Taxpayers affected by the new solidarity tax on large fortunes begin to maneuver to gradually reduce the tax bill that they will presumably have to pay next year. One of the formulas for which they are opting, as explained by various offices and tax advisors, is the acquisition of works of art. The reason is that these assets, as is already the case with wealth tax, will foreseeably have a series of exemptions that allow the tax base to be reduced by several tens of thousands of euros. “We believe that the new tax on the rich will maintain the current Patrimony scheme”, detail the experts consulted, who prefer not to be quoted. Therefore, it is to be assumed that these exemptions are replicated in the new figure.
From the Ministry of Finance, for its part, they confirm that although the tax is still being designed, it is most likely that it will be inspired by the original tax, so the elements that make up the tax base in Patrimony should be maintained. It should be remembered that the new figure was born to neutralize the 100% bonuses applied in Patrimony by several autonomous communities.
Investing in works of art for reduce the tax bill of the rich It has several possibilities. As explained by Luis Rodríguez-Ramos, Fiscal partner at Ramón y Cajal Abogados, there are a series of inventoried and cataloged assets that have a total exemption as long as they meet a series of requirements in terms of price and age.
Thus, for the purposes of applying the exemption, paintings, sculptures, drawings, engravings, lithographs or other similar items are considered art objects, provided they are original works and are catalogued. Antiques that are more than 100 years old and whose original characteristics have not been altered in the last century also have this tax advantage. Of course, there are certain limits regarding the value of the goods.
For example, pictorial and sculptural works whose price is below 90,151.82 euros are exempt from paying taxes as long as they are less than 100 years old. When they exceed this time frame, the paintings will be limited up to 60,101.21 euros and the sculptures, up to 42,070.85 euros. The long list includes collections of books or musical instruments below 42,070 euros and rugs or tapestries that do not reach 30,050 euros. Certain 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, for example in the case of pictorial works, allow these taxpayers to reduce the tax burden while investing in artists “of medium projection and with the possibility of appreciate in the future.”
However, there are other formulas designed for those goods whose price is substantially higher. The wealth tax, continues Rodríguez-Ramos, “provides exemptions for works of much greater value.” In these cases, he adds, it is enough for the owners to give them to foundations, museums or cultural institutions for public display. “The assignment has to be for a minimum period of three years, although it can be extended for longer,” explains Rodríguez-Ramos. In addition, it is not necessary for the work to be permanently exhibited: “It is enough that it is deposited”. Predictably, this requirement would also be maintained in the new tax.
The expert recalls that last year the General Directorate of Taxes already resolved favorably the query of a holder of various contemporary works of art who wanted to transfer them to a foundation for at least three years and save the corresponding part in the wealth tax.
risks
The purchase of works of art also has tax risks, as Alejandro del Campo, lawyer and tax advisor at DMS Consulting, recalls. Those pieces that are not exempt in Wealth, he explains, could be considered “unproductive assets” for the purposes of the maximum joint taxation for Wealth and Personal Income Tax, a limit that adds the quotas of both taxes to reduce the final bill.
The Supreme, he points out, has already established “that works of art are unproductive assets, so that on the value of those not exempt in Heritage, no reduction of the Heritage fee is applied, even if this means having to pay more than 60% of the income obtained”, the limit contemplated.
Details
The new tax on the rich will come into force before December 31 with the objective that the first payment be made in June 2023 on the assets declared in 2022. That is, at least, the objective of the Ministry of Finance, which last the details taking into account that its articles will be included in the decree that will promote the new tax on the extraordinary benefits of banking and large energy companies, which will see the light in a few days.
The tax has been expressly designed to neutralize the 100% bonuses applied to Patrimony by various autonomies governed by the Popular Party. It will act on net wealth of more than three million euros and will have a 100% deduction in the regions in which the original tax is applied, so in practice, it will only have effects in Madrid, Andalusia and Galicia, the three regions that totally or partially subsidize the wealth tax.
Initially, the Executive explained that the tax would affect 23,000 taxpayers for two years, with the aim of collecting nearly 1,500 million euros per year. However, the Government has already left the door open to extend it for a longer time or even make it permanent.
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