Art objects - Taxable or not

If you own art, classic cars, or expensive watches, you have surely wondered whether and from which point these items need to be declared in your tax return. Unfortunately, the answer is not as simple as one might wish, as the distinction between an asset value and household effects is sometimes hard to define.

Household Effects or Assets

Does the painting on the wall count as an asset, or is it merely tax-free household effects? This question concerns not only experts but also the tax authority itself. There is no fixed rule for this. Generally, paintings by less known artists that primarily serve a decorative purpose are not taxable. However, once the works exceed a certain amount, the object must be taxed as an asset. The problem here is that the tax authority has not set a fixed amount.

However, an important clue is provided by the insurance. If an artwork is insured beyond the standard household insurance through art insurance, it likely represents more than just decoration.

Often, a deciding factor can also be the number of art objects. A single work is treated differently than a complete collection. If there is also regular trading of the works, the tax authority even speaks of a commercial activity.

At what value must an art object be recorded in the tax declaration?

At what amount must the work be taxed then? The insurance sum is a good reference point. However, the insurance sum and market value can be quite different, especially if objects have been in the family for a long time or rarely change hands. It is even more difficult with items that practically have no market, such as extremely rare paintings or antiques. Determining the tax value then becomes a Herculean task. To avoid having the works overvalued, it is worthwhile to declare them and create transparency. Ideally, one should give the tax administration no reason to be suspicious.

Watches, Jewelry and Classic Cars

Watches, jewelry pieces, and classic cars can also be potential investment objects. Here again, the insurance is an indicator of possible tax liability. Objects that are reasonably suitable for everyday use generally do not need to be declared. However, entire collections of classic cars or watches should be listed in the tax declaration. Fortunately, with such objects, the market value can usually be easily determined, as they are mostly not rare rarities.