Riches seek artworks to reduce tax bills for the wealthy |  Economy

Riches seek artworks to reduce tax bills for the wealthy | Economy

Taxpayers affected by the application new solidarity tax for great wealth They start maneuvering to gradually reduce the tax bill they will likely have to pay next year. One of the formulas they chose is to buy artwork, as explained by various firms and tax advisors. This is because these assets will have a number of exemptions that allow the tax base to be reduced by several tens of thousands of euros, as is already the case with wealth tax. “We believe the new tax on the rich will continue the current Inheritance scheme,” elaborates experts consulted and who prefer not to be quoted. Therefore, these exemptions should be assumed to be newly repeated.

They confirm from the Ministry of Finance that although the tax continues to be designed, it will most likely be inspired by the original tax, so the elements that make up the tax base in Inheritance should be preserved. It should be noted that the new figure was created to neutralize the 100% bonuses that various autonomous communities have applied to Heritage.

investing in works of art reduce the rich’s tax bill has several possibilities. As Luis Rodríguez-Ramos, tax partner at Ramón y Cajal Abogados explains, there are a number of inventoried and cataloged assets that have total exemptions as long as they meet a set of requirements in terms of price and age.

Therefore, for the purposes of the exemption, paintings, sculptures, drawings, engravings, lithographs or other similar objects are considered art objects provided they are original works and have been catalogued. Antiques that are over 100 years old and whose original features have not been changed in the last century also benefit from this tax advantage. Of course, there are certain limits on the value of goods.

For example, paintings and sculptures that cost less than 90,151.82 Euros are exempt from tax, provided they are under 100 years old. When this period is exceeded, paintings will be limited to 60,101.21 Euros and sculptures will be limited to 42,070.85 Euros. The long list includes collections of books or musical instruments with a price of less than 42 thousand 70 euros, and rugs or tapestries whose price does not exceed 30 thousand 50 euros. Some furniture, archaeological objects and pottery, glass and porcelain are also exempt.

According to Elisa Hernando, CEO of Arte Global and Redcollectors, these are amounts that allow taxpayers to reduce their tax burden while reducing their tax burden, for example, in the case of pictorial works. investing in artists “with the average projection and the possibility of future revaluation”.

However, there are other formulas designed for goods with a significantly higher price. The wealth tax, Rodríguez-Ramos continues, “provides exemptions for businesses of much greater value.” In these cases, he adds, it’s enough for their owners to hand them over. foundations, museums or cultural institutions for public display. “The mandate must be for a period of at least three years, although it can be extended for a longer period,” explains Rodríguez-Ramos. In addition, it is not necessary for the work to be exhibited permanently: “It is enough to have a deposit.” As might be expected, this requirement will be retained in the new tax.

The expert recalls that last year, the General Directorate of Taxes already had a positive consultation with a bearer who wanted to transfer various works of contemporary art to a foundation for at least three years and save the corresponding part from wealth tax.

risks

As Alejandro del Campo, attorney and tax adviser at DMS Consulting reminds, there are also tax risks to purchasing artwork. He explains that those parts that are not exempt from inheritance can be considered “unproductive assets” for maximum common taxation purposes for Inheritance and Personal Income Tax, a limit that adds up the quotas for both taxes to reduce the final bill.

He points out that the Supreme Court has already determined that “works of art are non-productive goods, so no reduction in the Inheritance quota will be applied to the value of those who are not exempted from Inheritance, even if they have to pay more.” “More than 60% of the income earned” limit is foreseen.

Detail

The new tax on the rich will come into effect before December 31, with the goal of making the first payment on assets declared in 2022 by June 2023. The details were announced, taking into account that the articles of the decree that will encourage the new tax on the extraordinary benefits of banking and large energy companies, which will come to light in a few days, will be included.

The tax is clearly designed to neutralize the 100% bonuses imposed on Inheritance by the various autonomies administered by the People’s Party. will act on net worth of more than three million euros and since there will be a 100% deduction in the regions where the original tax applies, in practice only Madrid, Andalusia and Galiciathree regions that subsidize all or part of the wealth tax.

Initially, the Administrator announced that the tax would affect 23,000 taxpayers over two years, with the aim of raising approximately 1,500 million euros per year. However, the Government has already left the door open to prolong it even longer.

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