

[email protected] +7 (495) 025 0265 [email protected] +7 (495) 025 0265 (315)

Specialization Specialization
→ International tax planning and structuring for private clients, elabora- → Services for wealthy private clients – High Net Worth Individuals/Ultra
tion of tax strategies High Net Worth Individuals (HNWI/UHNWI)
→ Family and inheritance planning with the use of foreign structures → International Tax Planning and Structuring - comprehensive diagnos-
→ Has led projects involving personal holding structures for asset protec- tics of private and business asset holding structures for legal and tax
tion and inheritance, elaboration of personal CFCs, operational busi- risks (CFC rules)
ness restructuring, Russian tax amnesty (all three waves), tax-free dis- → Individual Tax Planning and Private property structuring and manage-
solution of foreign companies, currency control regulations, etc. ment for the purposes of asset protection and tax efficiency improve-
ment in different jurisdictions
→ Expatriates immigration support (assignment structuring, permitting
documents, other)

Roksana Ter-Nikogosyan
Manager

[email protected] +7 (495) 025 0265 (320)

Specialization
→ Services for wealthy private clients – High Net Worth Individuals/Ultra
High Net Worth Individuals (HNWI/UHNWI)
→ Individual Tax Planning and Private property structuring and manage-
ment for the purposes of asset protection and tax efficiency improve-
ment in different jurisdictions
→ International Tax Planning and Structuring - comprehensive diagnos-
tics of private and business asset holding structures for legal and tax
risks

ALTHAUS Private Tax

105120, Moscow, 2nd Syromyatnichesky lane,
bld. 1. Business Center «Delta Plaza», 4th floor

WTS Global in Russian Federation, Althaus.

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Paul McCarthy – The Angel WTS Global Guide on Taxation of Artwork | Spain
2018 | Bronze, gold leaf
54.6 x 46.4 x 30.5 cm / 21 1/2 x 18 1/4 x 12 in
© Paul McCarthy | Photo: Walla Walla Foundry
Courtesy Paul McCarthy and Hauser & Wirth

1. Legal Framework

1.1. 1.2.
How are income and wealth taxed in your country? What is the range of the applicable tax rates for indi-
viduals on income and wealth?
The Spanish Constitution establishes four levels of po-
litical organization within the Kingdom of Spain: Mu- Regarding resident taxpayers, the income tax due on
nicipalities, Provinces, Autonomous Communities and the general tax base is progressive and ranges from
the State. The first group constitutes the subdivisions 18.50% to 48%. In turn, the tax due on the savings base
of the second, the second group constitutes the subdi- ranges from 19% to 23%.
visions of the third and the third group constitutes sub-
divisions of the last. The income of non-resident taxpayers is taxed at a flat
rate of 24% for residents in a non-EU country and 19%
Spanish tax residents pay income tax and wealth tax on for residents in an EU country.
their worldwide net income and wealth respectively.
In contrast, non-residents pay income tax and wealth For wealth tax purposes, the net wealth is taxed at be-
tax on their Spanish-sourced income and wealth. tween 0.20% and 3.75%

The income of Spanish resident individuals is divid- 1.3.

ed into two categories of income giving rise to two How are profit and net equity taxed in your country?
different boxes or taxable bases: [1] The general tax
base, comprising employment in-come, income from The net profit of a legal entity is taxed at the State level.
self-employment, income from immovable proper- The taxable basis for the profit taxation is the net profit/
ty and certain capital gains which do not derive from loss at year’s end, determined according to the Spanish
the transfer of goods or rights. [2] The savings base, GAAP rules, that is corrected by the provisions set out in
formed by income from capital investments, income the Spanish CIT Act where appropriate (e.g. losses car-
from loans and capital gains arising from the transfer ried forward, non-deductible expenses, etc...).
of goods or rights. The income tax is collected by the
State but some relevant aspects of its assessment are The corporation’s net equity is not taxable in Spain.
partially determined by the Autonomous Communi-
ties, such as the scale of charge applicable to the gen- 1.4.
eral basis and certain tax reliefs. Therefore, the as- What is the range of the applicable tax rates for legal
sessment of income tax varies from one Autonomous entities on profit and capital?
Community to another.
The general tax rate is 25%. However, certain types of
The net wealth of Spanish residents is taxed at the lev- entities are subject to higher or lower tax rates (e.g.
el of the Autonomous Communities, which are entitled non-profit organizations holding art pieces benefit
to collect and to determine certain aspects of such tax. from a 10% tax rate and important exemptions).
The taxpayers are granted a tax allowance on a certain
amount of wealth that will not be taxed. 1.5.
What kind of valuation is generally accepted in respect
The Spanish-sourced income and wealth of non-resi- of certain assets (such as art) by the tax authorities?
dents is taxed at the State level. Nevertheless, regard-
ing wealth tax, non-residents are entitled to apply The Spanish tax authority does not have a valuation
the wealth tax provisions is-sued by the Autonomous method for art pieces and antiques which is general-
Community where the major part of their Spanish net ly accepted, however, an appraisal from a competent
assets are located, if more beneficial. technician is the most common method used to prove
the market value of such pieces before the tax author-

Spain ity.

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2. Taxation of Art case, expenses incurred in the course of the sales, as → The artist’s own work.
well as losses, can be offset against income from the
sales activity. In this case, capital gains are included Any piece of art or antiques other than the ones listed
2.1. Individuals rise to a punishment of between 1 and 5 years impris- in the general basis income, being subject to tax rates above will be liable to wealth tax on disposal. Conse-
Is there an obligation of declaring | disclosing private onment and a fine of 6 times the value of the items. Ad- ranging from 18.50% to 48%. quently, from a wealth tax perspective, it is recom-
artworks to the tax or other authorities (list of inven- ditionally, the incorrect transfer of the art pieces may mended to register the art-works and antiques with
tories or alike)? lead to their being seized. When the selling activity qualifies as self-employment, the corresponding registers set out in the Spanish Law
the entrepreneur must contribute to the Social Securi- on Historical Heritage, if possible, in order to obtain
The Law on Spanish Historical Heritage (Law 16/1985, These obligations/liabilities do not apply to artworks ty system under the special scheme for self-employed the exemption on wealth tax.
25th June) and its regulation (Royal Decree 111/1986, held by their authors. entrepreneurs.
10th January) provide for a reporting obligation of the How are works of art valued for tax purposes in your
owners of artworks prior to the sale when their eco- The privately held artworks must be disclosed in the The Spanish Income Tax Act provides for a tax relief country? Are there any common and accepted valua-
nomic value exceeds any of the following thresholds: wealth tax return under certain circumstances (see of 15% on the investments and expenses made to: [1] tion methods, i.e. at cost, insured value, market price?
point 2.1.2). Acquire art pieces located abroad under certain reg-
→ 90,151.81€ for paintings and sculptures being less istering obligations, [2] Preserve, repair, restore, dis- Pieces of art and antiques must be valued at the fair
than 100 years old. 2.1.1. Income taxes seminate and exhibit art pieces qualifying as items of market value for wealth tax purposes. The fair market
→ -60,101.21€ for paintings being 100 years old or Is income generated from the sale of artworks taxed cultural interest pursuant to the Spanish Law on Histor- value can be proven by any form of legally admissible
more. in your country? If yes, please indicate how (i.e. capital ical Heritage. The total tax relief cannot exceed 10% of evidence.
→ 60,101.21€ for collections or sets of art/cultural gains tax | income from self-employment). the taxpayer’s taxable basis.
items or antiques. 2.1.3. Inheritance | gift taxes
→ 42,070.84€ for sculptures, reliefs and bas-reliefs The sale of (an) art piece(s) by its creator always quali- 2.1.2. Wealth taxes In case of an inheritance or gift will there be any tax
being 100 years old or more. fies as self-employment income for the Spanish Tax Au- Does your country envisage any specific categories of levied?
→ 42,070.84€ for collections of drawings, engravings, thority, even if the creator is no longer carrying on the classification of artworks (e.g. tax-exempt personal
books, documents and musical instruments. artistic activity at the time the art piece(s) is (are) sold. belongings/household)? The inheritance and gift tax is collected by Autonomous
→ 42,070.84€ for a piece of furniture. The sale of (an) art piece(s) by a person different than Communities, which are also entitled to determine the
→ 30,050.60€ for carpets, rugs, tapestries and histor- the creator may qualify as a capital gain or as self-em- According to the Wealth Tax Act, an artwork means any rules on very important aspects of the tax assessment,
ical fabrics. ployment activity, depending on the circumstances un- painting, sculpture, drawing, engravings lithographs such as credits, tax reliefs, base reductions, the scale of
→ 18,030.36€ for a single drawing, engraving, print- der which the sale(s) is (are) carried out. and other similar items which are original works. In charge, etc. Thus in certain regions, like Madrid, Canary
ed book or manuscript or document in any support turn, antiques are defined as furniture and decorative Islands or Andalusia, the impact of inheritance and gift
or format. If the sale takes place as an act of the management items other than art items and being more than 100 tax is almost zero, because close relatives in those re-
→ 9,015.18€ for a musical instrument with historical of private assets and does not exceed the “common” years old. Therefore, any antique which is less than 100 gions are granted a 99% tax relief on the final tax due.
features and for ceramic, porcelain and crystal pieces. management of assets, i.e. the sale occurs as a result of years old will qualify as a household good, and conse- By contrast, in other regions like Cantabria or Catalonia
→ 6,010.12€ for archaeological objects. a randomly arisen opportunity which has been seized quently will be exempt from wealth tax. the inheritance and gift tax has a strong impact on the
→ 2,404.04€ for ethnographic objects. by the owner, then it is classified as a capital gain to be assets transferred.
included in the “savings base”, paying income tax at a In addition to the exemption on household goods
The same obligation is imposed on art dealers who, in rate ranging from 19% to 23%. above, the Spanish Wealth Tax Act provides for the fol- The art pieces and antiques exempt from wealth tax
addition, are obliged to keep a sales book for the art- lowing exemptions: (see point 2.1.2.) benefit from a reduction of 95% on
works described above, which must be legalized with The capital gain is calculated as the difference between their value when considering them as part of the tax
the corresponding administration. the acquisition cost and the transfer value. The acqui- → Artworks and antiques duly registered with the base for inheritance and gift tax. That benefit only
sition cost includes the purchase price, taxes, and ex- General Register for Cultural Goods or with the Gen- applies to children and to the spouse of the deceased
The information to be provided is the description of the penses directly related to the purchase, as well as any eral Inventory for Movable Goods referred to in the persons or donor. Therefore, it is important to regis-
art piece(s) and the purchase price if any. At this point it investment made to the art piece extending its initial Spanish Law on Historical Heritage. ter the art pieces and antiques having a value over the
may be of interest that the Spanish Administration has lifetime. In turn, the transfer value is calculated as the → Artworks and antiques comprising the historical thresholds set out on point 2.1. in order to access this
a preferential right on the acquisition of the art pieces sale price minus expenses and taxes directly related to heritage of any Autonomous Community that are important reduction.
listed above when selling them. the operation. duly registered.
→ Art pieces and antiques listed in point 2.1 where the
The breach of this obligation is punished with a fine Conversely, if the sale of (an) art piece(s) is (are) per- thresholds set out by law are not exceeded.
of up to 60,101.21€, when it is not considered a crimi- formed under a predefined plan, using human and ma- → Art pieces and antiques, as defined in the Wealth Tax
nal offense. From a criminal standpoint, the offence of terial resources implying a relevant amount of capital Act, when they are loaned to museums or non-prof-
smuggling is committed when the value of undeclared and a workforce and that bears an economic risk, then it organizations for their public exhibition. The ex-
or incorrectly declared items exceeds 50,000€, giving it will qualify as income from self-employment. In this emption is granted for the loan time line.

