Taxation in the
circulation of artworks

In France, the sale of artworks (as well as the “non-temporary” export of artworks outside the EU) by individuals is subject to the capital gains tax (“taxe forfaitaire sur les objets précieux” – TFOP) if the sale price (or customs value) exceeds €5,000. This tax is levied at a flat rate of 6%, plus a 0.5% social levy (resulting in a total rate of 6.5%), calculated on the sale price (or customs value).

Professional art dealers are exempt from the TFOP, as they are subject to income tax (see below), as is the artist selling their own work. The TFOP is paid by the seller (or exporter); however, if a transaction involves an intermediary or if the buyer is a VAT-registered entity in France, the buyer becomes responsible for paying the TFOP.

The seller (or exporter) may opt for the standard capital gains tax regime if they can prove the purchase price and acquisition date of the artwork or have held the artwork for more than 22 years. Under this regime, the gross capital gain (the difference between net sale price and acquisition cost) is reduced by 5% for each year of ownership starting from the third year, meaning the gain is tax-exempt after 22 years. The net capital gain (gross gain minus the 5% annual deduction) is subject to a flat tax of 19% plus 17.2% in social contributions (for a total rate of 36.2%).

If the person is professionally engaged in the trade of artworks, the income from such activity is subject to income tax and social security contributions. The taxable base is the difference between revenues and deductible expenses for the fiscal period (typically the calendar year), recorded on an accrual basis.
To determine whether an individual qualifies as a professional art dealer, the tax authorities consider several factors, primarily the number, frequency, and volume of transactions, as well as the time elapsed between purchases and sales.

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In France, net profits derived from the sale of artworks by legal entities are subject to Corporate Income Tax (CIT). 

Expenses directly related to the sales activity, such as acquisition costs and operational expenses, are generally deductible provided they are properly documented and recorded in the income statement. Companies may also benefit from tax incentives for purchasing artworks that meet certain criteria. 

Under Article 238 bis AB of the French General Tax Code (CGI), companies that acquire original works by living artists and register them as fixed assets may deduct the purchase price, spread equally over five years, from their taxable income through an off-balance sheet deduction. The deductible amount is capped at €20,000 or 0.5% of annual turnover (excluding corporate philanthropy donations), whichever is higher.
To benefit from this deduction, the artworks must be displayed in a location accessible to the public or company employees (excluding private offices) for at least five years.

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In France, from a tax perspective, legal entities benefit from more favorable treatment when art dealing is conducted as a professional activity.
Corporate tax rates range from 15% to 25%, and undistributed profits are not subject to social charges, while professional individual art dealers face income tax rates from 11% to 45% plus professional social contributions.
Furthermore, companies enjoy specific tax breaks for purchasing qualifying artworks 

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In France, inheritance and gift taxes follow essentially the same rules. 

Tax rates are progressive and depend on the relationship between the parties:

• For direct descendants: 5% to 45% depending on the value transferred.
• For siblings: 35% on amounts up to €24,430 and 45% on any excess.
• For other relatives up to the fourth degree: 55%.
• For unrelated parties: 60%.

Transfers between spouses or PACS partners are exempt from inheritance tax but subject to gift tax.

To determine the taxable base, the French tax authorities accept the following valuation methods for artworks, in order of preference:

1. Net price from a public sale held within two years of death;
2. In the absence of a public sale, the higher of:
3. the value indicated in a certified appraisal made within five years of death,
4. the value stated in an insurance contract;
5. If neither 1 nor 2 is available, a detailed and estimated declaration from the taxpayer.

For inheritance tax purposes, furnishings may be valued at 5% of the gross estate value. Paintings, artworks, or antiques may be included in this 5% lump sum unless part of curated collections or specific display rooms. However, the tax authorities may assess market value if they can demonstrate it exceeds the flat-rate valuation.
If inheritance or gift tax exceeds €10,000, it is possible to pay part or all of it in kind through the transfer of artworks to the French state, subject to approval.

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In France, trusts offer no inheritance or gift tax advantage, as assets transferred via trust are fully subject to such taxes. Transfers to recognized public-interest foundations (fondations reconnues d’utilité publique, FRUP) are exempt from inheritance and gift tax, provided certain conditions regarding their activities and operations are met. 

These include:

• Not-for-profit and non-commercial operations,
• Disinterested management,
• Benefits not limited to a narrow group,
• Pursuit of goals such as philanthropic, educational, scientific, social, humanitarian, sports-related, family-oriented, or cultural missions.

