The art sector in France is rising up against a bill that could significantly affect art: it is the proposed revision of the Tax on Immovable Property (IFI, impôt sur la fortune immobilière), which is now expected to become, keeping the same acronym, an “Impôt sur la fortune improductive” (impôt sur la fortune improductive). This levy, established in 2018 to replace the Solidarity Tax on Fortune (ISF), which was criticized by the government at the time as harmful to the national economy, retains the threshold of application; it is a tax that is levied on individuals whose taxable net worth exceeds 1.3 million euros. The revision is intended to discourage specific investments that are classified as “unproductive”-including real estate speculation or annuity placements-and that, according to the drafters, offer little or no contribution to the economic dynamism of the national fabric.
Adoption of the new wealth tax would not only entail a name change, but more importantly a broadening of the tax base. Although the tax rate is set at1 percent on the unproductive fortune, the assets taken into account as a result of the revision would no longer be limited exclusively to real estate assets, but would include various financial assets that are poorly invested in the real economy, such as life insurance euro funds, digital assets, including cryptocurrencies, and selected luxury assets, such as yachts, private jets, collector cars, and, indeed, works of art. The bill is currently being debated in the French Parliament: the amendment to the wealth tax law, included in the budget bill, was approved in the House thanks to an unusual majority, consisting of the centrists of MoDem, the Socialist party and the far-right Rassemblement National, while La France Insoumise (radical left), the Greens, the center-right Horizons party and the Republicains, all for different, often opposing reasons, spoke against. The government expressed an unfavorable opinion, as it believes the budgetary consequences are still unclear.
The very inclusion of artworks in the tax base of the new Unproductive Fortune Tax has triggered a strong reaction and concern in the cultural and heritage world. The Syndicat des Négociants en Art (SNA), the art dealers’ union, immediately sounded the alarm about the possible economic and cultural consequences of such a measure, pointing out that it would jeopardize the vitality of the art market and France’s ability to influence internationally. The SNA and the Comité Professionnel des Galeries d’Art (CPGA), along with other organizations, believe that the characterization of artworks as “unproductive assets” stems from a “profound misunderstanding of the essential role they play,” they write in a note. Works of art, the acronym points out, actively contribute to the cultural and economic vitality of the country: they fuel the market, promote patronage and enrich the national heritage.
The consequences feared by the art world are manifold. There is the fear of a probable flight of collections and heritage outside French territory, a slowdown in the economic and cultural dynamism of the entire sector, and a significant weakening of museum institutions, which would be deprived of important donations and dations (the payment of taxes through the transfer of works of art). By imposing such a tax device, France would risk, according to the art sector, undermining one of its greatest strategic advantages: its cultural prestige and attractiveness internationally.
The Syndicat des Négociants en Art therefore called politicians to common sense and responsibility, recalling that the defense of culture implies the protection of an entire professional ecosystem. This ecosystem includes, in addition to collectors, galleries, dealers, artisans, restorers, transporters, auction houses, and all the collateral trades associated with the art market.
The Comité Professionnel des Galeries d’Art (CPGA) also urgently mobilized to protect the tax exemption of cultural goods and the stability of the French market.
At the initiative of the CPGA, a broad coalition, composed of nearly thirty art world organizations, has formed a joint statement and forwarded it to public authorities. This coalition includes, among others, the SLAM (Syndicat national de la Librairie Ancienne et Moderne), the CEA (Compagnie des Experts en Art et Antiquités), theUFE (Union Française des Experts en objets d’art) and the FNEPSA (Fédération Nationale d’Experts Professionnels Spécialisés en Art).
The professionals emphasize in their statement that the vitality of the cultural ecosystem relies on the circulation of works and theengagement of private actors. In France, works do not constitute sterile capital but support the entire ecosystem of dissemination and creation, which includes artists, experts, galleries, auction houses, restorers, artisans, and specialized transporters. The art market generates more than 5 billion euros in sales, supporting the activity of some 30,000 French artists and creating, according to the coalition of naysayers, more than 60,000 direct jobs to which are added more than 100,000 indirect jobs, reaching a level comparable to that of the publishing or advertising sector. The tax revenue produced by the industry comes mainly from economic activity and the jobs it supports. A contraction of the market, caused by taxation, would inevitably lead to a decline in the turnover of cultural and economic structures, resulting in reduced employment and tax losses estimated at 245 to 457 million euros, or even 305 to 578 million euros including all auxiliary industries. Fiscal stability is, therefore, considered a vital national interest, as well as a cultural one.
Professionals also point out a fundamental paradox: While the tax aims to redirect savings toward productive investments or counteract tax optimization, in practice it would indiscriminately penalize an industry whose prosperity depends on the circulation of works. As for the taxation of asset holding companies, which aims to prevent the use of corporate structures to house private assets without economic activity, the extension to cultural property would not take into account the real workings of the market. Indeed, many collectors globally use legal entities, such as foundations or family companies, for reasons related to the preservation, asset management, lending or transmission of works. To equate these holding arrangements with abusive practices would, in the view of the CPGA and its member acronyms, be tantamount to sanctioning a common and transparent use that is essential to the circulation of art assets. By taxing cultural heritage, the measures would miss their target while weakening the creative ecosystem.
One of the most significant alarms concerns the likely flight of collections and heritage out of French territory. At a time when France is catching up with London in the post-Brexit system, the introduction of a tax on the holding of works would, according to the committee of naysayers, push collectors to organize their transactions, deposits and preservation facilities to jurisdictions perceived as more fiscally hospitable, such as the United Kingdom, Switzerland or the United States. If such a tax were adopted, France would become the only major art marketplace, unlike Hong Kong, the United States and the United Kingdom, to impose wealth taxation on the mere holding of works. Immediate consequences could include declining sales, outsourcing of collections, loss of mandates for French experts and auction houses, and relocation of auctions to New York or London. This fiscal shock would risk undoing the sector’s recovery dynamic, despite the positive signs seen recently.
Then there is the topic of the direct threat to national heritage and the enrichment of public collections. Every year, national and territorial collections are enriched by some 250 million euros in works, from bequests, donations, dations and private patronage. Without these transfers, many masterpieces would not be accessible to the public. Historical examples that built the wealth of French collections, from the founding dations of the Picasso Museum to essential contributions to the Louvre and Orsay, testify to the crucial importance of these transfers.
The introduction of the tax would, according to the CPGA, cause a likely withdrawal of private patrons, who are often major collectors and key players in the formation of future public collections. Their absence would result in an immediate impoverishment of the national heritage, which the state would not be able to compensate for on its own; for example, the annual budget for the acquisition of the National Museum of Modern Art is limited to only two million euros.
Moreover, by weakening intermediaries (galleries, antiquarians, auction houses, experts), living art creation would be affected. Indeed, these actors finance the production of artists, ensure their visibility and support the social protection of authors. A drop in sales would result in a decrease in speaker contributions, corporate taxes, social contributions, VAT collection and, ultimately, public resources: the tax, in essence, would destroy its own tax base.
Finally, there is a significant practical difficulty: the uniqueness of works makes their valuation extremely complex, dependent on variable quotations and fluctuating markets. Establishing tax bases for such assets would generate considerable administrative litigation, with costs that would likely exceed the modest expected tax yield. Previous studies of past attempts to include works in the ISF had already indicated that revenues would be marginal, limited to a few tens of millions, equivalent to 1-2% of total revenues at the time. The statement concludes with a solemn appeal to policymakers to explicitly exclude art, collectibles and antiques from the tax.
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| France, art world rises up against new patrimonial property, which includes works of art |
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