Benefits for Corporations and Sole Proprietors to Purchase Paintings and Artwork for Their Offices
There are many advantages for corporations and sole proprietors to display artwork in their workplaces. Here are two major possible advantages.
1) It sets the office image!
Decorating the office with paintings and artwork can enhance the dignity of the company and inspire creativity in employees.
2) Depreciation correctly will save you money on taxes!
Since it is an investment in the office environment, if depreciated correctly, it can be an effective tax-saving measure.
In this article, we will introduce the benefits of depreciation in more detail here.
Square in square by Svetlana Saratova｜W80.00cm x H 80.00cm｜¥109,800
Depreciation of paintings and works of art: 3 points
Point 0 - What is depreciation of paintings and works of art?
Depreciation is an accounting treatment in which the purchase cost of a fixed asset is divided and expensed according to its usable period (useful life).
Due to a change in the law, the "depreciation system as revised" will apply to artwork and other items acquired on or after January 1, 2015 (2015).
If the item you purchased is eligible for depreciation as described below, you will save taxes!
Point 1 - How to choose the depreciation method: less than 1,000,000 yen per item
In principle, the depreciation of works of art is applicable only if the price of one work of art is less than 1,000,000 yen ( fixed assets must be 100,000 yen or more, so the acquisition cost must be between 100,000 yen and 1,000,000 yen to be exact).
Point 2 - How to choose depreciation targets: "items whose value decreases with the passage of time"
In addition to point 1, "items for which it is clear that the value of the work of art will decrease with the passage of time" are eligible as well.
If these conditions are met, a work of art may be eligible for depreciation even if its price is more than 1 million yen.
This is the case where one of the following three conditions is met
1. The work is acquired for the purpose of decoration or exhibition in a place used by an unspecified number of people, such as the lobby of a congress hall or the hall of a funeral hall (except for works that are open to the public for a fee). (1) The property is acquired for the purpose of decoration or exhibition (excluding items open to the public for a fee) in a place used by a large number of unspecified persons, such as the lobby of an association or a funeral hall.
(2) It is difficult to relocate the property and it is clear that it will be used only for this purpose.
3 The item is not expected to have market value as a work of art, etc., based on its condition of installation and use, assuming that it is to be converted to other uses.
Source: FAQ on the determination of depreciable assets with respect to works of art, etc. (National Tax Agency)
Contrary to the above exception, assets that clearly do not decrease in value with the passage of time, i.e., those that have historical value or are irreplaceable, cannot be depreciated! Care must be taken here.
Therefore, among works of art, antiques, old documents, excavated artifacts, relics, etc. are not subject to depreciation.
Point 3 - How to choose the subject of depreciation: Items within their legal useful life
The useful life is the number of years an asset can be used for depreciation. It is determined based on the structure and materials of each work of art.
- For items displayed indoors: Mainly metal:15years
- Other items:8 years
If you are going to buy something, you will want to check the above information before making a purchase decision.
If you already have assets that are eligible for depreciation, we recommend that you take the depreciation procedures.
Key Points of the Revision of the Depreciation System What happens to items purchased before the revision?
Works of art acquired before December 31, 2014 were determined to be depreciable under the previous rules.
Please check again to see if you meet the requirements.
(1)Is the work related to the production of the artist listed in an art-related yearbook, etc.?
(2) The acquisition price is 200,000 yen or more per piece (20,000 yen per issue for paintings).
Under the amendment enacted on or after January 1, 2015, the basic threshold will be the purchase price of 1,000,000 yen instead of the above criteria.
Depreciation is allowed from the first fiscal year beginning on or after January 1, 2015 (the first year of application).
Depreciation method
Choose from "straight-line method" or "declining-balance method
Straight-line method: Depreciate a fixed amount each year.
Declining-balance method: Depreciation of a fixed percentage each year
Of the above, the declining-balance method is based on a system in which the depreciable amount is large at the beginning of the period of use, and then the depreciable amount decreases each year thereafter.
Are picture frames included in the acquisition cost of art works? Expenses included in the acquisition cost
Generally, frames are considered to be included in the acquisition cost as part of the painting.
Other expenses that are directly necessary to use the work for business purposes may be included in the acquisition price in the same manner as the frame.
These include, for example, pick-up freight, loading and unloading costs, transportation insurance premiums, purchase fees, customs duties, etc.
Special case: In the case of a small amount of acquisition cost
Corporations that fall under the category of small and medium-sized enterprises, etc., and the acquisition cost is less than 300,000 yen: Lump-sum depreciation is allowed (with an upper limit of 3 million yen per fiscal year).
If the acquisition cost is less than ¥200,000 but more than ¥100,000, lump-sum depreciation (straight-line depreciation over 3 years) is allowed.
If the acquisition cost is less than ¥100,000 and the usable period is less than one year, the entire amount can be deducted from expenses by using an account item such as "consumables expense.
At TRiCERA ART, we handle countless works for less than 100,000 yen, as well as works for more than 100,000 yen and less than 200,000 yen. We are sure that we have the perfect piece for your office, restaurant, café, or hospital. Please take a look at our recommendations by price.
Recommended works under 100,000 yen
Resin crystal gold painting by Tetiana Surshko
W 50.00cm x H 50.00cm｜39,400Yen
Recommended works between 100,000 yen and 200,000 yen
The Streets of Venice by Natalia Shchipakina
W 100.00cm x H 70.00cm / ¥167,400
Recommended works between 200,000 yen and 300,000 yen
Movement-W13 by Mariko OHASHI
W 65.20cm x H 80.30cm / ¥250,000
Recommended works between 300,000 yen and 1,000,000 yen
Passenger by ayaka nakamura
W 117.00cm x H 80.00cm / ¥580,000
If you are purchasing art as an asset
We can assist you in choosing the right artwork for your office, as well as in installation, not to mention depreciation.
If you have any questions, please feel free to contact us via chat, e-mail or phone.
Email: customer_support@tricera.co.jp
