“French Solidarity Tax on Wealth”

Amendment proposition: should artwork be included in the French Solidarity Tax on Wealth?

Paris, 10 October 2012. Art Media Agency (AMA). Since its creation in 1982, the French ISF (impôt sur la fortune) – or Solidarity Tax on Wealth, has always exempted artwork. Right-wing MP Marc Le Fur had already attempted to submit artwork to the Solidarity Tax on Wealth in year 2011, in vain. General budget rapporteur of the Assemblée Nationale (French equivalent of the Houses of Parliament), Pierre Eckert, came up with a new proposition of an amendment which would include artwork rated over €5,000 in the solidarity tax on wealth – except those accessible to the public. The minister for Culture, Aurélie Filippetti, is very reluctant toward the idea. Art professionals are against the idea of regarding art as part of an estate or a financial share, subject to return. The Quotidien de l’Art states Guillaume Cerutti, president of Sotheby’s France: “The purchase of artwork isn’t equivalent to the security of long-term property investments, nor does it offer the advantages of producing interests and dividends every year, as do proper financial investments. On the contrary, an art object presupposes maintenance, restoration and insurance fees. Many cost benefit analyses have shown how little return the purchase of a piece of art represents – assuming it isn’t below zero. Another risk is the shift of French collectors’ purchases towards foreign collectors’ purchases. Taxing artwork could mean smothering the French art market, to this day a national market above all. French cultural heritage could be damaged by this tax. Many professionals of the art market have highlighted how vain they think proposing such an amendment a few days away from the opening of the FIAC (International Contemporary Art Fair) is. They have also emphasized the inefficiency of  the measure, difficult to actually apply considering how risky estimating artwork is. In short, the...

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ADIAF criticises French MP’s

Paris, 10 June 2011, Art Media Agency (AMA). A communiqué released by ADIAF, the Association for the International Diffusion of French Art, is critical of recent events concerning the proposed amendment of the laws concerning taxation of artworks. The amendment was not adopted by French MP’s. ADIAF represents more than three hundred French collectors and stated in the press release that “suspecting collectors of being tax-evaders is abominable”. The association supports and promotes artists and French art creation on an international level and insists that the auction records that make headlines often have “no real relation to artistic reality”. ADIAF added that the majority of influential art market figures are driven by a passion for art and that profit made on artworks is mostly “hypothetical, random and highly vulnerable”. The defenders of French contemporary art organize numerous events to support the artistic scene of the country. Yesterday, they hosted a sale in aid of Japan, which will be continued today. All profits will be used to restore Japanese museums and cultural sites that have been damaged by the...

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Amendment to French Solidarity Tax rejected, but taxation of artworks to be examined

Paris, 8 June 2011, Art Media Agency (AMA). On 7 June 2011, French MP’s rejected an amendment to artworks into account when determining the aggregate value of a tax declarer who falls into the “wealthy” category and thus has to pay the French Solidarity Tax on Wealth. Marc Le Fur, who proposed the amendment, has now reoriented the focus of the debate and the MP’s will now examine the tax rate applicable to the sale of artworks. The pressure applied by the government as well as Nicolas Sarkozy’s vehement opposition to the taxation of artworks seems to have sufficed to have the amendment rejected. The proposed change is unlikely to be more favourably received by the French Senate. The amendment was rejected for two reasons. Firstly, should artworks be taxed under the Solidarity Tax, this could have disastrous effects on the French market. The second consideration is a pragmatic one: it would be highly complex to assess artworks and monitor declarations. A sales tax on artworks has not been discounted, however. In France, private individuals are taxed on artworks in two different ways as the tax on capital gain is often complicated by the fact that the declarer has difficulty producing a document attesting to the purchase, the date and price of purchase. For this reason, the tax on capital gain can be calculated as follows: five percent of the sale price or, optionally, if the declarer is able to produce a document that proves the sale date and price, the French general jurisdiction levies a tax of 29% on capital gain. A tax allowance of 10% is applied for each year of ownership, after the first two years. Les Échos, a French daily newspaper that focuses on financial and economic news, has published a report claiming that the...

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French government against taxation of artworks

Paris, 6 June 2011, Art Media Agency (AMA). On 1 June 2011, a number of MP’s from the UMP (Union for a Popular Movement, centre-right political party in France) proposed that artworks be taken into account for the French Solidarity Tax on Wealth (ISF). Frédéric Mitterand, French Minister of Culture and François Baroin, currently the Minister of Budget, have expressed their opposition to the idea. Today, the Budget Minister propounded his arguments on French television channel France 2, saying that “ninenty percent of public collections are enriched by donations from private individuals to the State and we need a means of protecting these cultural goods.” The government’s opposition to the admendment could lead to a retraction. If the bill is not withdrawn, the government, currently enjoying an absolute majority in the National Assembly, will vote against the proposition. François Mitterand declared in the Journal du Dimanche that “it will lead to the collapse of the art market if the Solidarity Tax on Wealth is extended to include artworks.” Mitterand is also concerned about the global position of the French art market, as the country is being overtaken by “emerging” countries. Jean-Louis Borloo, President of  the Parti Radical, does not agree with the government. He told Échos that he supports the proposition and that he even “proposed to take it further”. The former Minister wants capital gains in artworks and jewellery to be taken into account when determining the base of the Solidarity Tax. A political battle has thus been launched at the National Assembly. Thierry Ehrman, MD of Artprice.com, said in an interview with Boursica.com: “I do not necessarily approve of the amendment as I don’t think it’s the right solution (…).” The proposition is controversial and the inclusion of artworks has often been the subject of discussion since...

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French Solidarity Tax on Wealth to apply to artworks?

Paris, 1 June 2011, Art Media Agency (AMA). The French Solidarity Tax on Wealth (Impôt de Solidarité sur la Fortune)is an annual direct wealth tax on citizens whose assets are worth more than a certain amount.  Artworks, however, are not taken into account.  This means that buying art effectively leads to tax optimization for the taxpayer and makes the art market as a whole more dynamic. Extending this tax to include artworks could have a negative effect on the art market and artistic creation. On 1 June 2011, the French finance commission met to discuss budgetary reforms concerning the Solidarity Tax and adopted an amendment allowing artworks to be taken into account when calculating the tax.  This amendment was proposed by an MP from the UMP (Union for Popular Movement – the centre-right political party of which French president Nicolas Sarkozy is the leader).  Marc Le Fur’s proposition has not been welcomed by the French government, which wishes to reform the Solidarity Tax by revising its rates and threshold, but not by changing the tax base. It is thus unlikely that the amendment adopted by the financial commission will be passed by the French Senate or National Assembly. Similar amendments were proposed when Lionel Jospin was Prime Minister, but as all the conservative MP’s voted against the bill, it was not passed. MP’s who are supporting the amendment state that the current exclusion of artworks from the Solidarity Tax benefits only rich collectors.  However, the reform is likely to have a negative effect on artists, gallery owners, auction houses and all those involved in the art market. It is now up to the MP’s to decide whether or not the Solidarity Tax base should be...

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