Accounting obligations for an art gallery: a practical guide

01Choosing the accounting regime: micro, simplified actual or standard actual

The gallery owner operating as a sole proprietor or company must choose an accounting regime that determines the extent of their obligations. The micro-BIC regime, reserved for businesses whose turnover does not exceed the legal threshold, requires only maintaining a receipts book and, for sales activities, a purchases register. This regime attracts through its simplicity but has significant limitations for an art gallery: it does not allow deduction of actual expenses, prohibits VAT recovery and makes provisions impossible. The gallery owner whose activity has moved beyond the embryonic stage almost always benefits from opting for the actual regime.

The simplified actual regime, accessible to galleries whose turnover falls below the thresholds set by the General Tax Code, requires regular accounting but permits certain simplifications: flat-rate accounting for certain expenses, preparation of simplified balance sheets and profit and loss statements. The standard actual regime, mandatory beyond the simplified regime thresholds, requires complete accounting with balance sheet, profit and loss statement, appendices and cash flow statement.

Galerie Templon, which ranks among the most established French galleries, or Galerie Almine Rech, present in Paris, Brussels, London and Shanghai, necessarily fall under the standard actual regime given their turnover. Conversely, a young gallery owner opening their first space can begin under the simplified actual regime and switch to the standard regime as their activity develops. The transition from one regime to another occurs either automatically when thresholds are crossed, or by election when the gallery owner considers the higher regime more favourable.

02The inventory book and managing the stock of works

One of the most specific accounting obligations for an art gallery concerns managing the stock of works. The gallery owner permanently holds a collection of works belonging either to the gallery itself or to represented artists under consignment agreements. The distinction between these two categories is fundamental from both an accounting and legal standpoint. Works belonging to the gallery appear on the balance sheet as stock, valued at their acquisition price. Consigned works, which remain the property of the artists, do not appear on the gallery's balance sheet but must be tracked through rigorous off-balance-sheet monitoring.

The consignment register constitutes an indispensable document that every gallery owner must keep up to date. This register must note, for each work entrusted to the gallery: the identity of the artist or consignor, a precise description of the work, its dimensions, technique, date of consignment, agreed sale conditions and minimum price set by the artist. Galerie Perrotin, which manages a considerable volume of consigned works from artists worldwide, has necessarily developed computerised management systems to track this consignment stock.

Physical stock-taking, mandatory at least once per financial year, requires the gallery owner to verify the actual presence of each registered work in their premises or external storage locations. This operation enables detection of discrepancies between theoretical and actual stock, whether resulting from recording errors, unrecorded sales or, in the most serious cases, disappearances. The gallery that keeps its inventory current is also one that can respond promptly to a collector interested in a specific work and whose accounting faithfully reflects business reality.

03Invoicing: general rules and art market particularities

Invoicing for art sales follows the general rules of commercial invoicing, with mandatory details required by the Commercial Code and General Tax Code: date, invoice number, seller and buyer identity, description of the sold work, pre-tax price, VAT rate and amount, total price including taxes. To these general requirements are added art market-specific details: the VAT regime applied, which may be the general regime or margin VAT regime, and the resale right applicable to works by certain artists.

The resale right, provided for by European directive 2001/84/EC transposed into French law in articles L.122-8 and R.122-5 of the Intellectual Property Code, requires payment of a royalty to the artist or their heirs upon any resale of an original artwork involving a professional art market participant, when the sale price reaches a certain threshold. The gallery owner involved in such a transaction has the obligation to collect this royalty and remit it to the artist or the competent collective management body. The accounting treatment of this royalty must clearly show it as an amount collected on behalf of a third party and not gallery revenue.

04Declarative obligations: VAT, tax return package and social declarations

The gallery owner is subject to a set of declarative obligations whose calendar punctuates the accounting year. The VAT return, monthly or quarterly depending on the regime, requires calculating and declaring VAT collected on sales and deductible VAT on purchases and expenses. The complexity of this return is amplified by the possible coexistence of the general regime and margin VAT regime within the same gallery, requiring separate accounts for each regime.

The annual tax return package, a set of accounting and fiscal documents submitted to the tax authorities each year, constitutes the reference document for calculating profit tax. It comprises the balance sheet, profit and loss statement, depreciation schedule, provisions schedule, general expenses statement and, where applicable, the taxable income determination table. Preparing this package engages the gallery owner's accountant for several weeks and represents a significant cost in the gallery's budget.

Social declarations concern the gallery owner as an employer when staff are employed, but also as a self-employed worker if operating as a sole proprietor or majority shareholder-manager. Social contributions for the self-employed gallery owner are calculated on the basis of professional income and must be declared and paid according to a calendar set by social security organisations. Galerie Kamel Mennour, which employs a team of several dozen staff, must manage complex payroll with monthly declarations to URSSAF, while a gallery owner without employees need only manage their own contributions.

05Choosing an accountant: a strategic partner

The gallery owner has a legal obligation to have accounts certified by a chartered accountant once turnover exceeds micro regime thresholds. The choice of accountant should not be guided solely by price but by knowledge of the cultural sector and art market. An accountant specialising in artistic and cultural professions understands the specificities of the gallery business: managing consignment stock, margin VAT regime, resale right, international invoicing particularities, tax conventions applicable to cross-border transactions.

Seeking an accountant who counts other galleries among their clients can prove invaluable, as this sectoral experience guarantees familiarity with the profession's recurring issues. The gallery owner who entrusts their accounting to a generalist without art market knowledge risks allocation errors, incorrect returns and ultimately avoidable tax penalties.

06Tax audit: preparing rather than fearing

A tax audit constitutes a prospect that every gallery owner must consider seriously. Art galleries, given the significant amounts circulating in the art market and the complexity of applicable tax regimes, receive particular attention from the tax authorities. A tax audit may take the form of a desk-based review, conducted remotely from declarations and documents already in the administration's possession, or a full accounting inspection, conducted on gallery premises involving thorough examination of all accounting entries.

The best preparation for a tax audit is impeccable, up-to-date, documented and coherent accounting. The gallery owner who retains all purchase and sale invoices, who can justify each accounting entry with supporting documentation, who maintains a current inventory register and who scrupulously respects the tax return calendar faces an audit with composure.

Artedusa contributes to professionalising partner gallery management by offering a structured framework for presenting and selling works of art online. The traceability of transactions conducted via the platform constitutes an additional element of accounting documentation that strengthens the reliability of gallery accounts and facilitates dialogue with the tax authorities in case of audit.