Peter Kavelaars, Professor of Economics of Taxation at Erasmus School of Economics was interviewed by BNR Nieuwsradio. Art has become an increasingly important investment object in recent years, but is incredibly difficult to measure in value. Kavelaars discusses the tax side of this subject.
Art is subject to a tax exemption. In theory, an investor in art should mark it on his tax return, but in practice this does not often happen. This is because it is very difficult to check whether someone is using art for pleasure or to invest with it. So, for the tax authorities, it is almost impossible to tell whether art should be counted as part of box 3. At one point, the legislator wanted to draw up a guideline by saying, if something is exhibited in the house it should be seen as pleasure, if it is stored somewhere it should be seen as an investment. However, with all the different types of art out there it does become a tricky system to control that way.
There seem to be two disparate options to get a clear tax burden. Everyone can pay tax, in which case whether the person is an art lover or an investor does not matter. Or art should be completely exempt, this is most similar to the situation that exists now. In this, Kavelaars believes that everyone should report art. Then, there should be no distinction, but it may be possible to tax at a lower rate. However, this will still not solve the entire problem, as calculating the value of art is also tricky. These schemes would have to be introduced at European level, though, if they are to be truly impactful. Otherwise, it is quite attractive to store art in other countries.
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You listen to the full podcast from BNR Nieuwsradio, 13 March 2024, here.