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3. Taxation of legal entities (as owner of the artworks) formal requirements, as well as prior administrative Protected goods for exports outside EU countries:
permission according to the Spanish Historical Her-
itage Law and EU regulation 116/2009 when leaving 1. Art pieces and antiques on points [1] and [2] above.
3.1. Corporate income taxes cial year. However, in our opinion, this latter statement EU territory. In this respect, it is important to point out 2. Art pieces and antiques in annex I of EU regulation
How are profits deriving from the sale of artworks must be regarded on a case-by-case basis. that according to Spanish internal law, the remov- 116/2009.
taxed? al from Spanish territory of any art piece or antiques
Are there any general advantages of a legal entity as meeting certain circumstances, including moves to Export of protected artworks and antiques is liable to
In case an art trade activity is performed through a le- owner of artworks instead of a private ownership? other EU countries, is considered an export, regardless payment of a public fee:
gal entity, the net sales resulting from the trade are of whether there is a transfer of ownership or not (e.g.
subject to corporate income tax. Expenses in respect of When an art collection is held by a company, the risk moving a painting from Madrid to its owner’s holiday
the activity are generally tax deductible. of shareholders of being qualified as self-employed home in Capri (Italy) is considered an export and needs VALUE
diminishes. In addition, when the net profit from the prior permission).
Regarding legal entities holding art pieces in their bal- sale of artworks exceeds 55,000€, then the average From up to Rate
ance sheet as an investment (instead of as an invento- tax rate resulting from personal income tax equals the Certain art pieces or antiques cannot be exported
ry), the Spanish tax authority has pointed out in several flat tax rate for corporate income tax (25%). Therefore, – € 6.010,12 € 5,00 %
rulings that amortization does not apply to art pieces depending on the amount of the net profit it could be The export application to the Spanish authorities for a 6.010,13 € 60.101,21 € 10,00 %
and that expenses for conservation, repair and rehabil- recommendable to incorporate a legal entity to per- protected art piece or antiques is deemed by law to be 60.101,22 € 601.012,10 € 20,00 %
itation of art pieces must be considered as a major val- form the art trade activity (N.B. dividend tax is not tak- an irrevocable offer for sale to the Spanish Administra- 601.012,11 € onwards 30,00 %
ue of the art piece instead of an expense of the finan- en into account in this calculation). tion at the value declared on the export documenta-
tion. The Spanish administration has 6 months’ time to
accept the offer and one year’s time to pay the value
declared on export documents.

4. VAT | Customs The rejection of export applications does not mean the
offer has been accepted.

When selling or dealing with works of art within your 100% of input VAT, the sale will be taxed at the rate Protected art pieces which have been illegally export-
country what VAT implications have to be considered? of 10% VAT. ed are automatically considered the property of the
2. For sellers under the special scheme for sec- Spanish Administration, which will initiate all legal ac-
Indirect taxation in the art industry is a tricky business ond-hand goods, the sale is subject to 21% VAT. tions to recover those pieces.
in Spain because it involves two different tax items: [1] 3. Imports of art pieces, as defined in the VAT Act, are
“VAT” for B2B and B2C transactions, and [2] “Transfer subject to 10% VAT regardless of who the buyer is. In There are three types of exports: [1] Temporary ex-
Tax” for C2C and C2B transactions. turn, exports are fully VAT exempt. port, meaning art items leave the Spanish territory for
4. Intra-community sales are fully tax exempt in Spain a period of time without having the right to sell them,
In those sales in which the seller is an individual who is in B2B operations, and pay subject to Spanish VAT in [2] Temporary export with the possibility of selling,
not regarded as a professional art dealer, the purchaser B2C operations. The intra-community acquisitions meaning art pieces leave the country and the owner is
is liable to pay transfer tax regardless of whether it is a are subject to the reverse charge mechanism in B2B entitled to sell the piece (e.g. transportation of a pro-
legal entity or an individual acting as an art dealer. The operations. This do not apply to sales subject to the tected art piece to an international art fair) and [3] final
transfer tax is managed and collected by Autonomous special scheme for second-hand goods. ex-port, meaning art pieces leave the country definite-
Communities. Please note that the tax due calculated ly, regardless of the purpose.
as a flat tax rate on the market value of the art piece It is important to highlight that the tax treatment de-
transferred may vary from one Autonomous Commu- scribed above only applies to the transfer of art pieces. Protected goods for exports within EU countries:
nity to the other (the tax rate varies from 1% to 8%). Indeed, the VAT Act states that royalties and any other
When the seller is an individual professional dealer or remuneration earned on any other deal related to in- 1. Antiques being more than 100 years old.
a legal entity, the transfer of the art piece is subject to tellectual rights are considered as a provision of servic- 2. Artworks and antiques duly registered with the
VAT. In this case, the applicable VAT rate varies depend- es. These types of services are VAT exempt. General Register for Cultural Goods or with the Gen-
ing who sells the art-work: eral Inventory for Movable Goods referred to in the
When works of art cross the border of your country Spanish Law on Historical Heritage.
1. If the seller is the author/artist or any other entre- what needs to be considered regarding VAT | customs?
preneur who is not subject to the special scheme
for second-hand goods and has the right to deduct Exports of art pieces and antiques entail numerous

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5. Voluntarily disclosure program

What is the procedure in a voluntary disclosure of pre- the date that happened. Therefore, the value of the Roberto Peluso
viously not properly declared art works and what are piece at the disclosure will most likely be considered Senior Associate
the expected consequences? as an unjustified capital gain earned in the year disclo-
sure takes place. Consequently, in cases like this, the [email protected] +34 934 871 020
The Spanish General Tax Code sets out the procedure taxpayer will hardly benefit from rights resulting from
for regularizing unpaid taxes that lead to a surcharge the statute of limitations period. For this reason, the Specialization
system on unpaid taxes instead of the penalty system decision on conducting a voluntary disclosure and the → International Taxation, tax structures analysis for individuals
that happens when regularization is carried out by the choice of procedure to execute it must be taken with → Advisory on Indirect taxation and VAT special regimes for Artworks
tax administration through the different audit proce- the assistance of a tax professional. → Advisory on Personal Income Tax
dures existing in the Spanish General Tax Code. → Advisory on fiscal regime of expatriates and inpatriates
Does your country have a non-punishable voluntary
The problem when regularizing undisclosed art piec- disclosure programme?
es or antiques is the difficulty in proving the title by
means of which the specific piece was transferred and Not applicable.

Paula Fernández
Consultant
6. Special provisions re taxation of arts
[email protected] +34 934 871 020

Specialization
[Trust | foundation] The Spanish CIT Act provides a special scheme under → Tax Compliance for individuals
which, broadly speaking, all income earned is tax ex- → Tax and contentious-administrative procedure
For large collections of art pieces and antiques, Span- empt if it is used to achieve the object of the founda- → Advisory on indirect taxation
ish foundations may provide an efficient vehicle to tion. → Advisory on fiscal regime of expatriates and inpatriates
own art collections because:
Donations to the foundation entitle the donor to apply
The conservation, repair, rehabilitation, and exhibi- for tax relief on a percentage of donations at both, per-
tion of art pieces fall within the scope of activities that sonal and corporate, income tax.
this type of legal entity can perform under the Spanish
legislation.

Arco Abogados y Asesores Tributarios SLP

Beethoven 15 · 5ª
08021 Barcelona

WTS Global in Spain, ARCO.

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Rodney Graham – Untitled WTS Global Guide on Taxation of Artwork | Sweden
2017 | Gesso, paper, acrylic on linen
122.2 x 92 x 2.5 cm / 48 1/8 x 36 1/4 x 1 in
© Rodney Graham | Photo: Stefan Altenburger Photography Zürich
Courtesy Rodney Graham and Hauser & Wirth

1. Legal Framework

1.1. ment income. Social security charges are payable

How are income and wealth taxed in your country? by the individual.

Employment income of private individuals who are 1.3.

domiciled or work in Sweden is taxed at the municipal- How are profit and net equity taxed in your country?
ity level and the state level. The taxation of employ-
ment income is progressive, but capped at a maximum The profit of a legal entity is taxed at the state level.
rate. The tax rates vary from municipality to municipality.
The basis for the profit taxation is the profit and loss
Capital gains/income are taxed at the state level only. account. Certain adjustments can be made that differ
Capital gains up to 50,000 kr on privately held personal from the treatment under generally accepted account-
belongings are tax exempt. For capital gains (on per- ing principles, but are allowed from a tax perspective
sonal belongings) exceeding 50,000 kr a general de- (e.g. tax losses carried forward, higher depreciation
duction of 25% of the price paid (for the belonging) is rate on machinery and equipment that are accepted
granted. for tax purposes). Also, adjustments must be made for
non-deductible expenses.
Income from self-employment is taxable at the munic-
ipality level and the state level. Sweden does not levy any tax on net equity.

Sweden does not levy any tax on wealth. 1.4.

What is the range of the applicable tax rates for legal
1.2. entities on profit and capital?
What is the range of the applicable tax rates for indi-
viduals on income and wealth? For ordinary companies (e.g. limited liability compa-
nies) (Sw. aktiebolag), the profit is taxed proportion-
Tax rates for employment income (as of 2020) with no ally at a rate of 21.4% (2020). Partnerships are not tax-
regards to deductions and tax relief: able entities, thus their income is taxed in the hands of
the partners.
→ Up to 509,300 kr: approx. 30% municipality tax.
→ From 509,300 kr: the above-mentioned municipali- 1.5.
ty tax plus 20% state tax. What kind of valuation is generally accepted in respect
of certain assets (such as art) by the tax authorities?
Tax rates for capital gains/income:
Assets should in general be valuated at their fair mar-
→ Capital gains/income are taxed at a proportional ket value. The fair market value of an as-set is defined
rate of 30%. However, some exceptions apply. Capi- as the objective market value and equals the price
tal gains generated from the disposal of real estate which could be achieved in case of a sale of the asset in
held for housing is subject to an effective tax rate of the ordinary course of business. The fair market value
22% and capital gains and capital income generat- is usually an estimated value or a comparable figure,
ed from non-quoted shares is subject to an effective except for assets subject to regular trade. For the lat-
tax rate of 25%. As a general rule, only 70% of cap- ter, the fair market value is usually available.
ital losses are deductible. However, capital losses
deriving from the sale of personal belongings are Art pieces are in general unique items and there is nor-
not deductible. mally neither a periodic return of the as-set nor is there
a liquid market with regular trade. The valuation of art
Tax rates for income from self-employment: pieces can therefore not be ascertained by means of a

Sweden → Normally, the same tax rates apply as for employ-

comparable fair market value. In practice, the follow-
ing valuation methods exist: the purchase price and

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WTS Global Guide on Taxation of Artwork | Sweden WTS Global Guide on Taxation of Artwork | Sweden

the insurance value. ing market values. There is the possibility to get an How are works of art valued for tax purposes in your therefore not be ascertained by means of a compara-
expert opinion, contact databases, gallery catalogs or country? Are there any common and accepted valua- ble fair market value. In practice, the following valu-
The purchase price is not very conclusive. The devel- auction results. All these factors may be taken into ac- tion methods, i.e. at cost, insured value, market price? ation methods exist: the purchase price and the insur-
opment of market-driven prices is often the result of count in order to determine an art piece’s value. ance value. For further information on the methods,
unknown agreements, personal preferences and indi- All assets should in general be valuated at their fair see supra 1.5.
vidualized intentions of the market participants. Fur- Since Sweden does not levy any taxes on wealth, is- market value. The fair market value of an asset is de-
thermore, the purchase price must be reduced by com- sues on the valuation of assets are not commonplace. fined as the objective market value and equals the 2.1.3. Inheritance | gift taxes
missions resulting from the sale. In the event of the disposal of an artwork by a private price which could be achieved in case of a sale of the In case of an inheritance or gift will there be any tax
individual, the price paid for the artwork is generally asset in the ordinary course of business. Art pieces are levied?
The insurance value does not equal the fair market val- considered to be the market value. For legal entities, in general unique items and there is normally neither
ue in most cases, as the insured value also contains pa- however, the valuation of an artwork is more relevant a periodic return of the asset nor is there a liquid mar- Sweden does not levy any tax on inheritance or gifts.
rameters such as replacement costs. since the disposal of an asset below market value could ket with regular trade. The valuation of art pieces can
trigger taxation (Sw. uttagsbeskattning).
Increasing insurance values are an indicator of increas-

