Taxation in the
circulation of artworks

In the United States, the sale of artworks by collectors is subject to capital gains tax, with a maximum federal rate of 28%. If the activity is carried out professionally, the profits are treated as ordinary income and taxed at progressive rates (up to 37% at the federal level, plus any applicable state taxes).

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In the United States, corporations are taxed at a flat rate of 21% on taxable income (IRS Code §11), in addition to any applicable state taxes. The Tax Cuts and Jobs Act (TCJA), enacted in 2017, lowered the federal corporate income tax rate from 35% to 21%. However, many companies are able to further reduce their effective tax burden through deductions and tax credits—such as those for research and development—that can bring their effective rate significantly lower. 

Additionally, corporations may be subject to state and local income taxes, with rates varying by state. Many states impose rates ranging from 2.5% to 9.8%, but such taxes are generally deductible from the federal corporate tax base, subject to certain limitations. Expenses directly connected to the business activity are deductible.

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In the United States, from a tax standpoint, owning and selling artworks is generally more advantageous for those operating through a legal entity rather than as an individual. Legal entities—such as corporations, trusts, or foundations—enjoy greater tax flexibility: they can deduct various expenses related to the management of artworks, adopt more sophisticated tax planning strategies, and in some cases, even depreciate or write down assets.

Conversely, for an individual—particularly a private collector—the tax regime is significantly less favorable. Capital gains from the sale of an artwork, for instance, are taxed at a relatively high fixed federal rate (28%), and opportunities to deduct costs or benefit from tax breaks in case of donations are more limited. Moreover, while a corporation can manage artworks more efficiently and professionally even from an estate planning perspective, an individual has fewer tools at their disposal to optimize long-term management of an art collection.

Naturally, there are exceptions. For example, an artist selling their own works is taxed differently from a collector, as the income from such sales is treated as ordinary income from labor. However, in general, those who engage in art activities on an ongoing basis or for investment purposes find that a legal structure offers a more effective and tax-efficient solution.

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In the United States, a federal estate tax is imposed only on estates exceeding $13.99 million (threshold updated for 2025), with a maximum rate of 40%.

In 2025, the IRS established an annual gift tax exclusion, allowing an individual to gift up to $19,000 per recipient without incurring any tax obligations. This means that a person can transfer this amount to each recipient every year without having to file a tax return or use part of their overall exemption. However, if a gift exceeds this threshold, the excess amount is counted against the overall exemption of $13.99 million.

It is important to note that this does not automatically imply an obligation to pay gift tax; it only requires filing a tax return (Form 709) to report the excess amount. This structure allows taxpayers to transfer significant sums of money without immediate tax consequences, but with the understanding that the overall exemption could be reduced in the future unless Congress acts to extend it.

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In the United States, the trust system is well-established and regulated by the IRS tax code. There are two main categories of trusts, each with distinct tax implications.

The first is the Grantor Trust, in which the grantor retains some control or interest in the contributed assets. As a result, the grantor is still considered the actual owner and must report all income generated by the trust on their personal income tax return. In practice, there is no tax separation between the trust and its creator: the income is taxed directly to the grantor.

The second type is the Non-Grantor Trust, which is treated as a separate tax entity. In this case, the trust is responsible for paying tax on income not distributed to beneficiaries. When income is distributed, it must be reported and taxed by the beneficiary, who may claim a tax credit for any tax already paid by the trust.

Regarding private foundations, these are recognized in the U.S. as tax-exempt organizations under Section 501(c)(3) of the IRS Code. However, to maintain this status, they must meet strict requirements—for example, they must spend a minimum portion of their assets annually (typically at least 5%) on charitable purposes, avoid self-dealing with related parties, and file a detailed annual report via IRS Form 990-PF. While exempt from most taxes, private foundations are still subject to a 1.39% tax on net investment income.

