Paying French inheritance tax with artworks: article 1716 bis of the Tax Code

Taxes covered, eligible property and conditions of the offer

• Taxes. Inheritance and gift duties, partition duty and the real estate wealth tax (IFI). A dation can only settle duties already payable, never a future liability (BOI-SJ-AGR-50-20, § 30).
• Property. Works of art, books, collectors' items, documents of high artistic or historical value. The text also covers certain real estate (coastal conservation areas, woods and forests) under separate procedures not discussed here.
• Threshold. The duties offered in kind must amount to at least EUR 10,000 for each tax concerned.
• Holding period. The offer is inadmissible for property held for less than five years, unless received by gift or inheritance, or for property already refused twice.
• Ownership. The property must be owned outright by the taxpayers on the date of the offer; a work held jointly with a person who does not owe the duties cannot in principle be accepted. The work need not come from the estate or gift giving rise to the duties (BOI-SJ-AGR-50-20, § 55).
• Unconditional offer. No balancing payment, no reserved right of use; the offer may cover all or part of the duties (BOI-SJ-AGR-50-20, § 60).
• Irrevocable for six months. The offer cannot be withdrawn within six months of filing, extendable by three months by reasoned decision.

Dation differs from the gift of a work to the State under article 1131 of the Tax Code: the purchaser, donee, heir or legatee of a work of high artistic or historical value who gives it to the State within the registration deadline is exempt from transfer duties on that work, subject to approval, and may keep the use of it for life. Both procedures go before the same commission (Annex II, art. 310 G).

From the offer to the decision: who does what

The procedure for works of art and collectors' items is set by articles 384 A and 384-0 A bis of Annex II to the Tax Code. Approval is granted by the Budget Minister; the opinion on interest and value is given by the commission interministérielle d'agrément pour la conservation du patrimoine artistique national, known as the dation commission (Annex II, art. 310 G, II).

A refusal may be challenged before the administrative courts (BOI-SJ-AGR-50-20, § 150). The works accepted are transferred to the State and allocated to a public institution, in practice a museum, library or archive.

The deadlines that apply, and those that do not exist

No text sets a review period, except that two years of silence amount to a refusal: the length depends on the file and on the commission's schedule. The fixed reference points are the following.

Do the duties have to be paid during the review?

The duties offered in kind are not payable during the review; this is not a general suspension of the estate's tax. They only become payable within thirty days after the end of the procedure (BOI-SJ-AGR-50-20, § 280 to 310, based on the law of 31 December 1968).

• On filing. If the value of the works offered covers the duties, the return is registered without payment; otherwise only the difference is paid. Duties not covered by the offer are paid as usual.
• Approval accepted. The liability is discharged up to the discharge value. If lower than the duties, the balance is payable within thirty days after the acceptance period ends; if higher, the State pays nothing back.
• Refusal. The duties must be paid within the period set by the decision, thirty days at most, with no interest before it expires.
• Withdrawal or renunciation. An applicant who withdraws after the irrevocability period and before notification of the approval owes late-payment interest (Tax Code, art. 1727) from the first day of the month following the month in which the duties were due; one who declines a different value owes it only from the end of the thirty-day period (art. 1716 bis).
• Scope. The approval only covers duties declared in the return or deed for which the offer was made (BOI-SJ-AGR-50-20, § 290).

One estate, two works offered, a revised discharge value

Hypothetical illustration, built to show how the rules work; it does not describe an actual case.

A collector dies in Paris. The three children owe EUR 3,000,000 of inheritance tax; the estate has little cash and a collection. Within six months of death, they file with the return a dation offer of two works at an offered value of EUR 3,000,000. The return is registered without payment of the duties covered by the offer.

The commission proposes to retain only one of the two works; the State sets a discharge value of EUR 2,200,000, which is notified to the heirs. They confirm it, then expressly accept the Budget Minister's approval within the period it sets: the liability is discharged up to EUR 2,200,000 and the balance of EUR 800,000 is payable within thirty days after the acceptance period ends. Had they declined, the EUR 3,000,000 would have become payable, with late-payment interest from the first day of the month following the end of the thirty-day period.