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Budget enhances tax relief for the rich for the benefit of our heritage

Donors can secure 80% of the value of accepted works as a credit against outstanding and future tax bills

It may have been a relatively minor amendment in this year’s budget, but the decision to increase the amount the State will accept as part of the heritage donation scheme is a sign that a growing number of people are looking to gift works of art or literary importance – in return for tax relief.

Currently, the total value of items that can be donated under the scheme, also known as Section 1003, cannot exceed €6 million in any one year from all donors. Last year, the State hit that ceiling in total accepted donations, including a Sir John Lavery painting, A Garden in France, which was valued at €2.647 million, as well as a collection of silver, valued at €2.5 million.

However, this limit is now to be increased by about a third to €8 million, under a measure in the Finance Bill, a move which is expected to cost the Exchequer an additional €1.5 million on a full-year basis.

It’s a move that is likely to be welcomed by artistic institutions around the State. A spokeswoman for the National Gallery says that it is “delighted” by the decision to raise the ceiling.


“This much needed increase allows for greater donations to national cultural institutions,” she says.

What qualifies?

The scheme has proven to be important for cultural and artistic bodies to collect works to develop their collection.

“The gallery has been able to add significant works of art to the permanent collection that it would otherwise not have been able to secure,” says the spokeswoman for the National Gallery, citing some key examples such as Walter Frederick Osborne’s Mary Guinness and her Daughter Margaret; Daniel Maclise’s The Installation of Captain Rock; Harry Clarke’s ten original illustrations for ‘The Fairy Tales’ by Hans Christian Andersen; and Peter Paul Rubens’ Head of a Bearded Man.

But what might fit the bill for a donation? Is it time to fill up the car and head to your local valuer to see if you have anything that could be swapped to reduce your tax bill?

According to the Revenue Commissioners, a heritage item is “any cultural item, including any archaeological item, archive, book, estate record, manuscript or painting”.

It can also be a collection of these items.

The item must be “pre-eminent” in its class and if it were to be exported it would “diminish the country’s cultural heritage”. To this end, it must be suitable for acquisition by one of the National Archives, the National Gallery, the National Museum, the National Library, the Crawford Art Gallery, the Irish Museum of Modern Art or, with the consent of the Minister for Finance, any other body wholly or partly funded by the State, public or local authority approved by the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media.

One of the more regular recipients of donations in recent years, for instance, has been the Waterford Museum of Treasures, which has benefited from donations valued at €9.85 million over the five years to the end of 2021.

The spokeswoman for the National Gallery notes any work of art should also be of high quality, in good condition, with good provenance and title, should fill a gap in the permanent collection and be of benefit to the public now and in years to come.

Once you’ve selected which body you want to donate the item to, you must apply to the relevant section of the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media. This will involve submitting a declaration, providing proof of ownership and providence, the date of purchase and price paid in the last transaction. You will also be asked to explain why you think the item is of heritage value.

A selection committee will meet, and consider the worth of the proposed donation; if they decide it is suitable for the scheme, they will then ask Revenue to determine its market value.

In order to qualify for consideration, the open market value of the item must be at least €150,000. If the donation is a collection of items, at least one item in the collection must have a minimum value of €50,000. Those financial requirements do not apply, however, where the collection is of archive material or manuscripts.

If the item qualifies for the scheme, it will then be offered to the proposed beneficiary. According to the spokeswoman for the National Gallery, it has, in recent history, not turned down any such Section 1003 donations.

Tax relief

The key attraction of the scheme – apart of course from being a good citizen and gifting the State some of your valuables – is that you get a hefty tax credit, which you can use to offset your tax liabilities.

The credit is equal to 80 per cent of the market value of the item donated and it can be offset against a range of taxes you might be liable for, including income tax, corporation tax, capital gains tax or gift and inheritance tax (but not the universal social charge or PRSI).

So, for example, let’s say you receive an inheritance from your parents of €2 million, on which capital acquisitions tax of almost €550,000 may be owed (once your €335,000 allowance is deducted).

At the same time, you decide to bequeath the State a painting you own, which has a market value of €400,000. If this qualifies for the donation scheme, you will get a tax credit of €320,000, which can be used to defray your CAT bill, and bring it down to €229,450.

Relief will first be credited against any outstanding tax arrears before being applied against current tax liabilities. If the credit exceeds liabilities, it can be set against future tax bills but donors are not entitled to any cash refund as a result of the scheme.

The scheme used to be more generous: up to 2009, donors could receive the full value of the item as a tax credit, but it was restricted to 80 per cent that year.

The scheme used to cost the Exchequer considerably more than it does now. Back in 2005 for example, it had a cost of some €5.8 million, but this fell in subsequent years, particularly in the years following the financial crisis.

In 2020, the cost came to €2.4 million, with fewer than 10 items donated, and in 2021, the cost was €2.8 million, with just three items donated. That will have risen to €4.8 million last year on the basis that the current ceiling of €6 million in donations was hit.

By law, the Revenue is required to publish details of donations every year in its annual report – but it doesn’t disclose who made the donations.

However, sometimes the donors are made known to the public.

Back in 2016 for example, the Rubens Head of a Bearded Man, with a valuation of some €3.5 million, appeared on the list, having been acquired by businessman Denis O’Brien for the purposes of donating it to the National Gallery.

The previous year, businessman Lochlann Quinn was said to have donated A Village Kermesse Near Antwerp, by David Teniers the Younger, a 17th-century Flemish artist, with a valuation of some €2 million.

In 2016, the Yeats family donated WB Yeats’ Nobel medal for literature through the scheme, at a valuation of some €1.5 million.

Some high-profile donations to the State

· A Garden in France by Sir John Lavery, 2022, €2.647m, National Gallery

· Neil Jordan Archive, 2017, €2.75m, National Library

· Head of a Bearded Man by Peter Paul Rubens, 2016, €3.5m, National Gallery

· W.B. Yeats Nobel Prize Medal, 2016, €1.5m, National Library

· James Joyce’s Finnegans Wake manuscripts, 2006, €1,170,694.86, National Library

· 1916 Proclamation, 2006, €300,000, National Museum

Source: Revenue