GERMANY Trends and Developments Contributed by: Tanja Schienke-Ohletz, Flick Gocke Schaumburg
that are not linked to charitable status. The term “art object” is broadly understood and typically includes paintings, sculptures, graphics, installations, pho - tographs, handicrafts and comparable works; even vintage cars can fall under this category. An “art col - lection” requires a factual and systematic compilation of several works. This can be proven by means of an expert opinion. A mere accumulation is not suf - ficient. A 60% tax exemption applies (only 85% for real estate) if the above-mentioned works of art meet certain requirements. • The preservation of the works of art must be in the public interest due to their significance for art, history or science – ie, they must be objects of outstanding importance for art, history or science. Proof of this can be provided by an expert opinion from the competent authority under state law or an expert opinion from a private expert. “Public interest” does not mean that the work is “beautiful” or “expensive”, but that it has a cultural-historical/ art-historical/scientific relevance that goes beyond the interest of private collectors. • The annual costs of preservation must generally exceed the income generated. It then depends on the date of transfer. The case is clear if no income is generated. On the date of acquisition, a forecast must be made of how the income surplus account will develop in the future over a period of ten years. If the collection does not generate any ongoing income, the criterion is easily met, provided that the costs (insurance, security, restoration, storage, conservation) are plausibly documented. • The objects must be or be made usable for the purposes of research or public education to an extent appropriate to the circumstances. It is not necessary for them to be located in a museum. • The general public must at least be an interested group. If the objects belong to a castle, it must be open to the public at least on certain days. A loan agreement with a museum is also possible – ie, it does not mean that all works of art must always be made available to the museum, but can also involve changing works from a collection. A co- operation agreement obliging the owner to make the work of art available, for example by means of changing exhibitions at different locations, is also sufficient. The purchaser also has time to realise
this utilisation. As a rule, they should be able to prove within six months of the purchase at the latest that they have begun to take appropriate measures. The art should therefore not remain in the purchaser’s living room. The requirements for making the art available to the general public also depend on the nature of the art: in the case of a sensitive graphic art collection, the dedication to the general public will be interpreted more restric - tively than in the case of more robust collections that can easily be shown to the public. In the case of a collection, not every single item has to be exhibited at all times. The tax exemption applies to both inheritances and gifts. In addition, a 100% tax exemption applies if the fol - lowing additional conditions are met. • The art objects have been in the family’s posses - sion for at least 20 years or are listed in the register of nationally valuable cultural assets. • The purchaser must be prepared to subject the items to the applicable provisions of monument preservation. It is sufficient to submit a corre - sponding application to the monument preserva - tion authority. • The 20 years of family ownership cannot be fulfilled for new art collections. Anyone aiming for 100% exemption must clarify at an early stage whether listing/registration is achievable and how the mon - ument preservation requirements can be accepted and complied with in organisational terms. Full tax exemption is retroactively revoked if the items are sold within ten years of acquisition or if the require - ments are no longer met. In practice, tax exemption fails in the following cases: • sale of a qualifying work within ten years of acqui - sition; • termination of accessibility (eg, no loans, transfer to private ownership); and • relocation outside the EU/EEA without a temporary exhibition character.
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