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

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

• Businesses subject to business tax —automatically or optional
• Businesses and individual entrepreneurs subject to income tax in the BIC: titleContent

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

• Table, painting, drawing, watercolour, gouache, pastel, monotype
• Engraving, stamp and lithography, drawn in limited numbers directly from boards. The technique or material used does not matter, except for any mechanical or photomechanical process
• Production of all materials the statuary or sculpture and assembly
• Sculpture limited to 8 copies and controlled by the artist or his right-holders
• Tapestry handmade, based on original cardboard provided by the artist, limited to 8 copies
• Unique copy of ceramic, signed by the artist
• Email on copper, up to 8 numbered copies with the artist's signature
• Photograph taken by the artist, drawn by him or under his or her control, signed and numbered up to 30 copies, in all formats and formats.

However, manufactured objects made by craftsmen or industrialists craftsmen or industrialists are not original works. Likewise, jewellery, goldsmithing and jewellery items are excluded from the device.

To qualify for the tax deduction, the company must ensure that multiple are completed.

Artist still alive

The artist must be at the time of purchase of the work. It is up to the company to prove the artist's existence on 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 (excluding 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 4 years.

In concrete terms, the exhibition of the work can be carried out in different ways:

• In company premises, provided that they are effectively accessible to the public or to employees
• In museum to which the property is deposited
• In public establishment of a scientific, cultural or professional nature for example, universities, colleges, national polytechnics
• On protests organised by the company or by a museum, territorial authority or public institution to which the property has been entrusted

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

Regardless of the conditions for public exposure adopted by the company, the public must be informed of 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 place of the exhibition and by all promotional means adapted to the importance of the work.

Accounting obligations

The company must respect 2 accounting obligations ::

• Save the work in asset in its accounts
• Assign tax deductions amount to a special reserve account, listed in liability balance sheet. The company shall include a document on the establishment of this reserve in accordance with the template submitted by the tax authority.

Special reserve established pursuant to article 238 bis AB of the IGC

The basis of the deduction corresponds to tax-free purchase price of the work, to which any incidental costs (e.g. transport of the work) are added. On the other hand, expenses that are not included in the acquisition price (e.g. commission paid to an art dealer) are excluded from the basis of the deduction. The latter are immediately deductible.

Implementing rules

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

Amounts are deducted from the year's income, according to the company's tax system:

• Normal Actual : on table 2058-A line XG (cerfa 15949)
• Simplified tax system : on table 2033-B (cerfa 15948)

Limitation of deduction

Amounts are deductible within€20,000 or 5‰ turnover excluding company tax where the latter amount is higher. This annual ceiling shall be reduced by the payments made under patronage.

If the portion of the acquisition price cannot be fully deducted for a year, unused surplus is lost. It cannot be carried forward to be deducted in a subsequent year.

The tax benefit granted to the company may be challenged. Therefore, the amount deducted must be reinstated to taxable income It's extra-accounting.

Cases of challenge are:

• Assignment Change : the work is no longer exposed to the public
• Assignment of work : the property leaves thelocked in, because of a sale or a donation
• Deduction from reserve account : the withdrawal of all or part of the amounts allocated to the special reserve account shall result in the reinstatement of the amounts deducted from the profits taxed at the common rate of duty