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A business that purchases original works from living artists for public display may deduct the acquisition price from its taxable income. This is also the case for the purchase of musical instruments to be lent to artists. However, these works or instruments must meet certain conditions.
- Corporation subject to corporate tax (either outright or optional)
- Individual enterprise subject to income tax in the category of BIC
Warning : the mechanism of the deduction requires the deductible acquisition price to be recorded in a special reserve account as a liability on the company's balance sheet. This mainly excludes the liberal professions, which do not have the option of creating such an account on their balance sheet liabilities.
Original work by a living artist
To qualify for the deduction, the company must exhibit the work of art in a place accessible free of charge to the public or to employees, except in their offices, for 5 years. This period corresponds to the acquisition year and the following 4 years.
The works concerned are:
- Paintings, painting, drawing, watercolor, gouache, pastel, monotype, entirely executed by the artist's hand
- Engraving, stamping and lithography, drawn in limited number directly from boards entirely executed by hand by the artist. The technique or material used is not important, except for any mechanical or photomechanical process
- Production in all matters of the statuary art or of the sculpture and assembly, as long as this production and assembly are executed entirely by the hand of the artist. Jewelry, goldsmith and jewelry items are excluded.
- Sculpture font with a limited edition of 8 copies and controlled by the artist or his successors
- Handmade tapestry, based on original cardboard provided by the artist, limited to 8 copies
- Unique example of ceramics, entirely executed by the artist and signed by him
- Enamel on copper, entirely executed by hand, within the limit of 8 numbered copies and bearing the artist's signature. Jewelry, goldsmith and jewelry items are excluded.
- Photograph taken by the artist, taken by him or under his control, signed and numbered up to 30 copies, in all formats and formats.
Works purchased for resale are included in the company's inventory (dealers, art galleries, or any company involved in art transactions) and do not qualify for the deduction.
FYI : craft or series productions do not constitute original works.
The artist must be alive at the time of purchase of the work. The company must be able to justify the existence of the artist at the date of acquisition.
The exhibition of the work can be carried out in the following places and situations:
- Premises of the undertaking, provided that they are effectively accessible to the public or to employees
- Events organized by the undertaking or by a museum, territorial authority or public institution to which the property has been entrusted
- Museum to which the property is deposited
- Region, department, municipality or one of their public establishments or a public establishment of a scientific, cultural or professional nature
The exhibition must be permanent (for the required 5 years), and not carried out on the occasion of ad hoc events (temporary exhibition, seasonal festival, in particular).
Regardless of the conditions of exposure to the public adopted by the undertaking, the public must be informed of the place of exposure and its possibility of access to the property. The company must therefore communicate the appropriate information to the public. It must do so by attractive indications at the place of the exhibition and by any promotional means appropriate to the importance of the work.
Warning : the office space in which the work is displayed cannot be a personal office, a personal residence or a place reserved for the company's customers only, for example. Exposure to these premises does not allow access to the tax deduction.
To qualify for the deduction, the company must undertake to lend the musical instrument free of charge to the performers who request it.
The company must be able to justify this commitment by demonstrating that it has informed the potentially affected performers of its loan offer:
- A person who is trained in music at a music school or who has a musical qualification. His degree must correspond to a cycle 3 of national regional conservatory (or national music school) or a European equivalent
- student and former student of the National Conservatories of Music of Paris and Lyon
- a person who carries out a professional activity as an interpreter
The acquisition price of the work of art (or the instrument) may be deducted without an accounting record from the taxable profit of the acquisition period and the following 4 years. This is done in equal parts, or 1/5e (20%) each year.
The basis of the deduction is the cost price of the work or instrument, corresponding to the original value. The original value corresponds to its purchase price, plus any incidental charges and minus the recoverable VAT.
The additional costs, paid upon acquisition of the work of art or instrument (for example, commissions paid to intermediaries), are directly deducted from the total taxable income before tax is calculated. They are not included in the deduction base.
The amount is deductible up to €10,000 or 5 per (per thousand) of turnover excluding tax where the latter amount is higher, less the total payments made in respect of patronage..
If the portion of the acquisition price cannot be fully deducted in respect of a year, the remaining surplus is lost. It cannot be carried over to be deducted in a future year.
For enterprises subject to corporate tax (IS) or income tax in respect of BIC, the sums must be deducted from the result of the financial year:
- The company that falls under the normal real regime must deduct them on table n°2058-A (cerfa n°10951), line XG
- A business that is placed under the simplified tax system must deduct them on Table 2033-B (certificate No. 10957)
Any deduction not made by the enterprise in respect of a year shall be definitively lost.
The enterprise must record an amount equal to the deduction in a special reserve account, which is recorded as a liability on the balance sheet.
In the following cases, this amount must be reintegrated in an extra-accounting manner to the taxable profit:
- Change of assignment (the work is no longer displayed to the public or the instrument is no longer lent)
- Disposal of the work or instrument (the property proceeds from the fixed asset)
- Withdrawal from the reserve account (the removal of all or part of the amounts allocated to the special reserve account will result in the reinstatement of the amounts deducted from the profits taxable at the ordinary rate of duty)
An enterprise may make a provision for depreciation where the loss of value of the work exceeds the amount of deductions already made.
Please note : the ceiling €10,000 shall apply to payments made in the course of financial years ending on or after 31 December 2019.