Who owns
this?

The common claim is that art exists as a tax shelter. On the plainest measure it is the opposite. Gains on art are taxed in the US as collectibles at a federal maximum of 28%, against 20% for most capital assets, plus the 3.8% net investment income surcharge — roughly 31.8% federally before state tax, and above 48% combined for a California seller. Those rates are unchanged for 2026. If art were engineered as a tax vehicle, it is engineered badly.

Section 1031 let an owner swap a painting for a painting, defer the gain, repeat indefinitely, and die leaving heirs a stepped-up basis. That was genuinely a buy-knowing-you-can-sell engine. The Tax Cuts and Jobs Act removed personal property from Section 1031 with effect from 1 January 2018, and kept it for real property. When Congress chose to protect a tax-driven asset class, it protected buildings.

Borrow. The global art loan book is put at USD 33.9–40.0bn for 2026, forecast at USD 42.0–50.1bn by 2027, against about USD 8bn in 2015. Bank of America carries the largest private-bank book at over USD 10bn; Sotheby's Financial Services is around USD 1.6bn, roughly double its 2021 size. In January 2026 it priced a USD 900m securitisation backed by art and collectible-car loans — the largest of its kind, and oversubscribed. Loan-to-value typically runs 50–70%. The owner takes out cash with no sale, no 28%, and keeps the upside.

Donate. Give an appreciated work held over a year to an institution that makes related use of it — a museum that exhibits it presumptively qualifies — and the deduction is full fair market value while the embedded gain is never taxed. Give it to a charity that will simply sell it and the deduction collapses to cost basis. This is the largest legal shelter in the asset class, and the one the IRS is actively working: IR-2023-185 described promoters selling art cheap, promising appreciation, and coaching a donation after twelve months at an inflated appraisal, with over 60 completed audits producing more than USD 5m in additional tax.

Or die holding it. Under section 1014 heirs inherit at date-of-death fair market value and the lifetime gain disappears. The 2025 tax act set the estate exemption at USD 15m per person from 2026, permanent and indexed from 2027, with 40% above it.

From 1 January 2026 two changes bite. Itemised charitable deductions now carry a floor: only giving above 0.5% of adjusted gross income counts. And for taxpayers in the 37% bracket, the benefit of itemised deductions is capped at 35% — a USD 1,000 gift is worth USD 350 rather than USD 370. Small in isolation. Directionally clear alongside a permanent USD 15m step-up: the code now leans harder than ever toward hold until death, which is to say toward works that do not move and prices nobody has to publish.

The prosecutions are almost all consumption tax, and they are evasion rather than avoidance. Sotheby's paid New York USD 6.25m in November 2024 over allegations it accepted false resale certificates from at least eight collectors between 2010 and 2020, and at times helped fill them in. The collector vehicle Porsal Equities had already paid over USD 10m in 2018, admitting it certified purchases as for resale while buying for personal use. Christie's settled with the Manhattan District Attorney in 2020 for up to USD 16.7m over failing to collect New York sales tax on USD 189m of taxable sales routed through foreign offices and delivered to New York.

The IRS Art Advisory Panel is the cleanest available evidence that art has no price until someone forms a view. In its fiscal 2018 report the panel reviewed 251 items across 67 taxpayer cases with a claimed value of USD 360.9m. It accepted 94 items and adjusted 157 — 63% — recommending a net reduction of USD 64.6m, an 18% cut. In fiscal 2022 it agreed with 35% of appraisals, raised 31% and lowered 34%.

That near-symmetry is the tell. A donor wants the highest defensible number and an estate wants the lowest, so the same object attracts opposite appraisals depending on which form it is attached to. This is not fraud. It is what happens when value is legally an opinion.

Storage in a Geneva-style freeport treats goods as in transit, deferring import duty and VAT until they leave. It does not avoid capital gains for anyone resident where worldwide income is taxed, whatever the SEO tax blogs claim. Since AMLD5, freeport operators and art intermediaries handling transactions above EUR 10,000 are obliged entities who must identify beneficial owners and keep records. What a freeport still delivers is not secrecy from regulators but distance from tax authorities: AML record-keeping is not automatic exchange of information, and no CRS-style reporting regime covers art at all.

Treasury's February 2022 study, mandated by the Anti-Money Laundering Act, concluded that the high-value art market should not be an immediate focus for comprehensive anti-money-laundering requirements and that other sectors presented greater risk. Antiquities dealers, by contrast, were pulled into the Bank Secrecy Act definition of a financial institution. The Senate Finance Committee examined eleven collector-founded private museums in 2015–16, found founders still running institutions their donations had funded, and concluded the area was ripe for exploitation. Nothing was changed.

Even tariffs bend around it. Original fine art enters the US duty-free under chapter 97, treated as informational material. The April 2025 reciprocal tariffs explicitly exempted artworks, photographs and posters. From 24 February 2026 a 10% duty landed on historic antiquities while original contemporary art stayed at zero. The regime announced on 23 July 2026 — 10% or 12.5% across some 80 countries — again exempts works of art, antiques, collectors' items, coins, medals and stamps, with Canada the exception at 50%. Nearly everything else got taxed. Art got carved out, again.

Europe reads the same way. Works of art sit outside the French IFI, and the 2026 budget proposal to convert it into a tax on unproductive wealth — sweeping in art, precious metals, collector cars and yachts — passed the Assembly, was dropped by the Senate, and was absent from the final text. A French seller elects either a 6.5% levy on the gross price or 36.2% on the actual gain, with 5% relieved per year of ownership after the second and full exemption at twenty-two years, and nothing owed below EUR 5,000. Under article 1716 bis, inheritance duties can be settled by handing the object to the state. Belgium, meanwhile, introduced a 10% tax on financial-asset gains from 1 January 2026 and left tangible movable property — art, collectibles, physical metals — untaxed. Two governments looked at taxing art in the same year. Both declined.

It is worth resisting the cynical conclusion, because the causation fails. Section 1031 died for art in January 2018 and the biggest boom on record followed in 2021–22. The 2023–24 contraction and the 4% recovery to USD 59.6bn in 2025 track interest rates, China and confidence. Tax law moves velocity and geography — how often a work turns over, which entity signs, where the crate goes. It does not move the level of demand. Nobody buys a Basquiat for the treatment.

What the structures do explain is the opacity. Every one of them rewards holding over selling, private appraisal over published price, and ownership through an entity instead of a name. A market shaped that way will not build a registry, because a registry is the one thing that would make all of it legible.