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日本の税務情報を英語で書くブログ by みなと国際会計事務所

Saving tax by investing in arts

time 2018/09/26

An artwork lower than 1 MM yen per item is deductible from taxable income for corporate tax through the process called depreciation. The cost has to include auction fees (if you buy at an auction) and other expenses that came with the purchase (e.g. delivery fee).

The life years for the tax is either 8 years or 15 depending on what it is made of:

Made of Life Year
Mainly by metals 15
wood and others 8

The depreciation has to be calculated based on the number of months you possess the art for a year. If you purchased an art piece in September for 800,000 yen with an auction fee of 15%, you will only be allowed to expense 38,333 yen (if you adopt the straight-line method. There are other methods but this one is the easiest to use in an example). The calculation is as follows:

(800,000 + 800,000 * 15% (fee)) / 8 years * 4/12 months

Tax Impact

This does not look to make a big impact on your income statement. But think of the effect in the long run. After 8 years, you will have an invisible asset (which is sellable) on your balance sheet after expensing the cost to reduce your taxable income. Think if you keep buying one piece of artwork which is 1,000,000 yen every year. If your plan is to run your business for long-term, say 20 years, you will have invisible cashable assets of 20 million yen in your vault. Isn’t it beautiful?

If you are in the tax bracket of 50% (including the resident tax and social insurance), by saving the tax, you are buying an art piece you wanted for almost half a price.

Artworks are almost like a currency. There will always be people who want to buy.


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