In an inheritance, art is treated the same as other personal property. In other words, you can’t secretly bequeath your art collection. The tax authorities are watching.
Basically the paintings – be it a painting by a little-known artist or a lithograph bought for 500 euros – are part of your personal effectsin the same way as a lamp or a basket of fruit of great value. But if you are a true collector of masterpieces, that is another story.. The Borremans, Permekes and Warhols that adorn its walls hold an important place in its heritage. The tax authorities will want to tax them at their fair value.
with works of artas with other movable property, there are two possibilities. Or the works are transmitted to the heirs by inheritanceor are they the subject of donation.
In the first hypothesis, works will be subject to inheritance tax (progressive and in installments) after the death of its owner. for the heirs in direct line and between spousesinheritance tax ranges from 3 to 27% in Flanders, and from 3 to 30% in Wallonia and Brussels. For the other categories of heirs, they range between 25 and 55% in Flanders, and between 20 and 80% in Wallonia and Brussels.
To avoid inheritance taxit is possible to donate a work of art, through a manual donation or a notarized donation.
In case of manual donation of a work of art, it must be moved from the donor’s house to the beneficiary’s.
Those who opt for a manual donation are not required to register it and therefore do not have to pay any donation tax.. In Flanders and Brussels, however, the donor must remain alive for three years after the donation. In Wallonia, this period has been extended to five years for donations made after January 1, 2022. In the event of the death of the donor before these periods, the donated goods will be subject to inheritance tax. “The risk of unexpected death of the donor during this waiting period can be insured,” explains Astrid Dutré, estate planner at Nagelmackers bank. “In this way, the donee will be sure that his work of art will not have to be sold to pay inheritance tax.”
In the case of manual donation, it is also important that the work of art is moved from the donor’s home to that of the recipient. If you want to continue enjoying the work of art in your home until the end of your days, you will be obliged to make a donation with reservation of usufruct and go to the notary. In Brussels and Flanders, the gift tax rate is set at 3% in direct line, between spouses/common-law partners, and 7% between other people. In Wallonia, they are 3.3 and 5.5% respectively.
Track the works of art
It is not easy to exempt works of art from tax authorities because each work leaves traces. Strictly speaking, there is no registry of works of art that shows the names of the owners, but the presence of an FPS Finance officer during an auction can never be excluded.
Whether you pass on your collection through a recorded gift or it ends up in your estate after your death, it will need to be evaluated.
The certificate of authenticity and provenance of the work can also be a source of information. They offer an overview of the successive owners of the work and the places where it was exhibited.
But with time, may leave other traces indicating your ownership of certain works of art. This is the case, for example, if you have purchased them through your company and the purchase invoices end up in your accounts. the rental of a work or making it available for an exhibition Don’t go unnoticed either. The income you get from it must be included in your tax return under the heading “mobile income”.
determine the value
Whether you pass on your collection through a recorded gift or it ends up in your estate after your death, it will need to be evaluated. To avoid any discussion with the tax authorities, it is better to appoint an art expert who can justify the fixed value.
In addition, the value will be known through insurance. that you have subscribed for your artworks. In case of death, Belgian insurance companies must submit to the authorities the insurance policies taken out in the name of the deceasedas well as the insured goods and their value.
preserve the collection
To ensure the integrity of the art collection. that you have carefully constituted, there are different possibilities. Imagine that one of your children is especially interested in art. In this case, you can bequeath your collection through a donation or through a will. In the absence of any other provision, probate law assumes that you treat all of your children equally. “Therefore, a donation is considered an advance on the inheritance”, specifies Astrid Dutré de Nagelmackers. “On the donor’s death, donations made during the donor’s lifetime will be deducted from the recipients of the donations.”
If you want to favor one of your children, there are certain limits. Together, your children are entitled to half of your estate, but you are free to dispose of the rest as you see fit. Therefore, you may be able to benefit one of your children through a gift or a will.
Civil society and foundation
If your goal is to preserve your art collection in the long term, you can transfer it to an ad hoc structure. The simplest is a civil society.. In exchange for contributing to the artwork, you get shares in the company. These shares can be offered during your lifetime to the next generation. The applicable donation rights in Brussels and Flanders are 3 or 7% depending on the relationship of the beneficiary with the donor and respectively 3.3 and 5.5% in Wallonia.
A private foundation may be established to accomplish a nonprofit purpose, such as the preservation of an art collection and its careful management for future generations.
The advantages of civil society are its simplicity and the possibility of maintaining control. “But you have to take into account certain formalities, such as keeping accounts, organizing an annual meeting, registering with the Banque-Carrefour des entreprises and updating the UBO (Ultimate Beneficial Owners) register every year. , Ed),” warns Astrid Dutré .
There is no registration fee to be paid and the non-commercial company is not subject to corporation tax. In the event of death, the shares must be declared in the estate..
Another possibility is to create a private foundation.. This can be set up to achieve a non-profit goal, for example the preservation of an art collection and its careful management for future generations. A private foundation can be created. in the life of the owner, but also by will.
He does not receive shares in exchange for his contribution and, in principle, definitively renounces his assets. The property transfer tax in a foundation is not very high. “If you compare these rates with those of the inheritance tax, the calculation is done quickly”, continues Astrid Dutré.
Pay inheritance tax using works of art
In principle, it is possible to pay inheritance tax, in whole or in part, with works of art. They can be works belonging to the heirs or works that are part of the inheritance.
But not all works of art can be considered. They must be considered by the Minister of Finance as part of the cultural heritage or be recognized internationally. A special commission is summoned to give its opinion and will be in charge of evaluating the works. This valuation will also serve as the basis for determining the inheritance tax to be paid.