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Tax reduction for the purchase of works of art and musical instruments

Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister)

The company who buys a original work of art or a musical instrument before 31 December 2025 may to deduct the purchase price of its taxable profit or loss. In order to benefit from this tax advantage, the company must meet certain conditions.

Works of art

The tax deduction for the purchase of a work of art is available to the following companies:

  • Businesses subject to business tax —As of right (automatically) or on option
  • Businesses and sole proprietors subject to income tax in the BIC: titleContent

Warning  

Companies subject to income tax in the category of non-commercial profits (NBC) are excluded from this scheme.

The tax deduction applies to the purchase oforiginal works and entirely executed by the hand of the artist :

  • Table, painting, drawing, watercolor, gouache, pastel, monotype
  • Etching, stamp and lithography, drawn in limited number directly from boards. The technique or the material used is not important, with the exception of any mechanical or photomechanical process
  • Production in all materials of statuary art or the sculpture and assembly
  • Sculpture cast iron limited to 8 copies and controlled by the artist or his assigns
  • Tapestry handmade, based on original cartons provided by the artist, limited to 8 copies
  • Unique copy of ceramic, signed by the artist
  • Enamel on copper, up to a limit of 8 numbered copies and bearing the signature of the artist
  • Photography taken by the artist, drawn by him or under his control, signed and numbered up to 30 copies, all formats and supports.

However, manufactured goods manufactured by craftsmen or industrialists craftsmen or craftsmen are not original works. Similarly, jewelry, goldsmiths' and jewelry are excluded from the scheme.

Warning  

The works purchased for resale and which are included in the company's stocks shall not be eligible for the deduction. For example, dealers, art galleries or any company involved in art transactions are excluded the tax deduction scheme.

In order to benefit from the tax deduction, the company must ensure that several conditions are filled.

Artist still alive

The artist must be living at the time of purchase of the work. It is up to the company to prove the artist's existence at the date of acquisition.

Exhibition of the work

The company must have the work of art exhibited in a place accessible free of charge to the public or employees (except its offices).

The duration of the exposure shall be 5 years. This period corresponds to the accounting year in which the work was acquired and to the following four years.

Please note

The exposure must be continuous for the required 5 years. It cannot be occasional and limited to one-off events (temporary exhibition, seasonal festival...).

Concretely, the exhibition of the work can be carried out in different ways:

  • In the company premises, provided that they are effectively accessible to the public or to employees
  • In a museum to which the property is deposited
  • In a public establishment of a scientific, cultural or professional nature e.g. universities, colleges, national polytechnic institutes
  • During protests organized by the company or by a museum, a local authority or a public institution to which the property has been entrusted

On the other hand, the work must not be placed in a room reserved for one person only or a small group of people.

Example :

A company that exhibits the work acquired in an employee’s office, a personal residence or in a place reserved for customers would not be able to benefit from the tax advantage.

Whatever the conditions of exposure to the public adopted by the company, the public must be informed the place of exhibition and its possibility of access to the property. The company must therefore communicate the appropriate information to the public.

She has to do it by attractive indications at the exhibition venue and by all promotional means adapted to the importance of the work.

Accounting obligations

The company must respect 2 accounting obligations :

  • Save artwork in immobilization in his accounts
  • Assign the tax deduction amount to a special reserve account, listed in indebted of the balance sheet. The company must attach to its income statement a document concerning the constitution of this reserve, in accordance with the template presented by the tax administration.

Special reserve established pursuant to Article 238a AB of the General Tax Code

The basis of deduction is purchaser's price excluding tax of the work, plus any incidental costs (e.g. transport of the work). On the other hand, costs which are not included in the purchase price (e.g. commission paid to an art dealer) are excluded from the basis of the deduction. These are immediately deductible.

Implementing rules

The tax deduction is spread over 5 years (year of acquisition and subsequent 4 years) in equal fractions. Thus, it is equal every year to 1/5e (20%) of the cost price of the work. If the acquisition is made in the course of the year, the deduction is not reduced pro rata temporis.

Example :

A company acquires the work of a living artist to €1500 HT: titleContent. It may make a tax deduction of €300 each year, between year N (year of acquisition) and year N+4.

The sums are deducted from the profit or loss for the financial year, according to the tax system of the company:

Warning  

the tax cut is not catching up. Any deduction not made by the company in respect of a year is permanently lost.

Limitation of deduction

The sums are deductible up to €20,000 or 5% of turnover excluding company tax where the latter amount is higher. This annual ceiling shall be reduced by the payments made under the patronage.

If the proportion of the purchase price cannot be fully deducted in respect of a year, the unused surplus is lost. It cannot be carried forward to be deducted in a subsequent year.

