$450M art sale raises taxing questions
New York collects sales tax on even the smallest items, but it probably won’t collect a cent on a nearly half-billion dollar painting by Leonardo da Vinci.
The Italian Renaissance artist’s Salvator Mundi sold for $450 million US during a recordbreaking auction at Christie’s last month to a buyer reported to be a Saudi prince.
But unless he decides to hang the work in Manhattan or ships it using a certain type of carrier, he’ll likely be spared the nearly $39 million in sales taxes a regular New Yorker would have to pay for buying that work of art.
That’s because the state’s laws are structured so that out-of-town buyers generally don’t get hit with big tax bills. If they did, New York’s status as a global centre for art sales might be jeopardized, an expert said.
Christie’s declined to identify the buyer of the 500-year-old painting, but media reports point to the Saudi royal family. The New York Times reported that documents it reviewed identify the painting’s anonymous buyer as a little-known Saudi prince, Bader bin Abdullah bin Mohammed bin Farhan al-Saud.
The Wall Street Journal reported on Thursday that Bader was acting as a proxy for Saudi Arabia’s crown prince, Mohammed bin Salman.
The painting appears headed to the newly opened branch of the Louvre museum in Abu Dhabi, capital of the United Arab Emirates. The museum tweeted Friday that the painting had been acquired by the government’s tourism and culture department.
If the painting of Christ raising a hand in blessing had been bought by someone who planned to keep it in New York, the buyer would be on the hook to pay an 8.875 per cent state and local sales tax, which on a $450-million purchase would amount to about $39 million, said Jason Kleinman, a lawyer who advises art collectors. That probably won’t happen if the painting is shipped to the Middle East.
“We’re not supposed to tax the Saudi guy if he takes the painting outside the U.S.,” Kleinman said. “The caveat is that New York has very particular rules about how a painting needs to be shipped out of the city. If those rules are not abided by, there will be some inadvertent sales tax.”
The painting’s buyer could be forced to pay a tax if he hired a specialized fine-art shipper to deliver the painting to Saudi Arabia or Abu Dhabi. New York state authorities say purchases by outof-state buyers who use specialized shippers as opposed to common freight carriers such as UPS or FedEx are subject to sales tax.
Christie’s advises buyers on its website that it must collect tax on items collected by certain carriers. It also notes that buyers shipping artworks to 10 other U.S. states also would be on the hook for sales taxes.
New York has socked art houses in the past for failing to collect sales tax.
New York Attorney General Eric Schneiderman reached a $4.28-million settlement last year with New York’s Gagosian Gallery over unpaid taxes on art sales.
Schneiderman’s office had no comment on the sale of Salvator Mundi, Latin for “Saviour of the World.”