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Invest in Art; advice, taxation and profitability

9 May 2022NEWS

The art market is very attractive but it can also be quite complex. Before investing in a work of art , it is normal to wonder about certain points: why invest in art? How to succeed in your investment? Which work to choose? etc
Today, with the boom in the art market, investing is within everyone’s reach. Whether you are a simple amateur or a fine connoisseur, you will discover here a short overview of the art market, its taxation as well as some advice to help you in your future investments in art .

The rise of the art market

The art market was reserved for an elite, where only the wealthiest could invest in works of art. Over the past few decades, this market has evolved, it has become more democratic and it has become more accessible, in particular thanks to the ease of access to information offered by the Internet. In addition, online sales of works increase international opportunities. Another factor that has contributed to the growth of this market is that art can have a very good return.
The development of the museum economy has also played a role in the growth of the art market . Indeed, in recent years, a large number of museums have opened their doors and have therefore acquired several works of art (on average between 4000 and 5000). Large sums of money can be invested in these works. In addition, these museums only very rarely offer works for sale. These points influence the market by pulling it up.

Moving On, Safa Attyaoui
Moving On, by Safa Attyaoui

Art: a pleasure investment that can sometimes be very profitable

Art is a fun investment that can pay off big. One of the most interesting points in the art market is that it is decorrelated from stock market values. Therefore, it attracts an increasing amount of capital. It should be noted that by making an investment in art , for it to have an interesting return, it is necessary to think long term or even very long term. Indeed, it can be quite complicated to guess the value of a work of art, so it is necessary to make a long-term investment in order to smooth out any fluctuations in the market. However, one must be aware that where certain pieces of art will almost certainly gain in value, others will be risky investments and others should be avoided if the objective is to earn money. This is why art must above all be a pleasure investment! In addition to its financial value, the piece of art that you intend to acquire must, ideally, please you or touch your sensitivity. Whether by its aesthetics or by what it represents, the acquisition of this piece of art should be a pleasure. So, to invest or not to invest? To this question we will answer that if you sincerely like a work of art, it will always be a safe bet.

Like a Real Couple, Safa Attyaoui
Like a Real Couple, by Safa Attyaoui

Taxation of investments in art

The taxation of investments in art can be particularly interesting. Indeed, the possession of a work of art is not subject to taxation, only the capital gain on the resale of a piece of art sold at a value greater than €5,000 is.

In this case, the work can be submitted:

  • Either the flat-rate regime: the tax is 6.5% of the total price of the sale;
  • Or under the actual regime: the tax is 36.2% on the capital gain (19% tax + 17.2% social security contributions).

Another interesting point, a reduction of 5% per year is applied to the tax from the second year of possession. Thus, after 22 years, the tax exemption is total. In this case, it is essential to keep the invoice in order to prove the date of purchase. The flat-rate regime is particularly interesting for people who have acquired a work for a relatively short period of time and who have gained considerably in value. VAT is 20% of the purchase price. However, this value may change, particularly when importing a work from another country, in which case it is 5.5%. Also, no export tax is applied on the resale of a piece of art. Finally, it may be interesting to know that it is possible for heirs to free themselves from their inheritance rights by ceding a piece of art to the State (dation in payment).

Woman in motion, Mejda Ben
Woman in Motion, by Mejda Ben

Investing in art: our advice

To invest serenely in a work of art, there are certain rules to respect:

THE TRACEABILITY OF THE WORK

The work must be authenticated either by the gallery, or by the expert representing the artist, or by his heirs. If the work is listed in a catalog raisonné, its certification is total.

ARTIST’S CHOICE

When investing in art, it is essential to opt for a listed artist with a good sales average. An artist becomes listed when at least one of his works has passed through a public auction and therefore appears in a sales catalogue.
To find out which artists are rated, do not hesitate to inquire on the internet, but be sure to choose your sources carefully.

WORK FORMAT

It is advisable to avoid buying large format works and if the work is large, it is recommended to opt for a landscape format. This type of format is more suited to the size of apartments in London and New York, cities where more than half of the world art market is generated.

A propos de l’auteur

Ines-Baccouche
Ines Baccouche

Quand l’objet prends sens

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