Tax Deductions for Art Gifts - France

France introduced an Acceptance in Lieu scheme (dation en paiement) in 1968 and it has been running since 1972. It is broadly analogous to the UK system being a method of payment of Inheritance tax. However, what makes France particularly interesting are the changes it introduced a few years ago. In 2003, France reformed its tax incentives for charitable giving, especially for the cultural sector. Where a cultural object has been declared a "national treasure" donations from companies to acquire such items attract 90% relief from French corporation tax. If the company buys the item but retains title, relief is given at 40%, provide the item is on display and the company retains ownership for 10 years. The giving in payment was established by Law No. 68-1251 of 31 December 1968 and its implementing Decree No. 70-1046 of 10 November 1970, codified in the General Tax Code, governed by Article 1716 bis:

The transfer duties for free and the right-sharing can be paid by delivery of artworks, books, collectors' items, materials, high artistic value or historical or buildings located in intervention areas of the Conservatory of space coast and lake shores as defined in Article L.  322-1 of the Environment Code whose situation and the ecological interest or warrant landscape conservation in their natural state or buildings in kind of wood, forests or natural areas that can be incorporated into the forestry sector’s State. This exceptional procedure for settling rights is subject to approval given under conditions set by decree of the Council of State (See sections 384 A, 310G below). The approval decision sets the value discharge its recognition of the goods offered in payment.  The giving in payment is perfect as the acceptance by the complainant of that value.

Article 384 A

The heir, the donee, the legatee or co-sharing who wishes to pay all or part of transfer duty or sharing which he is liable by awarding works or documents referred to Article 1716 of a general code taxes must file the recipe taxes or conservation mortgages competent to record the act establishing the transfer, sharing or declaration of succession, an offer of giving the State indicating the nature and value of each property it plans to submit to the State.  It was issued a receipt. The offer of giving in payment is subject to the same conditions as those set by the I and II of Article 310 G for the offer of a donation from the same works or documents made for the exemption of transfer duty.  If approved, the applicant has the deadline set by the approval decision to accept a simple letter, the postmark as proof, the value discharge recognized well provided for payment of rights.  In the absence of a decision notified within one year from the date of receipt of the offer, it is considered to be rejected.

Article 310 G

The purchaser, the donee, heir or legatee, who wants to enjoy exemption from duties and taxes under section 1131 of the General Tax Code, must submit to the competent tax revenue to save the act finding the mutation or the declaration of succession offers a donation to the State, specifying the goods which are the subject and, where appropriate, the conditions under which such offer is made.  It was issued a receipt. Bids must be made within the period provided for the registration of the act establishing the transfer or declaration of succession.

The offer of a donation is sent by the tax service to a committee whose composition is determined by joint order of the Prime Minister, Minister of Culture and Minister responsible for the budget.

Before ruling, the commission shall obtain the opinion of the minister concerned by the possible allocation of goods subject to the offer of donation, the Minister is invited to nominate a representative to participate in an advisory capacity to work 's comments relating to this offer. It consult the relevant bodies, as appropriate, for the acquisition of works of art, books, objects or documents collection of high artistic value or historical interest.  It gives an opinion on both the artistic or historical interest on the value of the property offered. In view of the Committee's view, the competent minister proposes the Minister of Economy and Finance grant or refusal of approval.  The decision is notified to the applicant by registered mail with return receipt.

If approved, the applicant has the deadline set by the approval decision to accept the conditions under which it is subject.  It announced its acceptance to the Minister of Economy and Finance, by registered mail with return receipt.

In the absence of a decision notified within one year from the date of receipt of the offer, it is considered to be rejected. The donation is a payment method that allows exceptional pay a tax debt by handing works of art, books, collectors’ items, materials, high artistic value or historical interest.    It  is  a  fair system which allows the taxpayer to extinguish  its  tax  liability  and the  State  to  enrich  public collections.

The tax debt that can be  offset  include  human mutation  gratuitously (inheritance,  legacies  and donations),  human  sharing, solidarity  tax  on  wealth.   

The offer must match taxes due.   The procedure does not apply to other direct and indirect taxes. The initiative belongs to the taxpayer.    The  person  liable  for rights  that  could  be  settled  by donation  must  file  the  tax revenue  competent  an application  indicating  the  nature and  value  of  each  property  it proposes to pay to the state. The offer of donation will be processed by the Directorate General of Taxation and then transmitted to the Inter-ministerial Commission approval for conservation of national artistic heritage.    It gives an opinion on the artistic and historical interest of the property offered and on its value, after hearing the conservatives and experts.  The approval of the Minister of Finance: the Minister of Economy and Finance decide on approval.    The decision is notified to the taxpayer.  The agreement of taxpayer:  the acceptance by the taxpayer in terms of the decision closes the proceedings.    The well accepted in lieu becomes the property of the State.    The minister decides on the location of its assignment. The Inter-ministerial Commission approval for the conservation of national artistic heritage is composed of five members appointed by ministerial decree. 

You can obtain more information on Art Gifting and Tax in France by visiting http://www.culture.gouv.fr