3. Taxation of legal entities (as owner of the artworks)

2. Taxation of Art
3.1. Corporate income taxes Are there any general advantages of a legal entity as
How are profits deriving from the sale of artworks owner of artworks instead of a private ownership?
2.1. Individuals Income from self-employment: taxed?
Is there an obligation of declaring | disclosing private From a tax perspective, as a general rule it should be
artworks to the tax or other authorities (list of inven- → Income from self-employment is taxable. To be con- Net profits deriving from the sale of artworks are more profitable for a private individual who is not
tories or alike)? sidered self-employed, the taxable person should, subject to corporate income tax and taxed at a rate of self-employed to sell artworks directly than through a
as a general rule, carry on independent commercial 21.4% (2020). The classification of the artwork as a cap- legal entity, since income of a legal entity is subject to
There is no obligation to disclose private artworks to operations for profit. Thus, where a private individ- ital asset, stock, or machinery and equipment should double taxation (profits of a legal entity and dividends
the Swedish Tax Agency. ual carries on independent commercial operations not be relevant in this connection. distributed to shareholders are taxed separately).
for profit by acquiring and/or selling artworks, he/
2.1.1. Income taxes she could be considered self-employed and taxed as
Is income generated from the sale of artworks taxed such.
in your country? If yes, please indicate how (i.e. capital
gains tax | income from self-employment). 2.1.2. Wealth taxes
4. VAT | Customs
Does your country envisage any specific categories of
Capital gains/income: classification of artworks (e.g. tax-exempt personal
belongings/household)? When selling or dealing with works of art within your When works of art cross the border of your country
→ Capital gains generated from the sale of private- country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?
ly held personal belongings are tax exempt up to Yes, capital gains generated from the sale of privately
50,000 kr. For a capital gain (on personal belong- held personal belongings are tax exempt up to 50,000 The supply of art by an artist is VAT exempt if the tax- Art pieces crossing the border to Sweden are generally
ings) exceeding 50,000 kr, a general deduction of kr. Belongings will normally be considered personal if able amount is below 300,000 kr. The supply of art by subject to tax. The VAT rate for imported art is 12% in
25% of the price paid (for the belonging) is granted. they are predominantly used by the taxable person or an artist is only taxable if the taxable amount exceeds Sweden. The margin scheme is applicable for transac-
→ What constitutes personal belongings is not defined his/her family for e.g. decorative purposes. It is the ac- 300,000 kr. The Swedish VAT rate for art sold by the art- tions within the EU. Visual and auditory materials of
in the Swedish Income Tax Act. Belongings will nor- tual use of the assets that is decisive. For further infor- ist or its estate is 12%. cultural character can be imported free of import du-
mally be considered personal if they are predomi- mation, see supra 2.1.1. ties whoever the consignee and whatever the intend-
nantly used by the taxable person or his/her family For other supplies of art, the Swedish VAT rate is 25%. ed use of materials is.
for e.g. decorative purposes. It is the actual use of Is there an obligation to declare works of art in the tax
the assets that is decisive. With regard to artworks, return? Please indicate how this is done or if there is Works of art are also subject to the margin scheme un- Collector’s pieces and works of art which are not in-
a distinction could be made between an artwork any other obligation of declaration. der the VAT Directive. The margin scheme is therefore tended for sale are in some cases exempt from custom
kept as a decorative object (normally a personal be- applicable to taxable dealers’ supplies of works of art. duties and VAT when imported into Sweden. The goods
longing) and an artwork stored in a safety deposit There is no obligation to declare works of art in the an- are exempt if the importer is a gallery, museum or an-
(normally not a personal belonging). nual tax return. other institution approved by the Swedish Customs for

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the purpose of duty-free admission of these goods.

Duty-free admission is not allowed if the goods are
sup-plied against consideration from a taxable person.
Erik Nilsson
Senior Manager

[email protected] +46 (0) 8528 01 296

5. Voluntarily disclosure program
Specialization
→ Swedish & international corporate and individual taxation –
What is the procedure in a voluntary disclosure of pre- in particular;
viously not properly declared art works and what are Where a voluntary disclosure of previously not properly » Tax restructuring for private clients and for closely held companies
the expected consequences? declared income is submitted, no tax surcharge can be » Voluntary disclosure of foreign assets
levied and there can be no prosecution. The disclosure » Tax litigation
As stated above, capital gains generated from the sale must be voluntary and thus it must be initiated before » Cross border transactions
of artworks may be taxable. For private individuals, cap- the Swedish Tax Agency has initiated a case related to → Tax Compliance & Integrated Tax Services
ital gains generated from the sale of privately held per- the relevant income and before the Swedish Tax Agen- » Expatriates taxation
sonal belongings are tax exempt up to 50,000 kr. That is, cy has made public a general check of a certain area to » Establishment in Sweden
income tax is payable if the capital gain exceeds 50,000 which the relevant income is connected.
kr. A legal entity that sells artworks are subject to corpo-
rate income tax by a rate of 21.4% (2020). Capital gains It is preferable to make a voluntary disclosure of previ-
as well as net profits deriving from the sale of artworks ously not declared income by submitting a letter to the
should be dis-closed in the individual’s/company’s an- Swedish Tax Agency. There are no formal requirements
nual income tax return. In case taxable income has not as to procedure, but there are recommendations issued
been disclosed, there is a standard procedure for volun- by the Swedish Tax Agency on how to disclose income
tary disclosure. on foreign assets which have previously not been de-
clared properly.
The procedure is as follows, if taxable income has not
been disclosed in the income tax return - the Swedish Does your country have a non-punishable voluntary
Tax Agency may reassess the tax returns and levy a 40% disclosure programme?
tax surcharge. The statute of limitation is five years (be-
fore the year of taxation). If the additional tax is signif- Yes, by submitting a voluntary disclosure companies
icant a reassessment can lead to prosecution. In these and individuals can avoid tax surcharge and eventual
cases, the statute of limitation is ten years. prosecution. For more information, see answer above.

6. Special provisions re taxation of arts

[Trust | foundation]

Please see answers above. There are no special provi-

sions regarding taxation of arts other than the regula-
tions mentioned. Svalner
Smålandsgatan 16
111 46 Stockholm

WTS Global in Sweden, Svalner.

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Anna Maria Maiolino – Na Horizontal (On the Horizontal) WTS Global Guide on Taxation of Artwork | Switzerland
2014/2016 | Copper wire and raku ceramic on metal structure
Ed. 2/3 + 1 AP (unique variant)
282 x 150 x 25 cm / 111 x 59 x 9 7/8 in
© Anna Maria Maiolino | Photo: Everton Ballardin

1. Legal Framework

1.1. The net equity is taxed proportionally, expressed in

How are income and wealth taxed in your country? per mille of the taxable net equity.

The income of individuals who are domiciled or work 1.4.

in Switzerland is taxed at the federal, cantonal and What is the range of the applicable tax rates for legal
communal level, while their net assets (gross assets – entities on profit and capital?
debts) are taxed at cantonal and communal level only.
Capital gains on privately held, movable assets are For companies subject to ordinary taxation, the range
generally tax exempt. is between 12% and 24% on the profit before tax.

The taxation of the net income is progressive, but On net equity, the tax rates vary between 0.07% and
capped at a maximum rate. The tax rates vary from 0.52% depending on the canton.
Canton to Canton.
1.5.
The taxation of net assets is also progressive and What kind of valuation is generally accepted in respect
capped at a maximum rate. The Cantons usually allow of certain assets (such as art) by the tax authorities?
social deductions on the amount of net assets. Moreo-
ver, almost all Cantons grant a tax allowance on a cer- In general, privately held assets are valued at their fair
tain amount of wealth that will not be taxed. market value. There is very little legislation in this re-
spect, thus the valuation theme entails difficulties and
1.2. there are considerable cantonal differences.
What is the range of the applicable tax rates for indi-
viduals on income and wealth? The fair market value is defined as the objective mar-
ket value of an asset and equals the price which could
The rates vary from Canton to Canton. For income tax be achieved in case of a sale of the asset in the ordinary
purposes, it is between 12% and 40%. For wealth tax course of business. Friendship prices or sentimental
purposes, the net assets are taxed at between 0.1% values are therefore irrelevant. The fair market value
and 1.0%. is usually an estimated value or a comparable figure,
except for assets subject to regular trade. For the lat-
1.3. ter, the fair market value is usually available.
How are profit and net equity taxed in your country?
When it comes to art pieces, which are usually unique
The profit of a legal entity is taxed at federal, can- items, there is normally neither a periodic return on
tonal and communal level, whereas the net equity is the asset, nor is there a liquid market with regular
taxed at cantonal and communal level only. The basis trade. The valuation of art pieces can therefore not be
for the profit taxation is the profit and loss statement, conducted by means of a comparable fair market value
to which certain adjustments can be made that differ or a yield formula taking into account capitalized earn-
from the treatment under commercial law, but are ings, the standard valuation method in Switzerland.
allowed from a tax perspective (e.g. losses carried It will become evident that the valuation of art pieces
for-ward, higher write-offs that are accepted for tax entails substantial legal uncertainty in Switzerland. In
purposes). Tax rates vary from Canton to Canton. The practice, the following methods do exist: The (i) pur-
net equity of a legal entity is taxed on a cantonal and chase price, (ii) insurance value and (iii) other methods.
communal level only.
The purchase price is not very conclusive: The devel-
The profit is taxed proportionally on a federal level, opment of a market-driven price is often the result
whereas on a cantonal and communal level, different of unknown agreements, personal preferences and

Switzerland systems apply (i.e. proportional, progressive or mixed

rates).
individualised intentions of the market participants.
Furthermore, the purchase price must be reduced by

