The advantages of tax exemption for works of art for companies
By buying a work of art, the company benefits from a tax deduction
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This tax deduction is capped and allows the company to choose the most advantageous option for it, namely:
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A reduction of up to 0.50% of turnover excluding tax
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Or a reduction of €20,000.
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The company can then deduct the amount of purchase of the work of art for 5 years in equal fraction. In other words, it can deduct 1/5 of the price of the work each year within the limit of 0.5% of the turnover excluding tax or €20,000.
For example in order to better understand the tax exemption mechanism of a work of art for a company:
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Example 1:
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A company realizes for the year N a turnover of 6 million euros.
She buys a work of art for €20,000.
In this case, it is advisable to choose the ceiling imposed by the 0.5% of the turnover excluding VAT which is here equal to €30,000 (6 million x 0.5%) higher than the alternative ceiling of €20,000
She can thus benefit from the full tax deduction: €20,000 / 5 = €4,000
The company can therefore deduct €4,000 per year for 5 years, up to a maximum of €30,000 for year N.
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Example 2:
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A company realizes for the year N a turnover of 200 000 €.
She buys a work of art for €20,000.
In this case, it is advisable to opt for the alternative ceiling of €20,000, higher than the ceiling of 0.5% of its turnover excluding tax which is here 1,000 euros (€200,000 x 0.5%).
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She can thus benefit from the full tax deduction: €20,000/5 = €4,000.
She can therefore deduct €4,000 per year for 5 years, up to a maximum of €20,000 for year N.
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On the other hand, if the fraction of the price of the works of art cannot be totally deducted over a year, the excess cannot be carried forward. In short, he is lost!
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In order to benefit from tax exemption for a work of art, certain conditions must be met, especially for businesses.
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First of all, companies and individuals must have a purchase invoice for the work. This certificate serves as tax proof and contains the following information: The origin of the work, the amount and the date of acquisition.
Without this invoice, you cannot benefit from the tax advantage. Likewise, this certificate allows you to insure your work of art.
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Only the following companies are affected by the tax exemption system for a work of art:
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Companies subject to IS (corporate tax),
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Sole proprietorships subject to IR in the category of BIC (industrial and commercial profits)
Thus, to benefit from the tax advantages, they must meet the following conditions:
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Acquiring an original work by a living artist: The company must be able to prove the existence of the artist on the date of acquisition of the work.
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Exhibit the work of art: In order to be able to exempt its purchase from tax, the company must exhibit the work of art permanently for 5 years. The exhibition may take place on company premises provided they are accessible to the public or to employees, or in a museum. Indeed, the work cannot be exhibited in a personal office, or a place reserved solely for the company's customers. In this case, the tax deduction is not granted.
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Enter the deductible acquisition price in a special reserve account on the liabilities side of the company's balance sheet. This condition excludes from the system companies subject to IR (income tax) in the category of BNC (non-commercial profits), in other words the liberal professions.
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On the other hand, the liberal professions can benefit from tax advantages when paying a donation to an organization in order to support a work of general interest according to la Law n° 2003-709 of August 1, 2003 relating to patronage, associations and foundations
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The tax exemption for works of art is a system open to everyone: individuals and professionals alike.