Paying inheritance tax with Art
Heirs of a collector of artworks can already pay inheritance tax with works of art, they can even use their own art. The Flemish Government has just made it easier to pay the Flemish inheritance tax with cultural objects, a much wider definition. .
Dr Paul Janssen, the founder of Janssen Pharmaceutica had a prestigious collection of pre-Columbian art and when he died, the Flemish government allowed his widow to use the collection to help pay the inheritance tax on her husband's estate. That decision kept the collection in Belgium where it can be seen in the MAS in Antwerp.
That was in 2006. Since then, that has rarely happened again. The definition of works of art is not broad enough and the rules are too complex. Upon the advice of a special commission, the finance minister must recognise the artworks as cultural heritage, or they must be internationally renowned.
Any heir, legatee or beneficiary can ask to pay all or part of the inheritance tax with the works of art that they find in the estate, but they can also propose to pay with their own works of art. The Minister of Finance or, in Flanders, the Flemish government must accept the offer upon the advice of a special committee that decides on the nature and value of the works of art. If the artworks are part of the estate, the same value will be used to calculate the inheritance tax.
The Flemish government has opted for a thorough reform of the procedure so that more artwork can be be acquire in lieu of inheritance tax. After all, it is one way to enrich the art and heritage collection of the Flemish Community.
Of course, the Flemish government can only charge inheritance tax only on the estates of individuals who werre living in Flanders when they died even if the heirs live outside Flanders.
From 1 July 2023 at the latest, one will be able to pay inheritance tax to the Flemish Region with “cultural objects”. This includes jewellery, archaeological finds, manuscripts, scientific objects, etc. Cultural objects may be individual pieces or a collection. They must be key works, masterpieces included on the Topstukkenlijst (the official list of masterpieces) and pieces or collections that are rare and indispensable heritage for the Flemish Community. Cultural objects that are abroad are also eligible if they meet a number of conditions. The Topstukkenraad will advise whether the cultural goods offered are eligible for payment.
A more flexible procedure
The procedure for giving cultural objects in payment of the inheritance tax has also been simplified and made more flexible.
Owners of cultural objects who believe that their pieces meet the conditions can now, prior to the opening of an estate, submit a request to the Topstukkenraad in view of a later decision by the Flemish Government on the destination of those pieces if they are accepted in payment for the inheritance tax.
Cultural objects that have been accepted will be accepted for 120% of the market value determined by the Topstukkenraad. If the value of the cultural objects plus 20% is more than the inheritance tax due, then the Topstukkenfonds can guarantee the payment of the difference to the estate if the objects are master pieces. A heritage institution may choose to vouch for the payment of the difference If it concerns for key works that are destinated for its collection.
Entry into force
The Flemish government will set the date of entry into force in a decree. However, that must be at the latest on 1 July 2023.