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commissions resulting from the sale. some can-tons envisage the declaration of only 50% of 2.1.2. Wealth taxes Is there an obligation to declare works of art in the tax
the insurance value. Does your country envisage any specific categories of return? Please indicate how this is done or if there is
Due to the complexity of valuation, the Swiss tax au- classification of artworks (e.g. tax-exempt personal any other obligation of declaration.
thorities mostly take into account the insurance value In many cases the price of an art piece decreases over belongings/household)?
of the art piece. The insurance value does not equal the the years. Increasing insurance values are however Cf. 22 – 25
fair market value in most cases, as the insured value an indicator of increasing market values. There is the According to the Tax Harmonization Act, household
also contains parameters such as replacement costs possibility to get an expert opinion, contact databases, goods are tax free. This may lead to difficult questions How are works of art valued for tax purposes in your
(i.e. commissions for auction houses, dealer’s margins gallery catalogues or auction results. All these auxilia- regarding the classification of household goods and country? Are there any common and accepted valua-
and the like). Such costs may add up to 50% of the pur- ry factors may be taken into account in order to deter- assets. tion methods, i.e. at cost, insured value, market price?
chase price. Moreover, a surcharge of up to 30% when mine an art piece’s value. It is the taxpayer’s right to
determining the insurance value is usual in the indus- prove another value than the insurance value. The distinction of whether a good classifies as house- Cf. 1.5
try. Due to these specialities of the insurance value, hold good or as taxable asset is made on grounds of
the function of the good. The value of an art piece is 2.1.3. Inheritance | gift taxes
therefore generally not decisive. Household goods In case of an inheritance or gift will there be any tax
are items serving residential purposes and are in the levied?
house, that are usual in terms of home furnishing, as
2. Taxation of Art in everyday objects, such as furniture, rugs, paintings. Inheritance tax and gift tax follow the same methodol-
Such household goods are personal belongings that ogy in Switzerland, i.e. what applies for inheritance tax
serve the taxable person in everyday life and are not also applies for gift tax and vice versa. Inheritance and
2.1. Individuals When is an individual considered to be a professional primarily held as a capital investment. This means that gift taxes are only levied on the cantonal level. The tax
Is there an obligation of declaring | disclosing private art dealer and what are the consequences under this an art piece, serving as a decorative object, like an item is levied in the canton of the donor’s respectively the
artworks to the tax or other authorities (list of inven- qualification (e.g. social security, deductibility of loss- of furniture, may well be a household good. However, testator’s last domicile (except for real estate located in
tories or the like)? es and expenses etc.)? the specific circumstances of every single case must be a different canton). The tax is to be borne by the donee
taken into account. Items which are serving living pur- respectively the heir.
In general, the classification of an art piece as (tax If the sale happens as an act of management of private poses but also serve capital investment purposes are
exempt) household good or (taxable) asset is crucial assets and does not exceed the “common” manage- no longer classified as house-hold goods. If art is either gifted or inherited, the crucial question is
when deciding whether or not the art piece has to be ment of assets, i.e. the capital gain is made from a ran- in which family relation the donee respectively the heir
declared in the tax return. domly arisen opportunity which has been exploited, The following criteria is used for classification: (i) ac- stands to the donor respectively the testator. In almost
the capital gain is generally tax free. As the capital gain tual use and purpose, (ii) common furnishing and (iii) all cantons, gifts respectively inheritances to spouses
There is no explicit obligation to disclose taxable pri- does not qualify as income, there are no social security character of capital investment. In case of collections, and children are tax free. Therefore, the question of val-
vate art pieces to the tax authorities. In order to pre- contributions owed on the capital gain. Then again, a the motive of gathering and owning is usually para- uation in gift or inheritance cases involving art is often
vent conflicts, it is however advisable to declare art loss as well as expenses made in the course of the sale mount, especially if financial resources are used to cul- not relevant. However, if art pieces are gifted or pass by
pieces, if they are considered to be taxable assets, in cannot be deducted from the taxable income. tivate the collection. In this case, the investment of fi- inheritance to persons to whom the tax exemption does
the yearly tax return. In practice, there is the possibility nancial resources in certain items is predominant, even not apply, the question of the value of the asset arises.
of declaring art pieces “pro memoria”. This means that If the sale of (an) art piece(s) is however, viewed as a if the items are part of the furnishing (i.e. designer fur-
the art piece is listed with a value, but not taxed. In this whole, aimed at the earning of capital gains, the tax niture, pictures, paintings, statues) or used personally There are usually tax allowances on gifts or inheritanc-
respect, cf. the issue of distinction between tax free authorities usually qualify the existence of self-em- (i.e. watches, jewellery). es. The applicable tax rate depends on the degree of
household goods and taxable assets, at 2.1.2. below. ployment. This is particularly the case if the taxable kinship. The more distant the kinship, the higher the tax
individual acts according to a plan, combines work According to a decision of the cantonal court of Zurich, rate (from 0% to 55%).
2.1.1. Income taxes and capital and bears the economic risk. It is important even a single art piece cannot be part of the household
Is income generated from the sale of artworks taxed to mention that self-employment may be assumed if it exceeds a “certain value”. There is no strict figure
in your country? If yes, please indicate how (i.e. capital even in case of a single sale of one art piece. In case defining the amount of a “certain value”. This entails
gains tax | income from self-employment). of self-employment, social security contributions are legal uncertainty. In order to be on the safe side, valu-
owed on the sales profits, as these qualify as income. able art pieces should generally be declared in the tax
Capital gains resulting from the sale of privately held, Expenses made in the course of a sale and losses can return, either as assets (resulting in wealth tax) or pro
movable assets are generally tax ex-empt. Income and be deducted from the income from self-employment. memoria. There is a point where even an uninformed
capital gains from self-employment on the other hand taxable person should raise doubts regarding an art
are taxable. It is therefore significant to know if the piece qualifying as tax free household goods. This is
sale of art pieces is considered as a sale of a private as- the case with items that from an objective point of
set or as a sale in the course of self-employment. view are suitable as capital investments.

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3. Taxation of legal entities (as owner of the artworks) 5. Voluntarily disclosure program

3.1. Corporate income taxes chosen in a low-tax canton. Whilst a natural person What is the procedure in a voluntary disclosure of pre- son must seriously endeavour to pay the taxes resulting
How are profits deriving from the sale of artworks would possibly have to declare personally owned art viously not properly declared art works and what are from the disclosure. In case these conditions are all met,
taxed? pieces as assets and pay wealth tax on such value, the the expected consequences? the disclosure does not entail a punishment. However,
art trading company declares them in its balance sheet supplementary taxes and default interest are still owed.
In case of sales of art pieces through a legal entity, net but pays taxes on profit and capital. The profit aris- Switzerland knows the institute of the non-punishable
profits deriving from sales are subject to corporate in- ing from sales of art pieces can be distributed to the voluntary disclosure one can use once in a lifetime. Tax It is important to note that when a tax authority discov-
come tax. Expenses in respect of the sale are generally shareholder as a dividend. Dividends are preferential- fraud can be reported to the tax authorities without the ers a piece of art which has been considered, even in
tax deductible. ly taxed in case of a participation in the legal entity (if consequence of a punishment. good faith, as a household good, but is then classified as
at least 10%). No social security contributions are owed an asset, the non-punishable voluntary disclosure does
Are there any general advantages of a legal entity as on dividend payments. The person making use of the non-punishable voluntary not apply as the notification has not been made of the
owner of artworks instead of a private ownership? disclosure must contact the tax ad-ministration of his or taxable person’s own accord.
From a tax point of view there are no general advan- her own accord. Furthermore, the avoidance must not
If a legal entity works in the field of art trade, the risk tages to own artworks through a legal entity. Howev- be known by the tax authorities in the point in time of Does your country have a non-punishable voluntary
of the natural person, who has brought the art pieces er, social security and confidentiality considerations the disclosure. The taxable person must unconditional- disclosure programme?
into the company, of being qualified as self-employed, may lead to the conclusion of owning the artworks ly in-form and actively help the tax authorities in order
diminishes. The domicile of the legal entity may be through a legal entity. to determine all income and wealth. The tax-able per- Cf. above

4. VAT | Customs 6. Special provisions re taxation of arts

When selling or dealing with works of art within your quirements. If art pieces are crossing the border to N/A
country what VAT implications have to be considered? Switzerland with the purpose of being exhibit in a mu-
seum, the import can be arranged tax free, i.e. with no
The Swiss Federal VAT Act contains an exemption for import tax charges.
art pieces made by painters or sculptors (art. 21 para.
2 ciph. 16 SFVA). The exemption applies for art pieces If an artist intends to import his or her art pieces (as by
that were originally made by the artist by hand and definition from a VAT point of view as described above)
that are in the form of pure art, i.e. the art piece’s pur- into Switzerland, due to the exemption no Swiss VAT
pose is solely to be looked at. Serial products or pieces liability results for the artist. For art imports, it is im-
in the form of commodities (e.g. vases, plates, lamps portant that the art pieces being imported have not yet
and the like), on the other hand, are not exempted and been sold at the point in time of the border crossing. In
sales of these are treated as taxable supply of goods. In practice, not only artists import art, but also gallerists,
case an art piece is reproduced by the artist and the art art mediators and auction houses. It is advisable for
series is, from the outset, a limited edition, numbered such intermediaries to have a signed power of attor-
and signed by the artist, such art series are ex-empted ney from the artist in order to guarantee that the bor-
as well (exemption from the exemption). der crossing remains import tax free.

Turnover generated by art trade through legal entities

is not covered by the exemption of art. 21 para. 2 ciph.
16 SFVA. Such turnover is taxable.

When works of art cross the border of your country

what needs to be considered regarding VAT | customs?

International art trade entails numerous formal re-

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Bruno Bächli
Partner

[email protected] +41 58 9585858

Specialization
→ Bruno Bächli provides national and cross-border tax advice, supporting
private clients, entrepreneurs and medium-sized companies in their
tax planning.
→ This includes in particular tax-related succession and inheritance plan-
ning as well as all asset-related matters (e.g. securities, real estate,
and works of art).
→ Bruno Bächli published in the series “Inherit and Bequeath [Erben
und Vererben]” the volume “Estate planning and inheritance tax [Na-
chlassplanung und Erbschaftssteuer] with the Schulthess Publication
House. The publication is aimed at professionals who advice in the area
of estate planning.
→ Bruno Bächli advises clients also in respect of complex international
social security matter.

Wenger Vieli AG
Dufourstrasse 56
8034 Zurich

WTS Global in Switzerland, Wenger Vieli.

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David Zink Yi – ROMA 395-4 WTS Global Guide on Taxation of Artwork | United Arab Emirates
2006 | Lambda-Print on Alu-Dibond
132 x 104 cm / 52 x 41 in
© David Zink Yi | Courtesy David Zink Yi and Hauser & Wirth

1. Legal Framework

1.1. 1.4.
How are income and wealth taxed in your country? What is the range of the applicable tax rates for legal
entities on profit and capital?
At present, there is no personal income and wealth tax
in the UAE. With respect to branches of foreign banks the tax is im-
posed at the rate of 20% and on companies engaged in
1.2. the production of oil and gas, the tax rates are around
What is the range of the applicable tax rates for indi- 55%.
viduals on income and wealth?
1.5.
Not applicable What kind of valuation is generally accepted in respect
of certain assets (such as art) by the tax authorities?
1.3.
How are profit and net equity taxed in your country? ‘Internation Accounting Standard (IAS) 16 – Proper-
ty, plant and equipment’, as is applicable in the UAE,
Currently, the UAE does not have any federal cor- outlines the accounting treatment for most types of
porate tax regime. Taxation is determined on Emir- property, plant and equipment (PPE). PPE is initially re-
ate-by-Emirate basis (UAE is a federation of seven corded at its cost, subsequently valued either using a
Emirates) and in practice the corporate tax regime is cost or revaluation model and depreciated so that the
only enforced in respect of corporate entities engaged depreciable amount is allocated on a systematic basis
in the production of oil and gas or extraction of natu- over its useful life.
ral resources. Further, some of the Emirates have their
own specific banking tax decrees, which impose cor-
porate tax on branches of foreign banks.

2. Taxation of Art

2.1. Individuals belongings/household)?

Is there an obligation of declaring | disclosing private
artworks to the tax or other authorities (list of inven- Not applicable
tories or alike)?
Is there an obligation to declare works of art in the tax
None return? Please indicate how this is done or if there is
any other obligation of declaration.
2.1.1. Income taxes
Is income generated from the sale of artworks taxed Not applicable
in your country? If yes, please indicate how (i.e. capital
gains tax | income from self-employment). How are works of art valued for tax purposes in your
country? Are there any common and accepted valua-
Not applicable tion methods, i.e. at cost, insured value, market price?

2.1.2. Wealth taxes Not applicable

United Arab Emirates Does your country envisage any specific categories of
classification of artworks (e.g. tax-exempt personal

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2.1.3. Inheritance | gift taxes

5. Voluntarily disclosure program
In case of an inheritance or gift will there be any tax
levied?
What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
Not applicable viously not properly declared art works and what are disclosure programme?
the expected consequences?
Not applicable
As there is no income or general corporate tax, no such
voluntary disclosure scheme exists.
3. Taxation of legal entities (as owner of the artworks)

3.1. Corporate income taxes

How are profits deriving from the sale of artworks Are there any general advantages of a legal entity as
6. Special provisions re taxation of arts
taxed? owner of artworks instead of private ownership?

Such profits are not taxed. None [Trust | foundation]

None

4. VAT | Customs

When selling or dealing with works of art within your The import of artworks would attract 5% customs duty
country what VAT implications have to be considered? along with 5% import VAT. In case the goods are merely
passing through and not being imported into the main-
The UAE introduced VAT with effect from 1 January land, then no such customs duty and VAT implications
2018 at the standard rate of 5%. Accordingly, the im- would arise.
port, buying or selling of artworks within the UAE
would attract VAT at 5%. Zero-rating relief is available In case the goods are being temporarily imported for
when exporting the artwork outside the UAE. exhibition, display, etc, the goods can be imported un-
der the customs duty suspension scheme available for
When works of art cross the border of your country such temporary imports.
what needs to be considered regarding VAT | customs?

There are no special rules with respect to artworks un-

der the UAE VAT and customs regime.

