Art collectors, in some cases, can have a tax benefit on their art collection. If the art is a business asset for the company, but also for private art collectors where art is an exempt asset in box 3. Please pay close attention to the current tax rules.
If you keep a work of art privately in The Netherlands, it generally is taxable in box 3 and is taxed as a benefit from savings and investments. But the tax legislation in the Netherlands includes an exemption for art, for art that is only used for personal purposes. Such as art that you use as decoration for your home.This type of art is exempt from the tax in box 3.
Please note: in order to be able to invoke this tax exemption, you may not keep the art primarily as an investment. The limit is set at 70%. If the tax authorities think that you keep more than 70% of the art as an investment, then it is up to the tax authorities to provide proof of this.
If your John DutchArt Statement Art simply hangs decoratively on the wall in your home, then in principle there is no question of an investment.
If the art that you keep increases in value, then this increase in value will not be taxed, provided it is not an investment. If you collect art as a hobby, but it grows into large-scale art purchases and sales, the profit is potentially taxed (in box 1).
Under strict conditions, art can be used to pay tax debts for inheritance tax. The Royal Dutch Family has also used this ruling before...
This waiver scheme "kwijtscheldingsregeling" has been in place since 1997.
The arrangement means that art from an inheritance can, under certain conditions, be used for remission of inheritance tax. Up to a maximum of 120% of the value of the artifact!
Both renting art and buying art are fiscally interesting in the Netherlands.
The costs for renting and buying art are tax deductible and the VAT can be reclaimed from the tax authorities.
The condition is that this concerns reasonable business expenses, just like the purchase of an office chair or office furniture. A €75,000 painting for a dentist's waiting room will not reasonably be considered a reasonable business expense.
If you buy art as a commodity for the company, you must put it on the balance sheet and depreciate it normally. For example, over a period of 5 years, after which there is still 10% residual value. Similar as you would with a company car or a computer. Often, however, the purchase of art that is not expensive is immediately booked as costs, just as rental costs are booked. Check this in advance with your accountant.
Of course, you do not purchase works of art primarily to benefit from a tax advantage. But if you buy art, it is smart to make use of the existing tax arrangements. Both privately and for your business.
As an entrepreneur you should buy art because:
As a private individual you should purchase art because:
Interesting for you?
Consult with the tax authorities or accountant about the best options for you or your company.
Find in the available artworks your Statement Art that you would like to hang on your wall.
Or check the previously sold artworks to find your inspiration for a painting in commission.
For more information, please feel free to contact me via phone on
06-5358 5395 or use the contact form.
For example. An inheritance is €800,000. The inheritance includes a painting with a value of €100,000.
As an heir, you would have to pay €160,000 (at a rate of 20%) in inheritance tax. If you transfer the painting to the government as an heir, then €120,000 will be waived, after which only €40,000 remains for the inheritance tax to be paid.
The art obtained by the Dutch state through this remission scheme is added to the Collection of the Netherlands ("Collectie van Nederland"), from which it usually goes to a museum.
Note: The art object must be part of the inheritance and must not have been purchased after death. Also, the art may not have been purchased with the assets from the inheritance.
If you want to make use of the waiver scheme, good preparation in advance is important to increase the chance of success. Think, for example, of finding a suitable museum for the art object.
If the art purchase can be regarded as a business investment, it must be included on the balance sheet as a business asset. In that case you can also use the investment deduction. Depending on the total of the investments in a year, you can deduct a percentage of the investment from the profit. It is usually not possible to write off good art, because art does not wear out! This generally does not apply to fine art reproductions and replicas.
Any loss arising from the sale of the art object on the balance sheet is deductible. Any profit is of course taxed.
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