Example :

1. In year N, a company shall €5 000 000 turnover excluding tax. For that financial year, the applicable ceiling is therefore set at 5‰ of its turnover HT: titleContent (€25,000).

The company acquires the work of a living artist for €150,000 HT: titleContent. The tax reduction will be phased in over the next 5 fiscal years, at most €30,000 per year (150,000/5).

Because of the cap, the tax deduction is limited to €25,000 for year N, the surplus is lost.

2. In year N+1, the company shall €6,500,000 turnover excluding tax. For this financial year, the ceiling shall be €32,500. The company therefore benefits from a tax reduction of €30,000 in year N+1.

This logic is repeated until the N+4 exercise.

The tax advantage granted to the company may be questioned. Therefore, the amount deducted must be reinstated to taxable profit extra-accountancy.

The cases of challenge are as follows:

  • Change of assignment : The work is no longer on public display
  • Transfer of the work : the good comes out of thefixed assets, due to a sale or donation
  • Withdrawal from the reserve account : the withdrawal of all or part of the sums allocated to the special reserve account leads to the reintegration of the sums withdrawn into the profits taxable at the ordinary rate

Musical instruments

The tax deduction for the purchase of musical instruments is available to the following companies:

  • Businesses subject to business tax —As of right (automatically) or on option
  • Businesses and sole proprietors subject to income tax in the BIC: titleContent

Warning  

companies subject to income tax in the non-commercial profits (NBC) are excluded from this scheme.

To benefit from the tax deduction, the company must respect several obligations.

Instrument loan

The company must commit itself to lend the musical instrument to the performers free of charge upon request.

In practical terms, the instrument can be lent to subsequent persons :

  • Person following a musical training at a music school
  • Person with a musical qualification. The diploma must correspond to a cycle 3 of a national conservatory of a region (or a national music school) or a European equivalent
  • Student and former student of the Paris and Lyon National Conservatories of Music
  • Practicing person on a professional basis, a performer activity

The company must be able to demonstrate that it has carried out the publicity of its loan offer to the public potentially concerned. It must also be able to prove that the instruments were lent to performers of the required level.

Accounting obligations

The company must respect 2 accounting obligations :

  • Record musical instrument in immobilization in the company's accounts
  • Assign the tax deduction amount to a special reserve account, listed in indebted of the balance sheet. The company must attach to its income statement a document concerning the constitution of this reserve, in accordance with the template presented by the tax administration.

Special reserve established pursuant to Article 238a AB of the General Tax Code

The basis of deduction is purchaser's price excluding tax the musical instrument, plus any ancillary costs (e.g. transport of the goods). On the other hand, fees paid to intermediaries are excluded from the basis of the deduction. These are immediately deductible.

Implementing rules

The tax deduction is spread over 5 years (year of acquisition and subsequent 4 years) in equal fractions. Thus, it is equal every year to 1/5e (20%) of the cost price of the instrument. If the acquisition is made in the course of the year, the deduction is not reduced pro rata temporis.

Example :

A company acquires a musical instrument for €1500 HT: titleContent. It may make a tax deduction of €300 each year, between year N (year of acquisition) and year N+4.

The sums are deducted from the profit or loss for the financial year as follows, according to the tax system of the company:

Warning  

the tax cut is not catching up. Any deduction not made by the company in respect of a year is permanently lost.

Limitation of deduction

The sums are deductible up to €20,000 or 5% of turnover excluding company tax where the latter amount is higher. This annual ceiling shall be reduced by the payments made under the patronage.

If the proportion of the purchase price cannot be fully deducted in respect of a year, the unused surplus is lost. It cannot be carried forward to be deducted in a subsequent year.

Example :

1. In year N, a company shall €5 000 000 turnover excluding tax. For that financial year, the applicable ceiling is therefore set at 5% of its turnover HT: titleContent (€25,000).

The company acquires musical instruments for €150,000 HT: titleContent. The tax reduction will be phased in over the next 5 fiscal years, at most €30,000 per year (150,000 / 5).

Because of the cap, the tax deduction is limited to €25,000 for year N, the surplus is lost.

2. In year N+1, the company shall €6,500,000 turnover excluding tax. For this financial year, the ceiling shall be €32,500. The company therefore benefits from a tax reduction of €30,000 in year N+1.

This logic is repeated until the N+4 exercise.

The tax advantage granted to the company may be questioned. Therefore, the amount deducted must be reinstated to tax result company.

The cases of challenge are as follows:

  • Change of assignment : the instrument is no longer loaned to a performer
  • Transfer of the instrument : the good comes out of thefixed assets, due to a sale or donation
  • Withdrawal from the reserve account : the withdrawal of all or part of the sums allocated to the special reserve account leads to the reintegration of the sums withdrawn into the profits taxable at the ordinary rate

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