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Yann Mrazek
Managing Director

[email protected] +971 0 429557 27

Specialization
→ Private wealth
→ Tax and immigration
→ Corporate and commercial

M/HQ
Office 13, Al Gurg Tower 3, Baniyas Road,
Rigga Al Buteen, PO Box 186549

WTS Global in the United Arab Emirates, M-HQ.

164 165
Phyllida Barlow – untitled: pinkspree; 2018 WTS Global Guide on Taxation of Artwork | Ukraine
2018 | Filler, PVA, paint, plywood, sand, spray paint, timber
259 x 280 x 226 cm / 102 x 110 1/4 x 89 in
© Phyllida Barlow | Photo: Genevieve Hanson | Courtesy Phyllida Barlow and Hauser & Wirth

1. Legal Framework

1.1. CPT is paid on the total taxable income of the Compa-

How are income and wealth taxed in your country? ny, which is determined as the company’s financial re-
sult before tax calculated under applicable accounting
Wealth taxes are not levied in Ukraine. standards (either Ukrainian accounting standards, or
International Financial Reporting Standards (IFRS)),
There are just certain property taxes (like on land, real and adjusted according to the requirements of the Tax
estate above certain level, luxury cars), which are ap- Code of Ukraine.
plied as local [municipal] taxes.
1.4.
Income for personal income tax purposes is not well What is the range of the applicable tax rates for legal
defined; and what is considered as income is basically entities on profit and capital?
defined on casual level by listing in the Tax Code.
As per the general rule, the tax rate for CPT for the year
In case the tax is received from a person responsible 2019 is 18%. There are several ex-emptions from the
by law for assessing and withholding the person-al in- aforementioned general rule such as profits from in-
come tax (like national employer), the tax is applied at surance activity which are taxed at the rate of 3%, prof-
source of income. its from long-lasting life insurance agreements, which
are taxed at the rate of 0%, profits of non-residents of
For all other cases principally, the income shall be de- Ukraine originating from Ukraine, which are taxed at
clared by submitting annual tax return next year with the rates of 0%, 4%, 6%, 12%, 15% or 20%, and profits
self-assessment and remitting then the tax. from lotteries or gambling are taxed at the rate of 10%.

1.2. 1.5.
What is the range of the applicable tax rates for indi- What kind of valuation is generally accepted in respect
viduals on income and wealth? of certain assets (such as art) by the tax authorities?

Personal income tax for individuals is applied general- No valuation is required for artworks in general for the
ly at the flat rate of 18% plus surcharge 1,5% for army tax purposes.
support. Thus, in total tax burden for individuals is in
total 19,5%. Special tax rates are applied to certain Just for artworks being recognized as cultural valu-
types of income. ables (artworks created 50 years ago and more, al-
though matching other criteria) the state valuation
There is no Wealth Tax in Ukraine. is required by law in case of deals, in order to define
their condition, year of creation, acknowledgment of
1.3. an author, its cultural value, etc. In case of deals with
How are profit and net equity taxed in your country? such artworks the state may have preemptive rights
for purchase at the fair price (valuation).
There is no taxation of net equity.
Cross-border deals might be subject to TP control in
Profits are taxed generally actually when received. certain cases.
Taxable profit for corporate income tax is defined as
the accounting profits with some further adjustments
for the cases directly listed in the Tax Code. the main
tax payable by all companies resident in Ukraine and
permanent establishments of non-resident compa-
nies.

Ukraine
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WTS Global Guide on Taxation of Artwork | Ukraine WTS Global Guide on Taxation of Artwork | Ukraine

2. Taxation of Art 3. Taxation of legal entities (as owner of the artworks)

2.1. Individuals 2.1.2. Wealth taxes 3.1. Corporate income taxes Not-for-profit organizations may be exempted from
Is there an obligation of declaring | disclosing private Does your country envisage any specific categories of How are profits deriving from the sale of artworks tax on these operations provided that they are with-
artworks to the tax or other authorities (list of inven- classification of artworks (e.g. tax-exempt personal taxed? in the main scope of their statutory activity, the profits
tories or alike)? belongings/household)? are not distributed are used exclusively for financing
The Tax Code does not provide any specific rules re- statutory activity of this organization.
The Tax Code of Ukraine does not contain any obliga- Not applicable in Ukraine garding the taxation of the sale of art-works.
tion to disclose private artworks to the tax authorities. Are there any general advantages of a legal entity as
Is there an obligation to declare works of art in the tax Therefore, generally gain on sale (as the difference be- owner of artworks instead of a private ownership?
At the same time, the Law of Ukraine ‘On Preventing return? Please indicate how this is done or if there is tween the sales price and the book value) is included
Corruption’ requires certain categories of individuals any other obligation of declaration. into the taxable profits. Not really
specified in this Law (namely, public figures, public
servants and their close individuals [not only fami- In general no obligation to declare.
ly members but also individuals living together with
aforementioned persons, sharing a household and Just for certain categories of public figures, their family
having common rights and responsibilities of family members etc. there is obligation to declare all valua-
4. VAT | Customs
nature, including individuals who live together with ble items above certain value (currently approx.. Euro
aforementioned persons however, not married to 6 500) per item.
them], who meet the requirements set forth in the When selling or dealing with works of art within your Usually, in order to export artworks, the certificate
Law) to disclose, inter alia, movable valuables with How are works of art valued for tax purposes in your country what VAT implications have to be considered? confirming the right to export an art piece from the
value exceeding certain level (currently approximate- country? Are there any common and accepted valua- territory of Ukraine must be provided to the customs
ly equal to EUR 6,500). tion methods, i.e. at cost, insured value, market price? When selling by individuals, no VAT is applicable. authorities.

2.1.1. Income taxes Valuation shall be done by licensed assessor when it In case of sale through specialised art-dealers, auc- It should be noted that the export of certain types of
Is income generated from the sale of artworks taxed is required by law. Market price is normally accepted, tions, VAT is charged just on commission of that dealer. artworks (listed in the State Register of National and
in your country? If yes, please indicate how (i.e. capital with some rare exemptions. Cultural Inheritance, National Archive Foundation, Mu-
gains tax | income from self-employment). Sales by businesses are normally subject to VAT provid- seums Foundation of Ukraine) is prohibited.
2.1.3. Inheritance | gift taxes ed that the seller is VAT-registered person.
For individuals the sale of artworks is subject to taxa- In case of an inheritance or gift will there be any tax VAT taxation of imports of artwork follows the gener-
tion with PIT and Military Tax under the general rules levied? Several categories of artworks may be exempted from al rules, based on the contract value of such artworks,
set forth for taxation of the sale of movable property. VAT, yet it is rather exemptional approach that is rare however, not lower than its customs value, defined ac-
Gifts and inheritance are treated basically similarly for relevant for usual operations. cording to the Customs Code of Ukraine including cus-
Income is defined for this case as the contract sales the tax purposes. toms duties and fees paid upon their importation.
price, but not less than the valuation when it is re- When works of art cross the border of your country
quired under the law. There are no deductions envis- The inheritance or gift of artworks from the family what needs to be considered regarding VAT | customs? Therefore, importation is normally subject to VAT.
aged for the cost of purchase or the like. members of the first degree of relation (children, par-
ents, spouse) or second degree of relation (siblings, Although there is a general rule that artworks export- However, the Tax Code of Ukraine provides for special
Applicable personal income tax rate is 5% plus 1,5% grandparents, grandchildren) is not taxed. ed under the customs regime of export VAT rate at 0% rules with regard to the importing of artworks under
army support surcharge, thus 6,5% in total. applicable to export transactions, this may not be ap- certain codes of Ukrainian Classification of Goods of
In case of inheritance or gift of artworks from other plied by the dealer under the margin scheme of VAT Foreign Economic Activity (Group 97 which stands for
If respective operations are a part of entrepreneurial persons, PIT at the rate of 5% plus 1,5% of army support taxation. However, the tax legislation provides for ex- artworks), produced 50 years ago and more, which are
activity, then they are taxed at the standard 18% PIT surcharge. port of art-works in export customs’ regime with the ex-empted from VAT taxation.
rate plus 1,5% surcharge. Yet, in such case the tax is ba- VAT tax privilege, which results in exemption from VAT
sically on gain on sale, i.e., the cost of the artwork is In case of inheritance or gift of artworks received from taxation. Moreover, such artworks under certain codes of Ukrain-
allowed for deduction. or by a non-resident of Ukraine, irrespective of the re- ian Classification of Goods of Foreign Economic Activity
lations between the testator and donor, the PIT at the The state valuation is obligatory for the export of art- (Group 97), produced 50 years ago and more, regard-
rate of 18% and Military Tax at the rate of 1.5% applies. works that may be considered as cultural valuables less of their value and the mode of crossing the border
(created 50 years and more ago plus several other cat- of Ukraine performed by the citizens of Ukraine, are
egories). subject to specific written reporting.

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There are a number of formalities which must be ap- Also, if there is a necessity to establish whether the
plied to the import of artworks, such as the provision of artworks imported correspond with requirements set
documents confirming the right to import such goods, forth for VAT exemption, experts might be appointed.
duly legalized in the country of issuance. Alexander Minin
Senior Partner, Attorney at Law

[email protected] +38 (044) 490 71 97

5. Voluntarily disclosure program Specialization

→ Private Client Service,
especially privately owned asset-related matters
What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary → Tax and Customs disputes
viously not properly declared art works and what are disclosure programme? → Criminal Proceeding on White Collar Crimes
the expected consequences? → Tax due diligence
There are just discussion for the moment that some- → Litigation
No special rules apply. thing like this shall be introduced. No such programme → Tax Planning and Structuring
already in place for the moment. → Tax Advisory
→ Agribusiness

6. Special provisions re taxation of arts

[Trust | foundation]

Not yet really developed in Ukraine. Just at the starting

phase.

WTS Consulting, LLC (KM Partners)

5, Pankivska Str., 5th floor
01033 Kyiv

WTS Global in Ukraine, KM Partners (WTS Consulting).

170 171
Rodney Graham – Betula Pendula Fastigiata (Sous-Chef on Smoke Break) WTS Global Guide on Taxation of Artwork | Uruguay
2011 | Painted aluminum lightbox with transmounted chromogenic transparency
243 x 182 x 18 cm / 95 5/8 x 71 5/8 x 7 1/8 in
© Rodney Graham | Courtesy Rodney Graham and Hauser & Wirth

1. Legal Framework

1.1. 1.3.
How are income and wealth taxed in your country? How are profit and net equity taxed in your country?

Individuals and legal entities are subject to tax on their Uruguayan-resident companies and permanent es-
Uruguayan-sourced income. Income tax is only applied tablishments of foreign companies are taxed on their
at the national level. Uruguayan tax residents are also Uruguayan-sourced income. In addition to the taxes on
subject to income tax regarding certain kinds of in- such a corporation’s profit, distributions from the cor-
come generated abroad. poration to both Uruguayan-resident individuals and
foreign shareholders would also be subject to with-
Income tax is levied upon Uruguayan-sourced labour holding tax, applicable on the income subject to cor-
income (i.e. income derived from activities conducted porate income tax.
or services rendered in Uruguay).
The taxed profits accumulated by the company since
In relation to capital income, income tax is applied de- entry into effect of the Business Income Tax that are
pending on the characterization of the in-come. For older than three years will be presumed to have been
non-residents, income tax is levied upon Uruguay- distributed (notional dividends) within the third month
an-sourced capital income. For Uruguayan tax resi- after year end.
dents income tax is also triggered on foreign-sourced
capital income derived from deposits, loans and place- Net equity located in Uruguay at fiscal year end is sub-
ments of capital or credit with entities abroad. ject to net worth tax

Wealth tax is levied in Uruguay at the national level. 1.4.

