Taxation of Art

Throughout history, governments had conflicting views on the taxation of art — sometimes they wanted to make more profit out of art by increasing taxes, or at other times they aimed at improving their appeal to the public by decreasing them.

Source: Robilant + Voena

United Kingdom

In the early-19th century Great Britain, the government introduced a wealth tax on artists’ paintings — making their financial state even worse. Whether that was a way to introduce a kind of Darwinian quality control — to make unsuccessful artists give up the world of art for good — or just increase the state profits, we will never know.

Later, in the 20th century, United Kingdom exempted estate duty on the works of art, making it possible for them to stay in a family throughout generations. However, there is a dark side to this exemption — as a part of an artwork sale, now the seller has to pay a tax at the rate in force when the tax exemption took place. For example, Mr. Lee inherited a painting from his parent, and this painting was worth GBP 3 million in 1974; thus, Mr. Lee was exempted from paying an inheritance tax of 83%. In other words, he benefited from the exemption because he did not need to pay GBP 2.49 million as an inheritance tax for the artwork. However, he decides to sell the painting in 2020, when the painting is worth GBP 27 million… The ghost from the past catches up, and now Mr. Lee has to pay GBP 22.41 million in taxes.

At the moment, there is only one law in the United Kingdom, which makes the situation a little bit better — if the museum decides to acquire the painting, Mr. Lee will end up with 25% of the painting value — slightly higher than the initial prospective profit of GBP 4.59 million.

United States

In the United States, owners of art enjoyed favorable conditions. At the beginning of the 20th century, the US government introduced attractive tax legislation — donation of artworks to museums would decrease owners’ taxes by 30% of the declared value; meanwhile, the ownership of works would be maintained for the rest of owners’ lives. Museums were in charge of performing valuations and took an interest in helping their benefactors — the value was significantly increased for owners to make higher profits with a more significant reduction in taxes. This is a secret of how US museums ended up being so rich in their holdings.

European Union

The European Union has an import VAT (an import tax) on all artworks. Depending on the age, the rate usually ranges from 5 to 6% and is lower than a full VAT. The tax rate starts to increase when contemporary art is brought into the EU countries and may reach 20%. The maximum full VAT is imposed on art if there is evidence that over 12 editions of the same artwork exist.

There is also — the tax which originated in France to honor artists who died less than 70 years ago and became famous after their deaths. is a right of the heirs to receive 4% from the sale value; however, the tax value is capped at EUR 12.5 thousand. Some examples of how this tax works — an additional financial gain of Picasso and Matisse families. It is important to mention that is not payable in the United States.


A negative aspect of taxing art — many prominent artworks end up being hidden in the high-security warehouses of Freeports (for example, Switzerland). Freeports are out of fiscal jurisdiction, and one can keep the art there without paying any taxes and duties. The upsetting part — whilst hidden in the warehouses, many artworks will never be seen by anyone. It is sad to see how art is being hidden now to avoid unnecessary attention from fiscal authorities and how artworks are valued less by their beauty and history and more by their attractiveness to tax.