Recently, there have been several interesting stories from various sources on the topic of art galleries. As usual, in this case, too, one cannot do without dealing with taxes.

Cash transactions?

Shortly before Christmas, I purchased this wonderful work by artist Krista Dzidzulo, made with charcoal, at an auction organized by the Kim? gallery. When I shared this happy moment with a friend, he winked and said that you should be careful, because this industry does not have a good reputation, because works are often paid for in cash. Thus, there are even conflicts between parties to transactions that can be measured in millions. I decided to delve deeper – what is the story about? The respective article mentions that around 2000 different works of art were purchased.. also in cash, supposedly in millions. (Cash – supposedly obtained in dividends?) OMG!

If the cash limit is violated

In the conditions of modern AML supervision and restrictions on cash circulation, such transactions seem almost impossible at the moment. What are the sanctions for not observing the limit? The law provides for 15% fine of the transaction amount. The involved person himself told Re:Baltica that he understands that he broke the law that year, and, “as I already pointed out during the legal proceedings, I am ready to take responsibility for it.” However, no one has demanded responsibility from him so far. So, supposedly it is forbidden, but can it be done here? The Re:Baltica article mentions that it is unlikely – the SRS added this information to an existing case, in which the transactions of another art collector are still being investigated. “The SRS has informed that since 2017, 72 private individuals have been fined for cash transactions over 7,200 euros, who have paid an average of 5,000 euros in fines.”

Consequences of the transaction

Another obvious problem also appears in the media – how to prove ownership rights, the transaction price, etc. in transactions without papers (agreements, etc) and paid in cash? The relevant 2021 De Facto’s TV report states that the essence of the dispute in court is the ‘return of art objects’.

Read the full story by tax expert Jānis Taukačs here.