Individuals who own assets located in Uruguayan ter- What is the range of the applicable tax rates for legal
ritory on 31 December each year which are valued at entities on profit and capital?
above the non-taxable mini-mum, must pay a wealth
tax thereon at progressive rates. The rate is 25% on the net fiscal income of the entity, and
withholding tax on the distribution is at a rate of 7%.
1.2.
What is the range of the applicable tax rates for indi- Foreign companies with no permanent establishment
viduals on income and wealth? in the country are subject to Uruguayan income taxes
on their Uruguayan-sourced income at a general rate of
Income tax on income from labour is applied at pro- 12%, applicable on gross income
gressive rates ranging from 0% to 36% for Uruguayan
tax residents, depending on the income level, and at Legal entities are subject to the net worth tax at a rate of
12% for non-residents. 1,5% on net assets located in Uruguay at fiscal year end.

In relation to capital income, income tax is applied at 1.5.

flat tax rates between 7% and 12% de-pending on the What kind of valuation is generally accepted in respect
characterization of the income. of certain assets (such as art) by the tax authorities?

Wealth tax is applied at 0.5% to 0.8 % for tax residents For legal entities, valuation of assets is generally
and non-residents having an asset that generates in- linked to cost of acquisition and valuation of an expert
come tax in Uruguay. generally is not accepted. In the case of individuals,
valuation of an expert is accepted for certain assets in-
For those non-residents who are not non-resident in- cluding art..
come tax payers, the rate applied is 0.7% to 1.5%.

Uruguay
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2. Taxation of Art 3. Taxation of legal entities (as owner of the artworks)

2.1. Individuals determined on a notional basis as a percentage of the 3.1. Corporate income taxes actions will be subject to a 7% withholding income tax.
Is there an obligation of declaring | disclosing private other assets of the individual subject to the wealth tax. How are profits deriving from the sale of artworks
artworks to the tax or other authorities (list of inven- taxed? Foreign companies with no permanent establishment
tories or alike)? Is there an obligation to declare works of art in the tax in the country are subject to Uruguayan income taxes
return? Please indicate how this is done or if there is The rate is 25% on the net fiscal income of the entity; on their Uruguayan-sourced income at a general rate
There is no legal obligation to disclose private artworks. any other obligation of declaration. for obtaining the net income the company will be able of 12%. In the case of the sale of artworks, the tax rate
to compute the total acquisition price if the seller was is applicable on a notional income of 20% of the trans-
In fact, the value of art works can be computed on a no- No. taxed at an income tax rate equal to 25% or higher. fer price, which derives on an effective tax rate of 2,4%
tional basis and without taking into account their real on the transfer price. If the non-resident entity is in a
market value. How are works of art valued for tax purposes in your As a general rule, all expenses necessary to obtain the low or no tax jurisdiction included in a list issued by the
country? Are there any common and accepted valua- taxable income are deductible when determining net tax authority, the effective tax rate would be 7,5% on
The law establishes that any taxpayer of the wealth tax tion methods, i.e. at cost, insured value, market price? income. However, regulations establish that an ex- the transfer price of the art work.
who has real estate must determine a notional amount pense is only deductible if it constitutes income for the
corresponding to the furnishing included in the proper- For purposes of wealth tax applicable to individuals, other party (resident or non-resident) which is subject Are there any general advantages of a legal entity as
ty/s (including works of art). artworks are included in a category that includes per- to business or personal income tax. These expenses owner of artworks instead of a private ownership?
sonal belonging/households, collections, documents are deductible by multiplying the expense by the ratio
According to that notional regime, the value of the fur- and books, denominated as “ajuar” in Spanish. of the maximum rate applicable to income of the other No. Furthermore, from a tax perspective it is more ben-
nishing or “ajuar” will be calculated as 10% or 20 % of party over 25% corresponding to the IRAE rate. eficial to be a physical person than a le-gal entity, so
the total taxed assets, with deduction of the admitted If the tax payer owns real estate in Uruguay, it will there are no advantages for legal entities as owners of
liabilities. have to compute the “ajuar” as a taxable asset and it The remittance of dividends deriving from such trans- art works.
will include the artworks. The ajuar is calculated on a
Despite this, it is established that individuals domiciled notional basis as the 10% or 20 % of the net value of
abroad who own properties in Uruguay but who do not the other assets subject to wealth tax after deducting
reside there, or do so sporadically, have to have their certain liabilities.
works of art appraised by an expert for purposes of the
4. VAT | Customs
wealth tax. Individuals domiciled abroad who own properties in
Uruguay but who do not reside in the country, or do so
2.1.1. Income taxes sporadically, they do not have to compute the “ajuar” When selling or dealing with works of art within your the artwork from the country.
Is income generated from the sale of artworks taxed as a taxable asset. In such case, if the individual owns country what VAT implications have to be considered?
in your country? If yes, please indicate how (i.e. capital artworks in Uruguay, he would have to compute the
gains tax | income from self-employment). artworks as taxable assets for the wealth tax for the None. Artworks are exempted from the VAT.
market value determined by an expert.
Yes. The sale of artworks triggers a tax equivalent to When works of art cross the border of your country
2.4% of the price of the sale. In fact, the law establishes 2.1.3. Inheritance | gift taxes what needs to be considered regarding VAT | customs?
a way of applying the income tax in which the net in- In case of an inheritance or gift will there be any tax
come obtained from the sale of the artwork is assumed levied? No VAT is applicable on the import or export of art-
to be 20% of the price, and personal income tax at 12% works. Regarding custom duties applicable on the im-
is applied to that percentage. There is no inheritance tax. The donation or transfer for port of artworks, same are applied on the value of the
no consideration made by an individu-al of artwork lo- materials that form part of the artwork not taking into
2.1.2. Wealth taxes cated in Uruguay triggers a tax of 2.4% on the value of consideration the intangible value of the artwork
Does your country envisage any specific categories of the artwork.
classification of artworks (e.g. tax-exempt personal Note that for the export of artwork it is necessary to
belongings/household)? obtain an authorization of the Commission of Cultural
Patrimony of the Nation. If the artwork is considered
Yes. For purposes of paying the wealth tax the art- of cultural interest for the country based on the value
works are included in a category that includes the per- of the piece, the scarcity of similar pieces or any other
sonal belonging/households, collections, documents similar circumstance that shows the singularity of the
and books. This category denominated as “ajuar” is artwork, the Commission can forbid the departure of

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5. Voluntarily disclosure program

What is the procedure in a voluntary disclosure of pre- non-payment of applicable taxes do not generate Gianni Gutiérrez
viously not properly declared art works and what are criminal consequences, but there are economic sanc- Partner
the expected consequences? tions applicable for late payment of the tax (fine of
20% plus interest capitalized every four months). [email protected] +598 2900 1000
There is no specific procedure for voluntary disclosure
of previously not declared artworks. If an individual/ Does your country know a non-punishable voluntary Specialization
legal entity wants to voluntary declare artwork not disclosure programme? → Tax planning
properly declared in the past, he/it will have to file → Preservation and passing on of property
the correspondent tax return including the artwork There is no non-punishable voluntary disclosure pro- → Structuring of trust and other legal entity
and pay the correspondent taxes. . The non-inclusion gramme in Uruguay for the declaration of artworks
of a property in a declaration and the corresponding not properly declared.

6. Special provisions re taxation of arts

There are no special provisions re taxation of arts, oth-

er than the ones already mentioned above

Ferrere
Edificio Ferrere, Juncal 1392
11000 Montevideo

WTS Global in Uruguay, Ferrere.

176 177
David Zink Yi – Neusilber (New Silver) WTS Global Guide on Taxation of Artwork | United States of America
2015 | Stainless Steel | Unique
Each 353 x 100 x 95 cm / 139 x 39 3/8 x 37 3/8 in
© David Zink Yi | Photo: Aaron Schumann | Courtesy David Zink Yi

1. Legal Framework

1.1. 43 states. 7 states levy no income tax at all. The state

How are income and wealth taxed in your country? in-come taxes vary between flat and progressive tax
regimes at rates ranging from 2% to 13.3%.
The United States has federal, state, and local tax juris-
dictions. Income taxes are imposed at the federal, and The tax rate of net capital gains from the sale of cap-
the majority of states, and some local levels. In addi- ital assets depends on the amount of time the capital
tion to income taxes the government imposes an es- assets are held by the taxpayer. Net capital gains from
tate tax on the transfer of the estate of a deceased per- assets held for one year or less are taxed at ordinary
son. A gift tax applies to transfers of property during a income tax rates. Net capital gains from assets held for
person’s life. Furthermore, many states have en-acted longer than one year are taxed at 20% on the federal
sales, estate and gift tax provisions. level. However, certain capital assets that are consid-
ered “collectibles“ are taxable at a maximum rate of
U.S. Persons are subject to U.S. income taxation on their 28%. Collectibles include, but are not limited to, works
worldwide income. The term “U.S. Person” includes of art, rugs, antiques, precious metals and stamps.
U.S. individuals, U.S. corporations, and U.S. trusts. An
individual is a U.S. Person if he or she is either a U.S. In addition, taxpayers with significant investment in-
citizen, regardless of residence, or a U.S. Resident, re- come may be subject to the net investment income tax.
gardless of citizenship. A U.S. Resident for income tax This tax applies to investment income above a thresh-
purposes is a lawful permanent resident, or an individ- old amount and carries a federal tax rate of 3.8%.
ual who meets the “substantial presence” test.
The federal estate and gift tentative tax rate is current-
A U.S. resident for estate and gift tax purposes (e.g. ly 40%. There are several credits against the tentative
wealth transfer taxes) is a person whose primary res- tax, the most important of which is a unified credit
idence, or domicile, is in the U.S. which can be thought of as providing for an exemption
amount with respect to the sum of the taxable estate
Persons who are neither U.S. citizens nor U.S. Residents and taxable gifts during lifetime.
(“Non-U.S. Persons”) are also subject to U.S. income
tax, due to their income effectively connected to U.S. 1.3.
sources such as in-vestment income (e.g. dividends, How are profit and net equity taxed in your country?
rent and interest) or sale of U.S. real property. Non-
U.S. Persons are also subject to income tax at the same For U.S. income tax purposes, businesses generally fall
graduated rates as U.S. Persons on their income earned within two categories of taxation, those that are treat-
in connection with the conduct of a trade or business in ed as a separate taxpayer (“Corporations“), and those
the U.S. that are tax transparent (“pass-through entities“). Cor-
porations pay tax on their net taxable income at the
Estates of Non-U.S. Persons are subject to U.S. estate rates described below. In addition, shareholders are
tax only on U.S. situs assets (e.g. real property situated taxed upon a distribution of taxable corporate profits
in the U.S., tangible personal property situated in the (e.g. dividends). Hence, entities taxed as a corporation
U.S., and shares of stock in U.S. corporations). create a double layer of taxation on income in the U.S.

1.2. The equity owners of the pass-through entities must

What is the range of the applicable tax rates for indi- include their allocated share of the business’s profit
viduals on income and wealth? into their own respective taxable income calculation.
If the pass-through entity owner is an individual, such
Income tax rates graduate at the federal and state lev- income will be taxed only once at the individual in-
els for individuals. For individuals, the federal ordinary come tax rates.

