TAX OPTIMIZATION
Reduce your taxes and increase the value of your capital
As a business owner, you may be looking for innovative ways to optimize your tax obligations while also enhancing your company's image and assets.
One such option is to invest in artwork.
This article will explore the tax benefits for businesses in France who acquire art, as well as the fiscal advantages available in other continents such as the United States and Europe.
ARTWORK ART OPTIMIZATION IN FRANCE
According to Article 238 bis AB of the French General Tax Code (Code général des impôts, CGI), companies paying their taxes in France can enjoy significant tax benefits by investing in original works of art created by living artists.
This tax incentive aims to support the art industry and promote cultural patronage.
Eligible companies can deduct the acquisition cost of such artwork from their taxable income over a five-year period.
Eligibility Criteria for Tax Deductible Artwork on Our Website:
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Limited Edition Photography by Aurore Klein: On our website, we offer a selection of limited edition photographs exclusively created by Aurore Klein. These unique photographs are part of a numbered and signed series, ensuring their authenticity and exclusivity by a French certified fine art photo lab and the Aurore Klein, the Artist itself. It is important to note that standard, non-limited edition prints on our website do not qualify for tax deductions. Only the limited edition, signed, and numbered photographs by Aurore Klein meet the criteria for tax optimization.
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Paintings by Aurore Klein: All the paintings available on our website are the original works of Aurore Klein, a living artist. These one-of-a-kind pieces showcase Aurore's creativity and skill, making them eligible for tax deductions. By acquiring a painting from Aurore Klein through our website, businesses can enjoy the tax benefits associated with supporting the arts.
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The Tailor-made service pertaining to photography or canvas artwork is equally eligible for tax deductions.
The amounts are deductible up to a limit of 20,000 € or 5‰ of the company's pre-tax turnover when the latter amount is higher. This annual cap is reduced by donations made for sponsorship purposes.
If a portion of the acquisition price cannot be fully deducted in a given year, the unused excess is lost. It cannot be carried forward to be deducted in a subsequent year.
Example A:
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During year N, a company generates 500,000 € in pre-tax turnover. For this fiscal year, the applicable cap is set at 5‰ of its pre-tax turnover (2,500 €).
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The company acquires several artwork of art from Aurore Klein for 18,000 € pre-tax. The tax reduction will be spread over the next five accounting years, with a maximum of 3,600 € per year (18,000/5).
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Due to the cap, the tax deduction is limited to 2,500 € for year N, and the excess (1,100 €) is lost.
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During year N+1, the company generates 600,000 € in pre-tax turnover. For this fiscal year, the cap is set at 3,000 €. The company thus benefits from a tax reduction of 3,000 € in year N+1, which is less than the maximum annual deductible amount of 3,600 €, so 600 € of excess is lost.
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This logic is repeated until the fiscal year N+4.
Example B:
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During year N, a company generates 5,000,000 € in pre-tax turnover. For this fiscal year, the applicable cap is set at 5‰ of its pre-tax turnover (25,000 €).
The company acquires several artwork of art from Aurore Klein for 150,000 € pre-tax. The tax reduction will be spread over the next five accounting years, with a maximum of 30,000 € per year (150,000/5).
Due to the cap, the tax deduction is limited to 25,000 € for year N, and the excess is lost.
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During year N+1, the company generates 6,500,000 € in pre-tax turnover. For this fiscal year, the cap is set at 32,500 €. The company thus benefits from a tax reduction of 30,000 € in year N+1.
Companies must also display the acquired artwork in a public space accessible to employees and visitors for the duration of the deduction period - 5 years.
TAX ADVANTAGES IN OTHER CONTINENTS
UNITED STATES
In the U.S., businesses can benefit from tax incentives for charitable contributions, including donations of artwork to qualified museums or cultural institutions. Companies may claim a deduction for the fair market value of the donated art, subject to specific limitations and appraisal requirements.
EUROPE
Various European countries offer tax incentives for businesses investing in or donating art. For example, in Italy, businesses can claim tax credits for donations to cultural institutions, while in the UK, the Cultural Gifts Scheme allows companies to reduce their tax liability by donating art or other cultural objects to public collections.
CONCLUSION
Investing in artwork can be a strategic move for your businesses to optimize your taxes while fostering cultural patronage and enhancing your corporate image. By exploring tax incentives available in France, the United States, Europe, and other countries, you can make well-informed decisions and maximize the fiscal advantages of your art investments.
Additionally, as the artist's reputation and prominence grow over time, the value of the artwork increase, making it not only a tax optimization strategy but also a valuable long-term investment.
If you have any questions, we encourage you to schedule a consultation with us.
Our team is more than happy to guide you through the process of selecting and purchasing artwork that best meets your needs and preferences. We are here to provide personalized assistance to ensure a smooth and enjoyable experience while you explore the world of tax-deductible artwork on our website.
