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Art in your company (for Danish companies only)
Companies that purchase art generally cannot deduct these expenses in their tax accounting. This is because the value of an artwork typically does not depreciate.
However, there is an exception. To support artists, tax rules include a special set of regulations that, under certain conditions, allow companies to deduct or depreciate expenses for art purchases. Here, we provide an overview of the essential parts of these regulations.
**Types of Art**
The special rules only apply to original visual artworks. This includes paintings, sculptures, graphics, photographic art, installation art, and similar forms. A distinction is made between artworks that are hung or displayed and those that are part of a building.
For graphic and photographic works, there is an additional requirement that they must be numbered and signed by the artist and produced in a limited edition. Reproductions are not covered by the rules.
The artwork must be a first-time purchase and must be bought directly from the artist or from a gallery that has the artwork on consignment.
The rules cannot be applied if the company purchases the artwork from an artist who is a family member or otherwise closely related to the company's owner.
**Artwork Displayed or Installed**
Expenses for the purchase of artworks that are displayed or installed in the company's premises can be depreciated using the so-called declining-balance method at up to 25% per year. This is done following the same rules as for inventory. Full depreciation can be made in the acquisition year, even if the purchase occurs late in the fiscal year.
If the purchase price is DKK 32,000 or less per artwork (2023), the company can deduct the entire amount in the year when the artwork is purchased.
Source: BDO Danmark
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