United States of America income tax rates are progressive and range from 10%
to 37%. Individual state income taxes are imposed in Pass-through entities include sole proprietorships,

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partnerships, and eligible corporations that elect to be For charitable giving purposes, the donor must obtain likely to keep the art in storage rather than hanging it taxpayer, generally the gross estate would include all
taxed under subchapter S of the Internal Revenue Code a qualified appraisal of value of any tangible personal on his or her walls. A key consideration is whether the property (including artwork) in which the decedent
(“S corporations“). property (including artwork) that is ultimately donat- tax-payer is engaged in the investment activity with had an interest.
ed for which there is not a readily ascertainable fair the primary objective of making a profit. The investor
1.4. market value. pays 28% on the net gain as long as the work of art was How are works of art valued for tax purposes in your
What is the range of the applicable tax rates for legal held for a least one year. The investor may add to the country? Are there any common and accepted valua-
entities on profit and capital? For estate and gift tax purposes, a qualified appraisal basis of a purchased work of art the expenses related tion methods, e.g. at cost, insured value, market price?
of value on the date of death or the date of the gift is to sale of that artwork. In addition to the federal taxes,
The nominal federal corporate rate is a flat 21% on the not technically required under U.S. tax law. However, art gains are subject to applicable state and local per- The required standard of value for U.S. tax purposes is
profit before tax. Corporate income taxes are levied in asset valuations assessed by taxpayers for estate and sonal income taxes. fair market value, which deems a transaction between
44 states within a range of 2.5% to 12%. There are no gift tax purposes are often challenged by the Internal an assumed willing buyer and assumed willing seller.
preferential capital gains tax rates for corporations. Revenue Service (“IRS”). A qualified appraisal of value A collector is someone who buys and sells works of art Actual transactions of assets, if at arm’s length, can be
Conversely, pass-through entities do not pay an entity by a qualified appraiser can reduce, but not eliminate, primarily for personal pleasure and is neither a deal- used as an indication of fair market value.
level tax except for certain state and local entity level the possibility of the IRS successfully challenging a val- er nor an investor. Although net sales of artwork sold
taxes. uation used by a taxpayer. by collectors are taxed at the capital gains rate of 28%, For charitable giving purposes, the amount of the de-
they may not deduct or capitalize expenses related to duction depends on whether the work of art is long
1.5. In general, privately held assets are valued at their cur- the sale. In addition to the federal taxes, art gains are term capital gain property, short term or ordinary in-
What kind of valuation is generally accepted in respect rent fair market value. Art is defined as a collectible un- subject to applicable state and local personal in-come come property. In addition, the deduction for capital
of certain assets (such as art) by the tax authorities? der the Internal Revenue Code. Due to the complexity taxes. gains property depends on the use of the property. If
of valuation, the IRS mostly considers recent sale val- the donor establishes that the property will be reason-
The required standard of value for U.S. tax purposes is ues and/or recent appraisals from a qualified apprais- In general, an art dealer can deduct the ordinary and ably expected to be put to a related use by the charity,
fair market value, which deems a transaction between er. The Art Advisory Panel of the IRS provides insight to necessary business expenses incurred in the trade or the deduction will be based on the fair market value of
an assumed willing buyer and assumed willing seller. the Art Appraisal Services. The Panel’s objective is to business. However, an investor or collector of art can- the artwork. If the contributed property is not related
Actual transactions of assets, if at arm’s length, can be assist the IRS through the evaluation of art appraisals not deduct art related expenses. In addition to expens- to the charity’s exempt purposes or function, the de-
used as an indication of fair market value. submitted to the IRS for tax purposes. es incurred, losses from the sale of an artwork gener- duction is limited to the cost basis of the artwork.
ally cannot be deducted by a collector.
2.1.3. Inheritance | gift taxes
2.1.2. Wealth taxes In case of an inheritance or gift will there be any tax
Does your country envisage any specific categories of levied?
2. Taxation of Art classification of artworks (e.g. tax-exempt personal
belongings/household)? There are two parts to the Unified Gift and Estate Tax
system in the U.S., the estate tax and the gift tax. The
2.1. Individuals taxpayer is a dealer, an investor, or a collector of art. As of 2019 there is no annual wealth tax in the U.S. for estate tax is a tax on the transfer of the estate of a
Is there an obligation of declaring | disclosing private The distinction will determine whether expenses re- individual income tax purposes. A work of art may be deceased person. The tax applies to property that is
artworks to the tax or other authorities (list of inven- lated to maintaining a collection of art are able to be considered a collectible with an attainable market val- transferred in accordance with a will or according to
tories or alike)? deducted by the taxpayer. ue that would be subject to estate and gift taxes if the the state laws of intestacy. The gift tax applies to trans-
owner is a U.S. person. As stated above, the selling of fers of property during a person’s life.
For U.S. tax purposes, there are no explicit obligations An art dealer is someone engaged in the trade or busi- appreciated works of art would be subject to federal
of a taxpayer to disclose ownership of assets to the tax ness of selling works of art, primarily to customers. All and state income taxes as well as local sales and use If a person transfers artwork as a gift to an individual or
authorities before the death of the taxpayer. income from the sale of art by a dealer is considered taxes. trust, the donor needs to be charged rent by the donee
If a tax return is required to be filed for a deceased ordinary income taxable up to a maximum rate of 37%. or trust if the donor continues to hold the art for his or
taxpayer, generally the gross estate would include all In addition, the art dealer will pay self-employment Is there an obligation to declare works of art in the tax her own personal use and enjoyment. The rent charge
property (including artwork) in which the decedent tax on the profits from the sale of art. Expenses in- return? Please indicate how this is done and if there is is a complex analysis as there is great uncertainty as to
held an interest. curred by the art dealer in the ordinary course of busi- any other obligation of declaration. the fair market value of the use and enjoyment of the
ness are deductible against gross income. In addition art. If the rental value is below market value, the val-
2.1.1. Income taxes to the federal taxes, art gains are subject to applicable As stated earlier, for U.S. tax purposes, there are no ex- ue of the artwork can be included in the donor’s gross
Is income generated from the sale of artworks taxed in state and local personal income taxes. plicit obligations of a taxpayer to dis-close ownership estate. If the rental value is above market value, the
your country? If yes, please indicate how (e.g. capital of assets to the tax authorities before the death of the donor is making an annual gift to the donee or trust.
gains tax | income from self-employment). An investor is someone who buys and sells works of art taxpayer. In addition to the gift and estate tax issues there are
primarily for investment, rather than for personal use also sales tax implications on rental arrangements that
First, a determination must be made as to whether the and enjoyment or as a trade or business. An investor is If a tax return is required to be filed for a deceased need to be considered.

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In addition to the federal estate and gift tax many

5. Voluntarily disclosure program
states have enacted similar taxes.

What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
viously not properly declared art works and what are disclosure programme?
the expected consequences?
3. Taxation of legal entities (as owner of the artworks) As stated above, taxpayers interested in disclosing vio-
Taxpayers interested in disclosing violations of tax re- lations of tax reporting requirements should seek the
porting requirements should seek the counsel of a U.S. counsel of a U.S. law firm that specializes in federal and
3.1. Corporate income taxes legal entity as owner of artworks in-stead of a private law firm that specializes in federal and state voluntary state voluntary dis-closure programs.
How are profits deriving from the sale of artworks ownership. A common pass-through entity in the U.S. is disclosure programs.
taxed? a Limited Liability Company (“LLC”), which is a U.S.-spe-
cific form of a private limited company. It is a business
Corporate income tax is imposed in the U.S. at the fed- structure that combines the pass-through taxation of
eral, most state, and some local levels on the taxable a partnership or sole proprietorship with the limited
income of entities treated for tax purposes as corpora- liability of a corporation. In addition, holding artwork
6. Special provisions re taxation of arts
tions. All income, including gains that are realized from through an LLC may allow a taxpayer to transfer a frac-
the sale of artwork, are subject to the same federal tional interest of an artwork in a tax efficient manner
21% tax rate. Certain deductions available to individu- by transferring interests in the entity to a desired do- Taxation of Art for Trusts ment income. Donations of works of art to a qualified
als may be limited at the corporate level (e.g. charita- nee. When valuing an interest for transfer purposes in foundation potentially entitle a taxpayer to deduct the
ble deductions). Due to the nature of double taxation an entity that owns the art collection rather than in the Trusts can used with increasing frequency by both col- artwork’s full fair market value.
on profits, corporations are rarely created to hold art- art collection itself, valuation discounts may be avail- lectors and dealers for a variety of purposes including
work. able to reduce the value of the entity. The IRS closely asset protection, estate planning and charitable giv- When donating artwork, it must be considered long-
scrutinizes discounts, so retaining a qualified appraiser ing. term capital property to qualify for a tax deduction. In
Are there any general advantages of a legal entity as is required. order to claim an artwork’s current fair market value
owner of artworks instead of a private ownership? If a taxpayer bequeaths art to a trust at their death, the as the value of the charitable deduction, the artwork
estate tax will be due based on the fair market value of must be held for longer than one year.
There are both tax and non-tax advantages of using a the property at the time of their death. If the taxpayer
makes a transfer of artwork to a trust during their life- The donor must also fit the classification of an art col-
time, they will be responsible for a gift tax on the value lector or investor as defined by the IRS in order to claim
of the artwork unless the trust is revocable. In such a an appreciated fair-market-value tax deduction. If the
case, an estate tax is applied (in lieu of the gift tax) on donor is an art dealer or an artist, the donor is only en-
4. VAT | Customs the value of the artwork in trust upon the taxpayer’s titled to deduct the lower of its fair market value on
death. the date of contribution or its cost basis on charitable
donations of artwork. The IRS code treats artists differ-
When selling or dealing with works of art within your collect sales or use tax upon resale. Sales tax must be Although using trusts for art succession planning may ently when they donate artwork they have created. In
country what VAT implications have to be considered? paid by the buyer (e.g. an investor or collector) and col- provide advantages over outright gifts, they present these situations, the artwork is al-ways considered or-
lected by the seller (e.g. a dealer, investor, or collector) a number of unique considerations. A trust does not dinary income property (that is, it is not a capital asset),
In the U.S., there is no current federal VAT on goods or unless (1) the property is sold to a buyer for delivery have the ability to carry forward unused charitable de- and therefore, the deduction is limited to the cost basis
services. Instead, a sales and use tax is employed by out of the state or (2) is purchased by a dealer exclu- ductions, whereas an individual can carry forward the of the art which is determined by the cost of the mate-
most states. Sales tax is payable when tangible prop- sively for resale. State sales and use tax laws vary and unused deduction up to five years. Also, the income rials to create the artwork.
erty (e.g. art) is purchased within a certain state, and it is essential that a tax advisor be utilized to ensure tax brackets for trusts are less favourable than those
use tax is payable when it is purchased out of a state compliance with the required jurisdictions. afforded to an individual taxpayer and this should be
with the intent to use it in that particular state. The use considered when holding income generating property
tax complements the sales tax to ensure that tax is paid When works of art cross the border of your country in certain trusts.
either in the state of purchase or the state of use. what needs to be considered regarding VAT | customs?
Generally, art dealers must register with the state Taxation of Art for Foundations
sales tax department, obtain a resale certificate and Currently, in the U.S. there is no federal VAT on artworks
resale numbers from the state in which the dealer is that cross the borders, rather sales tax is imposed. Cus- Foundations are exempt from income tax, but most are
doing business. An art dealer will not pay sales or use toms reports the importing of art and other tangible subject to a one or two percent “excise tax” on invest-
tax when purchasing a piece of artwork but will rather property to state and local tax authorities.

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Charles J. Vallone Alan T. Frankel

Founding Partner Founding Partner
Co-Head of Business Tax Services and High Net Worth Tax Services Group Co-Head of Business Tax Services and High Net Worth Tax Services Groups

[email protected] +1 (516) 874-8825 [email protected] +1 (516) 874-8815

Specialization Specialization
→ Private Equity Funds, Venture Capital Funds, Hedge Funds, → Private Equity Funds, Venture Capital Funds, Hedge Funds, Real Estate
Real Estate and Multi-Generational Businesses and Middle Market Companies
→ Transaction, M&A and Advisory Tax Services → Transaction, M&A and Tax Advisory Services
→ Cross Border Business, Individual, Estate/Gift Tax Advisory Services → Cross Border Business, Individual, Entrepreneurs,
→ Investment Manager, General Partner Structuring Estate/Gift Tax Advisory Services
and Tax Advisory Services → Investment Manager, General Partner Structuring
→ Private Client Services – Tax Compliance, and Tax Consulting Services
Structuring and Advisory Services → Private Client Services – Tax Compliance, Structuring
→ Family Office Services and Advisory Services
→ Family Office Services

Frankel Loughran Starr & Vallone LLP (FLSV)

1475 Franklin Avenue
Garden City, NY 11530

WTS Global in the United States, Frankel Loughran Starr & Vallone.

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Takesada Matsutani – Red-Sun-P WTS Global Guide on Taxation of Artwork | Vietnam
1972 | Acrylic on canvas
201.3 x 157.8 x 4.4 cm / 79 1/4 x 62 1/8 x 1 3/4 in (framed)
© Takesada Matsutani | Photo: Christopher Burke
Courtesy Takesada Matsutani and Hauser & Wirth

1. Legal Framework

1.1. 1.3.
How are income and wealth taxed in your country? How are profit and net equity taxed in your country?