If the foundation does not meet all criteria but is recognized as a FRUP, then a flat 45% gift/inheritance tax applies.

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In France, the standard VAT rate is 20%. However, some transactions related to artworks can benefit from reduced VAT rates (5.5% or 10%).

The 5.5% VAT rate applies to the sale of artworks by the artist or the holder of their rights, unless they can benefit from a complete exemption from VAT.

The 10% VAT rate applies to occasional sales made by businesses (other than professional dealers) which, within the framework of patronage, have purchased artworks recorded as fixed assets and for which they have had the right to partially or fully deduct input VAT.

Under certain conditions, sales of artworks by professional dealers may be subject to VAT on the basis of the gross profit margin only (i.e., sale price minus purchase price). In this case, input VAT is not deductible. This is an optional provision: if more tax-efficient, professionals can choose to apply VAT on the total sale price and deduct input VAT.

Finally, there are special exemptions: VAT does not apply in the case of taxable persons with modest turnover.

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In France, a reduced VAT rate of 5.5% applies to the importation of artworks.

In the case of intra-community purchases from a taxable dealer, VAT follows the rate applicable in the dealer’s country, in accordance with national regulations. VAT is therefore paid by the seller.

Exports are exempt from VAT.

However, for exports of artworks, a lump-sum tax on precious objects (TFOP) applies, with a rate of 6%.

For intra-community acquisitions, the applicable VAT rate depends on the nature of the buyer:

• Taxable buyer (business): the purchase is subject to the reverse charge mechanism, and VAT is payable in the buyer’s country.
• Private buyer: VAT is generally payable in the seller’s country, according to national regulations.

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In France, donations to organizations of public interest entitle the donor to tax credits. An organization is considered to be of public interest if it meets the following conditions:

• It carries out a non-profit and non-competitive activity. It is important to note that organizations subjecting their activities to VAT and other commercial taxes are automatically excluded from the eligibility scope of sponsorship;
• The management is disinterested;
• The activity does not benefit only a narrow circle of people.

In the case of donations by businesses, a reduction equal to 60% of the donated value applies to the corporate income tax, with a maximum limit set at 5% of total sales net of taxes. In the case of donations by individuals, a reduction equal to 66% of the donated value applies to the individual income tax, with a maximum limit set at 20% of taxable income. If the donation is made to certain charitable organizations that assist those in need, the tax credit is equal to 75%.

Furthermore, the French state has adopted specific and highly incentivizing measures in favor of contemporary art, heritage, musical practice, performing arts, conservation, and the enrichment of public collections.

Specific provisions are provided for entities, public or private, that carry out activities for the promotion of performing arts and contemporary art exhibitions: these organizations, even if subject to VAT and other commercial taxes, may benefit from corporate sponsorship (a tax reduction of 60% of the donation amount).

Additionally, donations destined for restoration work and public access to private historic monuments in favor of the Heritage Foundation or any other approved foundation/association may benefit from the above-mentioned tax reliefs, both for companies and individuals, provided that the monument benefiting from it is maintained by the owner and open to the public “for at least ten years.”

Companies that purchase original works by living artists and register them as fixed assets can deduct from taxable income for the year of acquisition and the following four years, in equal fractions (1/5 per year), an amount equal to the purchase price. The deduction amount cannot exceed a limit calculated as follows: 5% of the company’s turnover minus the amount of certain donations made by the company to non-profit organizations. For the entire deduction period, such works must be displayed in a place open to the public or simply to the company’s employees and/or clients, excluding offices.

Finally, companies can benefit from a tax reduction equal to 90% of payments made to contribute to the purchase of cultural goods considered “national treasures” or “works of significant heritage interest” for the benefit of a public collection. The tax reduction cannot exceed 50% of the corporate tax due. If the company acquires such goods for itself, the tax benefit is equal to 40% of the amount spent for the acquisition.

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In France, under Article L. 561-2 of the Code Monétaire et Financier, art galleries and dealers are subject to anti-money laundering regulations. They must perform identity verification (KYC) for transactions exceeding €10,000.

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In France, following EU Directive 2022/542, France will introduce the following changes to the VAT regime for artworks:

• A 5.5% reduced VAT rate will apply to all art sales, regardless of the seller, except where the margin scheme is used.
• The 10% VAT rate for occasional sales by non-professional businesses will be eliminated.
• The margin scheme will remain available but can no longer be combined with reduced VAT rates. Professionals must choose between applying 5.5% VAT on the total sale price or 20% VAT on the gross margin.

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