The acquisition of works of art is an essential element of a company’s image and communication strategy. It represents a direct impact on its notoriety and dynamism.
Art in companies can also improve the well-being of employees.
Acquiring a work of art is also an investment that can be eligible for tax exemption. This acquisition does not always require a high budget and brings the necessary potential to allow a return on investment.
Build up a collection of contemporary art, embellish your waiting rooms and halls and save on your taxes!
According to article 238bis AB of the French General Tax Code, companies that purchase works of art from living artists benefit from advantageous tax provisions.
Reason 1
The purchase of original works of living artists can be deducted from an amount equal to the acquisition price of the works concerned with a depreciation over 5 years of 20% of the amount of the acquisitions. The amount is allowed as a deduction from the taxable income of your company up to 0.5 per thousand of the turnover.
Reason 2
The obligation to exhibit to the public is limited to the duration of the depreciation of the good, i.e. 5 years.
Reason 3
Art within your company is a means of affirming your values and your identity, offering a capacity for new discourse to all your collaborators in contact with the customers.
Your sponsorship approach will prove to be as much a management and internal communication tool as a springboard favorable to the company’s image.
It is also possible to optimize your cash flow with a 60-month credit.
If you wish to optimize your cash flow and take advantage of tax benefits, you can opt for a classic credit of up to 60 months. You deduct the loan interest and amortize the amount of the artwork over 5 years.
Companies subject to corporate income tax (IS), either by law or by option,
Individual companies subject to income tax in the category of BIC, excluding BNC (Example: a doctor can not but a medical practice could),
More generally, it is necessary to be able to register the price of the work in a special reserve account on the liabilities side of the company’s balance sheet.
The company must exhibit the work of art and must communicate the location of the exhibition:
In a place accessible free of charge to the public or to employees; on the company’s premises (Example: it cannot be a personal office, a personal residence or a place reserved for the company’s clients only);
Or during events organized by the company or by a museum, a local authority or a public institution to which the property has been entrusted or in a museum to which the property is deposited;
Permanently for 5 years (period corresponding to the year of acquisition and the 4 following years).
The acquisition of original works of living artists and sponsorship, open to a tax deduction capped according to the most advantageous option for the company:
either up to 0.5% of the turnover excluding tax,
or up to 20 000€, an alternative ceiling.
For the purchase of a work of art, the amount of the purchase is deductible from the result of the year of acquisition and over the four following years (i.e. a spreading over 5 years) and this by equal fractions = division of the price of the work by 5.
These 1/5th are therefore deductible within the limit of 0.5% of the turnover excluding tax or 20,000 euros, according to the most advantageous option and reduced by the patronage actions already carried out during the year.
If the fraction of the acquisition price of the work(s) purchased (1/5th) cannot be fully deducted in one year, the unused surplus cannot be carried forward and deducted in the following year, it is lost.
Amended by LOI n°2019-1479 of 28 December 2019 – art. 134 (V)
“Companies that purchase, as of January 1, 2002 and before December 31, 2022, original works by living artists and record them in a fixed asset account may deduct from the income of the year of acquisition and the following four years, in equal fractions, an amount equal to the acquisition price.
The deduction thus made for each financial year cannot exceed the limit mentioned in the first paragraph of the 3 of the article 238 bis, reduced by the total of the payments mentioned in the same article.
To benefit from the reduction envisaged in the first paragraph, the company must expose in a place accessible to the public or to the employees, with the exception of their offices, the good which it acquired for the period corresponding to the exercise of acquisition and the four following years.
The company must enter in a special reserve account on the liabilities side of the balance sheet an amount equal to the deduction made pursuant to the first paragraph. This sum is reintegrated into the taxable result in the event of change of assignment or of transfer of the work or the instrument or of withdrawal from the reserve account.
The company can constitute a provision for depreciation when the depreciation of the work exceeds the amount of the deductions already made under the first to fourth paragraphs. “
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