Tax aspects of buying art for a company

[Brendan Burgess]

What are the tax implications for a company which buys art for its premises?

Capital Allowances
Am I right in saying that they can claim capital allowances at 12.5% per year for 8 years?

Capital Gains Tax

Presumably the company must pay 20% Capital Gains Tax on any profit on disposal?

VAT
If a painting is bought from a gallery which is registered for VAT, the gallery commission element is subject to VAT.
So the price might be as follows:
Artist: €500
Gallery: €500
Vat: €105
Selling price: €1105

I presume that a VAT registered purchaser cannot reclaim this VAT?

Brendan

 

[simplyjoe]

What are the tax implications for a company which buys art for its premises?

Capital Allowances
Am I right in saying that they can claim capital allowances at 12.5% per year for 8 years?

Capital Gains Tax

Presumably the company must pay 20% Capital Gains Tax on any profit on disposal?

VAT
If a painting is bought from a gallery which is registered for VAT, the gallery commission element is subject to VAT.
So the price might be as follows:
Artist: €500
Gallery: €500
Vat: €105
Selling price: €1105

I presume that a VAT registered purchaser cannot reclaim this VAT?

Brendan

This situ would be that the art is fixtures and fittings and you could claim the VAT and Wear and Tear Allowance at 12.5%. On sale you would have a balancing allowance and pay tax at your marginal rate or Corporation tax.

 

[gonk]

I presume that a VAT registered purchaser cannot reclaim this VAT?

Yes, you're right. I bought an artwork for my company a couple of years ago in a Dublin gallery. I can't remember the exact details and haven't the receipt to hand, but I do recall the receipt specifically said the VAT element was not reclaimable.

Here's the detail from the Revenue website:
[broken link removed]