Taxation in the
circulation of artworks

The art market is configured not only as a cultural and professional sphere for artists and curators, but also as a significant economic sector, capable of attracting the interest of investors, collectors, institutions, and professionals. However, the tax and regulatory framework governing its dynamics is heterogeneous at the international level, with significant differences from one legal system to another. In this context, a comparative analysis proves essential to identify opportunities and address the challenges that characterize cross-border operations in the art world.

In an effort to provide a comprehensive overview, several of the most relevant countries — both European and non-European — have been examined in order to understand how different legal and tax systems relate to the circulation, ownership, and transfer of works of art.

Section prepared by Studio Lombard DCA

Individuals

In Spain, the sale of a work of art by its creator is always considered self-employment income and is taxed accordingly.

However, when the seller is someone other than the creator, the sale may be classified either as a capital gain or as self-employment income, depending on the circumstances:

If the sale is part of the management of a private asset portfolio and does not exceed the "ordinary" scope of asset management, it is classified as a capital gain, to be included in the "savings base" and taxed at a rate ranging from 19% to 23%. The capital gain is calculated as the difference between the acquisition cost (purchase price plus taxes and expenses directly related to the acquisition, as well as any investments made in the artwork) and the transfer value (sale price minus any expenses and taxes directly related to the transaction).

If the sale follows a pre-established business plan, involves the use of human and material resources, and entails significant capital and labor investment along with an economic risk, it is classified as self-employment income. In this case, expenses incurred during sales, as well as losses, may be deducted from the income generated. The resulting income is included in the “general base” and taxed at progressive rates ranging from 18.5% to 48%.

Legal Entities

In Spain, net income from the trade of artworks by legal entities is subject to corporate income tax at a flat rate of 25%. Expenses related to the business activity are generally deductible.

It’s important to note that if the artworks are classified on the balance sheet as investments (rather than as inventory), they are not subject to depreciation. Furthermore, conservation, repair, and restoration costs must be treated as capitalized value increases of the artwork rather than as deductible business expenses.

Comparison Between Natural and Legal Persons: From a Tax Perspective, Who Benefits More from the Ownership and Sale of Artworks?

In Spain, when an art collection is held by a company, there is less risk of the shareholders being classified as self-employed individuals and having the sale of artworks taxed as self-employment income.

Additionally, when the net profit from artwork sales exceeds €55,000, the average effective income tax rate for individuals reaches the same 25% flat rate as corporate tax. Therefore, depending on the amount of net profit, it may be advisable to form a legal entity for conducting art trade.

Taxation on Inheritance and Donations

In Spain, inheritance and gift taxes are regulated at both national and regional levels.

At the national level, the tax rate ranges from 7.65% to 34%, depending on the value transferred. There are also allowances based on family relationship:

Group 1: Children under 21 receive an exemption of €15,957, plus €3,990 for each year under 21 (up to a maximum of €47,858).
Group 2: Children over 21, spouses, registered partners, parents, grandchildren, grandparents, and great-grandparents receive an exemption of €15,957.
Group 3: Second- and third-degree relatives receive €7,933.
Group 4: Other individuals receive no exemption.

In any case, the Autonomous Communities may establish rules on very important aspects of tax assessment, such as credits, tax relief, reductions of the taxable base, the amount of the tax, etc. Thus, in some regions, such as Madrid, the Canary Islands, or Andalusia, the impact of the inheritance and gift tax is almost negligible, because close relatives in these regions are entitled to a 99% tax relief. On the other hand, in other regions, such as Cantabria or Catalonia, the inheritance and gift tax has a significant impact on the transferred assets.

Works of art and antiques, if they meet certain criteria, benefit from a 95% reduction in their value when considered as part of the taxable base for inheritance and gift tax purposes. This benefit applies only to the children and spouse of the deceased or donor. The works that qualify for this reduction are the following:

Artworks and antiques that meet certain criteria benefit from a 95% reduction of their value for inheritance and gift tax purposes, but only when transferred to children or the spouse of the deceased or donor. Eligible works include:
Antiques less than 100 years old (considered household goods);
Works registered in the General Registry of Cultural Property or the General Inventory of Movable Property under Spanish heritage law;
Works part of a regional historical heritage and duly registered;
Works that do not exceed legal value thresholds:
- €90,151.81 – Paintings and sculptures under 100 years old
- €60,101.21 – Paintings 100+ years old; collections of art, cultural, or antique objects
- €42,070.84 – Sculptures/bas-reliefs 100+ years; collections of drawings, engravings, books, documents, instruments, furniture
- €30,050.60 – Carpets, tapestries, historic textiles
- €18,030.36 – Single drawing, engraving, book, or manuscript
- €9,015.18 – Musical instruments, ceramics, porcelain, crystal
- €6,010.12 – Archaeological objects
- €2,404.04 – Ethnographic items
Works loaned to museums or nonprofit organizations for public display (exemption applies for the duration of the loan);
Works by the artist themselves.

