Along with real estate, art is one of the main areas of investment. It offers a considerable advantage for companies and individuals since the purchase of an original work is tax-free!
Indeed, any company, whatever its activity, can in principle buy a work of art, expose it to the public and thus benefit from a tax deduction. However, this tax exemption is subject to conditions.
For individuals, since the 2018 Finance Act, art has been excluded from the real estate wealth tax (IFI) base. Moreover, the VAT rate is among the lowest in Europe, since France subjects to the rate of only 5.5% (compared to 20% generally in other European countries) the acquisition of works of art made directly in the hands of artists or their beneficiaries.
Investing in art today therefore has many advantages!
Combined with tokenization, this tax exemption of art can have an even greater advantage: we will be able to democratize investment in art! This is the reason why EquiSafe wishes to organize the tokenisation of a piece of art.
As a reminder, tokenization* is the creation of the digital representation of an asset on a blockchain*.
Thanks to tokenization, we can virtually divide a work of art, whether it is a painting, a sculpture, or a collector’s car. This will make it possible to obtain tokens*, i.e. shares of this work.
Any individual or company will be able to purchase tokens and will therefore be considered as the owner of part of the work. This will allow a partial tax exemption.
This idea of the tokenization of an artwork presents new advantage: the democratization of tax exemption! What is meant by “democratization”?
It is obvious that big companies can buy expensive pieces of art more easily than SMEs. Furthermore, the purchase of artworks, considering the cost, relates to a minority of individuals.
EquiSafe wishes to allow the greatest number of individuals and companies to invest their savings take advantage of tax exemption!
The tokenization of a piece of art brings several advantages:
Regarding the first point mentioned, tokenization helps dividing a piece of work in as many parts as there are investors. Thus, the tokens’ value is minimized! The more there is tokens, the more there value is minimized. For example, in the AnnA operation, first European tokenization carried out by EquiSafe on a building, a token represents €6.5! It is less expensive than a pack of cigarettes or a pint in Paris!
Therefore, any individual or SME will be able to buy tokens of a piece of art.
Tokenization also allows a better traceability of the trade. Indeed, the time required to register the transaction on blockchain is nearly instantaneous. Blockchain finally permits a real transparency. For more information, please read the first article of our summer saga!
In addition to that, the tokenization helps making a way more secured transaction, and notably to avoid double spending*, a major problem with the advent of crypto currencies, illustrated in the “Dole Food” case.
Moreover, this process permits the immutability of the information. In fact, at the time an information is added on blockchain, it is impossible to either modify the information or delete it.
If you need more information on the security brought by the blockchain system, we refer you to the second article of our summer saga.
Thanks to high security and the certification schemes implemented on the platform, the tokenisation of a piece of art will allow the direct sale of the artwork by the artist; while most sales are made through auction houses or galleries. In the end, these operations promote the artist’s autonomy!
In order to illustrate our statements, we imagined 3 use cases to show you what EquiSafe can offer:
You are an art lover, and more specifically into sculptures. Whether it is a Rodin or an Orlinski, you dream of exhibiting one in your apartment. Unfortunately, you do not have enough money to purchase a sculpture on your own.
EquiSafe has the solution!
Thanks to tokenization, we can virtually split the sculpture in tokens that you will be able to buy directly on our platform. Thus, you will be co-owner with other art lovers, and if you earn 25% of the piece of art, you will be able to exhibit it 25% of the time in a year, as 3 months.
Or even, you are in love with France and its art, and you would like to share its culture by allowing the lending of a piece of art as beautiful as a Renoir.
EquiSafe also brings you the solution!
Indeed, if you want to invest in a piece of art, we may implement a system according to which the artwork you decided to invest in is lent do several museums around the world. Therefore, the piece can be better known abroad, and the profits made by the museums thanks to the exhibition of the work will be refunded in proportion to your investments.
It will be possible on our platform to set up an auction. Thus, using your private key which will be assigned to you when creating your account, you can simply propose an amount for a piece of art in particular, for example a Picasso.
Original work: for a creation of the mind to be qualified as a work of art, and it benefit from the protection of intellectual property, it must be “original”, which means that it is the result of a creative effort. Henri Desbois, professor at the University of Paris II Panthéon-Assas, defined this originality as “the imprint of personality”, a definition that is widely adopted.
Tokenization: “tokenization” is the creation of the digital representation of an asset (a bond, a financial security, etc.) on a blockchain.
Blockchain: a blockchain is a transparent, secure information storage and transmission technology that operates without a central control body. It allows the exchange of value units (e.g. bitcoin, digital assets representing physical real estate, etc.).
Token: there is no exact definition of a “token”. A token actually represents a value in a particular ecosystem (financial, real estate, artistic, etc.). It can represent a right, an exchange of value, an access right, a currency or a distribution of profits.
Double spending: “double spending” is a fraud specific to digital currencies according to which the same digital coin will not be duplicated as in fiduciary currency fraud but spent twice.