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In the United States, there is no federal VAT. Indirect taxation is applied through sales tax. Examples:

• New York: The combined sales tax rate in New York City is approximately 8.875%. However, original artworks sold directly by the artist are exempt from sales tax in the State of New York.
• Florida: Imposes a state sales tax of 6%, with possible local surtaxes. If the artwork is shipped out of state, the seller may not be required to collect sales tax.
• California: Has one of the highest base rates at 7.25%, with possible local additions.
• States without sales tax: Montana, New Hampshire, and Oregon do not impose a state sales tax. 

Moreover, exemptions are available for registered galleries and museums.

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In the United States, customs regulations are flexible: imports are often exempt or subject to reduced tariffs. Many artworks—such as paintings, sculptures, hand-made prints, and drawings—can be imported duty-free. The same applies to antiques over 100 years old, which fall under Chapter 97 of the Harmonized Tariff Schedule of the United States (HTSUS).

Additionally, a de minimis exemption threshold applies to shipments valued under $800, allowing them to enter without duties or taxes. However, as of May 2025, the U.S. has amended its import rules for certain countries, such as China and Hong Kong, revoking exemptions for some categories of goods, including artworks.

It is also important to note that some artworks may be subject to restrictions or special controls, especially if they contain protected materials under international conventions—such as ivory, endangered animal skins, or exotic woods. In such cases, specific permits are required under CITES regulations or U.S. environmental protection laws.

Regarding export, the United States does not impose general restrictions on the export of artworks. However, specific limitations exist for items deemed protected cultural property, such as archaeological artifacts or materials originating from federal lands.

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In the United States, art patronage is encouraged through tax incentives. 

Donations of artworks to tax-exempt entities (such as museums, universities, libraries, and cultural foundations) are deductible under Internal Revenue Code §170.

Donors may deduct the fair market value of the artwork from their taxable income at the time of donation, provided that:

• The recipient is a qualified entity under Section 501(c)(3) of the IRC;
• The use of the artwork aligns with the tax-exempt mission of the organization (so-called "related use").

The deductibility of art donations is also subject to strict documentation requirements.

• For works valued over $5,000, a qualified appraisal by a recognized expert is mandatory.
   
• For works valued over $500,000, the appraisal must be attached in full to the tax return.

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The United States, since 2024, has enforced the Beneficial Ownership Information Reporting (BOIR) requirement, which is mandatory for all entities involved in significant transactions. Identification and registration obligations are regulated under U.S. FinCEN (31 CFR 1010).

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In the United States, the AML Act of 2020 extended the application of the Bank Secrecy Act to the art sector, including dealers and galleries. The specific FinCEN regulations, still under development, will introduce thresholds and formal obligations for dealers, auction houses, and galleries.

Among the most significant legislative proposals is the ENABLERS Act, approved by the House of Representatives in 2022, which imposes stricter anti-money laundering requirements on operators with revenues exceeding 5 million dollars, but it is still awaiting approval by the Senate.

In March 2025, the Treasury Department recommended applying the Bank Secrecy Act to transactions over $10,000 in the art market, thereby expanding regulatory oversight.

Currently, suspicious activity reporting related to artworks remains mandatory for banks and intermediaries, although its enforcement is limited.

Finally, with the Corporate Transparency Act of 2025, reporting requirements on beneficial owners of U.S. entities have been temporarily suspended, postponing the obligation to disclose ultimate beneficial ownership.

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In the United States, the AML Act of 2020 extended the application of the Bank Secrecy Act to the art sector, including dealers and galleries. The specific FinCEN regulations, still under development, will introduce thresholds and formal obligations for dealers, auction houses, and galleries.

Among the most significant legislative proposals is the ENABLERS Act, approved by the House of Representatives in 2022, which imposes stricter anti-money laundering requirements on operators with revenues exceeding 5 million dollars, but it is still awaiting approval by the Senate.

In March 2025, the Treasury Department recommended applying the Bank Secrecy Act to transactions over $10,000 in the art market, thereby expanding regulatory oversight.

Currently, suspicious activity reporting related to artworks remains mandatory for banks and intermediaries, although its enforcement is limited.

Finally, with the Corporate Transparency Act of 2025, reporting requirements on beneficial owners of U.S. entities have been temporarily suspended, postponing the obligation to disclose ultimate beneficial ownership.

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