Special Tax Provisions for Trusts and Foundations

In Spain, foundations may be an efficient vehicle for owning art collections. The conservation, repair, and exhibition of artworks are recognized purposes under Spanish law. Generally, income received by the foundation is tax-exempt, provided it is used to pursue the foundation’s mission.

Trusts, on the other hand, do not offer special tax benefits for inheritance purposes. For tax purposes, assets transferred to beneficiaries via a trust are treated as if directly inherited from the deceased at the time of death, and tax exemptions depend on the family relationship between the settlor and the beneficiary.

Sale within national borders

VAT for the sale of artworks

21%

VAT reduced to 10%

if the seller is the artist or an entitled entrepreneur

VAT on Domestic Transactions

In Spain, indirect taxation in the art sector involves two different types of taxes.

When the seller is a self-employed professional or a legal entity (B2B or B2C transactions), the transfer of the artwork is subject to VAT. The standard VAT rate is 21%. If the seller is the artist or any other entrepreneur who is entitled to fully deduct input VAT, the applicable rate is 10%.

When the seller is a private individual who is not considered a professional art dealer (C2C or C2B transactions), the buyer is required to pay a transfer tax, which is managed and collected by the Autonomous Communities. The tax due, calculated as a flat-rate percentage on the market value of the transferred artwork, may vary from one Autonomous Community to another (the rate ranges from 1% to 8%).

VAT and Customs Duties on Cross-Border Transactions

Sale outside national borders

VAT on the importation of artworks

10%

Exports are exempt from VAT

In Spain, the imports of artworks (as defined under VAT law) are subject to 10% VAT, regardless of the buyer.

Exports are completely VAT-exempt.

Intra-EU sales are exempt when the buyer is a business (B2B), but subject to Spanish VAT when the buyer is a private individual (B2C).

Furthermore, the export of protected works of art and antiques is subject to the payment of a public fee. Protected items are considered to be antiques over 100 years old and works of art and antiques duly registered in the General Register of Cultural Assets or the General Inventory of Movable Property under the Spanish Historical Heritage Law. Additionally, in the case of export outside the EU, protected items also include works of art and antiques listed in Annex I of EU Regulation 116/2009. The applicable public fee in these cases provides for the following rates

5% for items valued up to €6,010.12
10% for items up to €60,101.21
20% for items up to €601,012.10
30% for items over €601,012.10

Tax Incentives for Patronage

In Spain, the Law on Patronage (Law 49/2002) is the main regulation governing tax incentives applicable to donations, gifts, agreements, and corporate collaborations in favor of non-profit organizations and cultural activities declared to be of general interest.

The tax deductions for donations made by individuals (IRPF) are:

80% deduction for the first €150 donated
35% (or 40% for recurring donations) for the excess amount

For companies (IS), deductions are equal to 35% of the donated amount (up to 40% if the donation is made for at least 3 consecutive years to the same beneficiary).

Works of art can be donated to museums, foundations, or other recognized cultural institutions.

Donations in kind can benefit from the same tax deductions provided for monetary donations, provided that they are officially appraised and accepted.

Companies can support events, exhibitions, or restorations through collaboration agreements, obtaining tax advantages and public visibility. Cultural sponsorships allow the deduction of expenses as advertising costs deductible at 100% from business income. Some initiatives can be declared “of cultural interest” by the Spanish government. In these cases, projects benefit from enhanced tax incentives, including higher deduction rates for donors or sponsors.

Anti-Money Laundering

In Spain, AML regulations are outlined in Law 10/2010 on the Prevention of Money Laundering and Terrorist Financing. Art market operators must register and apply due diligence procedures for high-value transactions.

Regulatory Updates

In Spain, the sale of artworks is generally subject to 21% VAT. However, a reduced 10% rate applies if the seller is the artist. Exports are VAT-exempt, while private sales (C2C) may be subject to a transfer tax.

Taxation in the circulation of artworks

Taxation in the
circulation of artworks