Corporate income is taxed under the law on Corporate The profit of corporations is taxed under the system of
Income Tax. Personal income is taxed under the law on Corporate Income Tax, the profit of business individu-
Personal Income Tax. als under the system of Personal Income Tax. No tax on
net equity is imposed.
Vietnam has imposed withholding methods on Corpo-
rate Income Tax, Personal Income Tax and Value Added 1.4.
Tax. What is the range of the applicable tax rates for legal
entities on profit and capital?
There is no general tax on wealth up to now. A land tax
is imposed on the non-agricultural use of land. Corporations are taxed at 20% on their profit. In certain
cases tax reductions or exemptions can be achieved.
1.2. No tax is applied on the capital. A license tax of around
What is the range of the applicable tax rates for indi- 150 USD is applied per year for each corporation.
viduals on income and wealth?
1.5.
Non-resident individuals being employees are taxed What kind of valuation is generally accepted in respect
at 20% on their Vietnam-sourced income, regardless of of certain assets (such as art) by the tax authorities?
where it is paid. For business income, the rate is 1% to
5%. In civil transactions, the assets are generally valued by
agreement between the contracting parties or as de-
Resident individuals are taxed on their world-wide in- termined by a third person at the request of the parties
come with a progressive rate of up to 35%. following the principle of market prices. Where the
law stipulates that the price must conform with the
No tax is imposed on wealth. The tax on land use rang- regulations of the authorized State agency, the agree-
es from 0.03% to 0.15% on the land use price. ments between the parties on the price of assets must
comply with such regulations.

2. Taxation of Art

2.1. Individuals of the Culture - Sports and Tourism Department.

Is there an obligation of declaring | disclosing private
artworks to the tax or other authorities (list of inven- Where income is received in the form of royalties from
tories or the like)? artistic and scientific works, the declaration on Personal
Income Tax will have to refer to the related artworks.
There is no regulation imposing an obligation of dis-
closing/declaring a privately owned artwork to a state 2.1.1. Income taxes
authority. The obvious exception is the case where a rel- Is income generated from the sale of artworks taxed
ic, antique, or national treasure has been found on the in your country? If yes, please indicate how (i.e. capital
territory of Vietnam i.e. on the mainland, islands, inter- gains tax | income from self-employment).

Vietnam nal waters, territorial sea, exclusive economic zone and

continental shelf. That must be reported to the Director The tax rate for income from capital investments is 5%,

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the income from transferring artwork will be taxed at 2.1.3. Inheritance | gift taxes
4. VAT | Customs
5% as a copyright transfer, the tax rate for business in- In case of an inheritance or gift will there be any tax
come is 1% to 5%. levied?
When selling or dealing with works of art within your When works of art cross the border of your country
2.1.2. Wealth taxes Income from an inheritance or gift is taxed at 10%. The country what VAT implications have to be considered? what needs to be considered regarding VAT | customs?
Does your country envisage any specific categories of amount exceeding 10 million VND (around 450 USD)
classification of artworks (e.g. tax-exempt personal per case is taxable. When selling, the seller usually will have to add VAT For exportation, the VAT rate zero applies. For importa-
belongings/household)? onto the invoiced amount. The following are not sub- tion, usually the VAT rate of 10% applies
If the artwork is real estate and passes by inheritance/ ject to VAT according to Art 5 No. 15 Law on VAT: “Pub-
No. There are no categories of classification of art- is given as a gift to husband/wife, parent/child includ- lication, importation and distribution of newspapers, Applicable customs tariffs depend on the type of goods
works as personal belongings/household. ing parents- and children-in-law, grandparents and magazines, specialized newsletters, political books, and the origin.
grandchildren or siblings, no tax is imposed. textbooks, teaching materials, law books, technical
Is there an obligation to declare works of art in the tax and scientific books, books printed in languages of Temporary import for re-exportation is possible and in
return? Please indicate how this is done or if there is ethnic minorities, propaganda pictures, photos and that case no VAT and no customs duty will be applied,
any other obligation of declaration. posters, including in the form of disks, tapes and elec- but the handling must be done very carefully.
tronic databases; and printing of money.”
No. Artworks are not considered as a special category
for tax purposes. Tax rates are: general rate 10%, reduced rate 5% for
“Cultural activities; exhibitions; …artistic performanc-
How are works of art valued for tax purposes in your es; film, books” and 0% for exportation.
country? Are there any common and accepted valua-
tion methods, i.e. at cost, insured value, market price?

Artworks may either valued as the object of business

income or as income from copyrights. 5. Voluntarily disclosure program

Works of art may be valued at either (i) market prices of

these assets or (ii) like assets of the same kind (if any). What is the procedure in a voluntary disclosure of pre- Does your country have a non-punishable voluntary
viously not properly declared art works and what are disclosure programme?
the expected consequences?
No. Vietnam does not follow the concept of a non-pun-
No special regulations regarding artworks exist. ishable voluntary disclosure.
3. Taxation of legal entities (as owner of the artworks)
Taxpayers having committed tax offenses (“viola-
tors”), whether deliberately or unintentionally, incur
3.1. Corporate income taxes a license for trading artwork (or any other product) in administrative penalties.
How are profits deriving from the sale of artworks Vietnam. For a compliant handling of all activities, set-
taxed? ting up a legal entity is recommended. If the intention
is limited to buying in Vietnam and exporting, no legal
The profit of the company is taxed in the same way entity in Vietnam is required..
whether the traded goods are artworks or not. The
6. Special provisions re taxation of arts
general tax rate is 20% on the profit.

If the company is not licensed to perform the business Vietnam law allows the foundation of various types of enjoy tax reductions or exemptions. For certain pro-
done, the related costs cannot be claimed as deducti- not-for-profit organizations. Regulations are complex, jects of collecting and trading artworks, it might be
ble expense. the structure of these organizations can only partially considered using such organizational form and benefit
be compared to a Trust or Foundation in other coun- from reduced taxation or achieve tax exemption.
Are there any general advantages of a legal entity as tries. However, these not-for-profit organizations will
owner of artworks instead of a private ownership?

A private person being a foreigner will not easily obtain

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Wolfram Grünkorn
Resident Partner

[email protected]

+84 28 7302 5772

Specialization
→ Taxation of project business in Vietnam
→ Investing and operating business in Vietnam
→ Investment of Vietnamese individuals abroad
→ Taxation of individuals in relation to Vietnam

WTS Tax Vietnam Co. Ltd. | Grünkorn & Partner Law Co., Ltd.
8th Floor, TMS Building 172 Hai Ba Trung,
District 1, Ho Chi Minh City

WTS Global in Vietnam, WTS Tax Vietnam.

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Contact

Austria Costa Rica Hungary Norway Spain The United States

Mr. Gottfried Schellmann Mr. Erik Ramirez V. Mr. Tamás Gyányi Mr. Ulf H. Sørdal Mr. Roberto Peluso Mr. Charles Vallone
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www.wts.com www.m-hq.com

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About Hauser & Wirth About WTS Global

Hauser & Wirth was founded in 1992 in Zurich by Iwan complex, in downtown Los Angeles in 2016. In 2018, With representation in over 100 countries, WTS Global local players in their home market who are united by
Wirth, Manuela Wirth and Ursula Hauser, who were Hauser & Wirth Los Angeles was awarded Los Angeles has already grown to a leadership position as a global the ambition of building a truly global practice that de-
joined in 2000 by Partner and President Marc Pay- Conservancy’s highest honor, the Chair’s Award, which tax practice offering the full range of tax services and velops the tax leaders of the future and anticipates the
ot. A family business with a global outlook, Hauser & recognizes the importance of preserving the historic aspires to become the preeminent non-audit tax prac- new digital tax world.
Wirth has expanded over the past 29 years to include places in Los Angeles. In 2020, Hauser & Wirth opened tice worldwide. Clients of WTS Global include multina-
outposts in Hong Kong, London, New York, Los Ange- its first purpose-built gallery space at 542 West 22nd tional companies, international mid-size companies as WTS Global effectively combines senior tax expertise
les, Somerset, Gstaad, St. Moritz, Southampton (NY), Street in New York’s West Chelsea art district. In July well as private clients and family offices. The Private from different cultures and backgrounds and offers
Menorca, and Monaco. The gallery represents over 2021, the gallery opened a 1,500 sq.m. art center on Clients Global Service Line consists of dedicated ex- world-class skills in advisory, in-house, regulatory and
80 artists and estates who have been instrumental in Menorca after a two-year conservation project, sen- perts from 60 countries. digital, coupled with the ability to think like experi-
shaping its identity over the past quarter century, and sitively repurposing existing historic buildings on the enced business people in a constantly changing world.
who are the inspiration for Hauser & Wirth’s diverse island with architect Luis Laplace. The member firms of WTS Global are carefully select-
range of activities that engage with art, education, ed through stringent quality reviews. They are strong For more information please see: wts.com
conservation and sustainability. As a publisher specializing in books on modern and
contemporary art, Hauser & Wirth has published over
Hauser & Wirth has built a reputation for its dedica- 120 titles in its quarter-century history of exhibitions,
tion to artists and support of visionary artistic projects projects and research. Hauser & Wirth’s publishing ac-
worldwide. Since its earliest days, the gallery has tivity, brought together under Hauser & Wirth Publish- Imprint
mounted historically significant exhibitions. The inau- ers, consists of monographs, artists’ books, historic ex-
gural exhibition in 1992 took place at Hauser & Wirth’s hibition catalogues, collections of artists’ writings and
first gallery, located in the first-floor apartment of an catalogues raisonnés. Hauser & Wirth Publishers works WTS Global
Art Deco villa in the heart of Zurich; it united mobiles with academics and curators to bring current, leading P.O. Box 19201 | 3001 BE Rotterdam
and gouaches by Alexander Calder with sculptures and research to its readers. Netherlands
paintings by Joan Miró. Since then, the gallery has con- T +31 (10) 217 91 71 | F +31 (10) 217 91 70
tinued to forge an academically rigorous, ambitious A commitment to education underpins the Hauser & wts.com | [email protected]
program of historic exhibitions, providing a natural Wirth exhibition roster. Every show is accompanied by
home for a number of major 20th-century Europe- a series of lectures, interactive seminars, innovative The above information is intended to provide gener-
an and American artist estates. These include Louise workshops, and special events developed for a range al guidance with respect to the subject matter. This
Bourgeois, The Estate of Philip Guston, The Eva Hesse of ages and target audiences. These programs are in- general guidance should not be relied on as a basis for
Estate, Allan Kaprow Estate, Mike Kelley Foundation tended to inspire creativity and foster a passion for undertaking any transaction or business decision, but
for the Arts, The Estate of Jason Rhoades, Dieter Roth contemporary art, nature and architecture within all rather the advice of a qualified tax consultant should
Estate and The Estate of David Smith. areas of the community. In Somerset, the gallery has be obtained based on a taxpayer’s individual circum-
created strong links with local schools, universities stances. Although our articles are carefully reviewed,
Hauser & Wirth is widely admired for a sympathetic ap- and charities, and also provides courses for adults and we accept no responsibility in the event of any inaccu-
proach to restoring historic buildings and giving them a special interest groups. Hauser & Wirth Somerset wel- racy or omission. For further information please refer-
new lease of life as contemporary art spaces that invig- comes around 100 school groups every year. to the authors.
orate surrounding communities. From the conversion
of its first permanent venue in the former Löwenbräu
brewery building that became Hauser & Wirth Zürich
in 1996, the gallery has developed and sensitively re-
stored existing structures that respond to their envi-
ronments, connecting international art with local cul-
ture through architecture. In recent years, the gallery
has renovated Durslade Farm, a collection of dilapidat-
ed farm buildings in rural Somerset, into world-class
art center Hauser & Wirth Somerset, as well as redevel-
oping a 100,000 sq. ft. former flour mill, the Globe Mills

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WTS Global Guide on Taxation of Artwork | 2021