9 Compelling Reasons to Invest in Art

In the ever-evolving world of investments, art has emerged as a significant and lucrative asset. A report from the American bank Citi has unveiled that the global art market has seen an annual growth of 13% since the year 2000. Despite the frequent setting of new records—making it a challenge to keep up with the most expensive painting sold—some skeptics remain unsure about the feasibility of art as a sound investment. Here are nine reasons that might just change your mind:

A Long-term Asset in Your Portfolio: Art can be a valuable long-term asset in your investment portfolio, outperforming emerging market debts and commodities. Its returns significantly exceed those of fixed income investments.

A Safe Haven Asset: Art is considered a safe haven asset that appreciates if purchased wisely. It also has a positive correlation with volatile assets like American stocks and has shown a positive return/risk ratio over more than 50 years.

Risk Diversification: Investing in art brings unique value to diversifying investment risk, offering a cushion against market volatility.

Personal Aesthetic Enjoyment: Unlike other investment forms, art provides personal aesthetic pleasure. The innate joy of viewing, acquiring, and owning art is unparalleled.

Enhances Corporate Image: Art investment can enhance a company's image. As noted by the renowned collector Juan March, investing in art as a form of patronage is a crucial strategy for corporate and institutional communication.

Attractive Fiscal Benefits: Art investments come with significant tax incentives designed to encourage art purchases within a country. The United States pioneered such incentives in the 1960s. One of the most appealing tax benefits is the art-for-tax scheme, allowing taxes to be paid with art without incurring capital gains tax.

Art for Tax Payments: Artworks can be used to settle tax liabilities. Furthermore, income from the sale of art is considered a capital gain, which can affect the savings component of your income tax.

Exemption from Wealth Tax: Art can qualify for exemptions from wealth tax under certain conditions and up to specific limits. There are also specific cases where it can benefit from reductions in Inheritance and Gift Tax.

Reduced VAT on Art Purchases: Buying art benefits from a reduced VAT rate, except when the piece is owned by a gallery, in which case a standard rate of 21% applies.

The art market offers not only financial gains but also cultural enrichment and aesthetic pleasure. With its blend of fiscal benefits, risk diversification, and the intrinsic joy of art ownership, investing in art stands out as a sophisticated strategy for those looking to diversify their investment portfolio with something that offers more than just financial returns.