Investment in Works of Art - Taxation Position

Income/Corporation Tax
Legislation S.284TCA1997 states:

Section 1
A trader who incurs capital expenditure on machinery or plant is entitled to a wear and tear allowance if the asset is in use for the purpose of his trade at the end of the basic period for the tax year.

Section 2
The annual wear and tear allowance is 15% on a straight line basis.

Where a corporate or individual tax payer buys a work of art and displays it at their business premises for the purpose of promoting their business, the work of art is treated as machinery or plant, and is eligible for the annual wear and tear allowance.

Capital Gains Tax
Legislation S.606TCA1997 deals with the Capital Gains Tax position on disposals of works of art; etc. loaned for public display

Section 1
This relief applies to works of art (including books, jewellery, manuscripts, pictures, prints, sculptures) having a value of not less than IR£25,000 when loaned to a Gallery or Museum which is approved by the Revenue for this relief.

Revenue may consult with appropriate experts to insure that a work has a value of not less than IR£25,000.

The public must have reasonable access to the work of art during the loan period (the qualifying period) which must not be less than six years.

Section 2
A disposal of a work of art if previously lent to a gallery or Museum for a qualifying period is treated for Capital Gains Tax purposes as giving rise to no gain/loss.

The work of art need not be on display for the entire loan period. Reasonable access appears to mean that an exhibition admission price should not be excessive, and that the work of art should be displayed at normal admission times.

Information provided by:

Thomas S Greene & Co
5 St Andrew's Terrace
Waterford
Ireland
Tel +353 - 51 - 875 521
info@tgreene.com
http://www.tgreene.com