Why Wine Investment is Tax Free
Is investing in fine wine really tax free? Are investment wines exempt from income tax and capital gains tax? These are some of the salient questions posed by savvy investors when dealing with investments in luxury wines.
Fine wine investments have been firmly established as one of the most lucrative alternative investments in todays financial market. One of the primary reasons why it is gaining tremendously in popularity is the fact that it is completely free of tax, and therefore a mouthwatering prospect for intelligent investors.
Wine – A Tax Free Asset
Officially, fine wines only have a shelf life or life expectancy of 50 years and are therefore considered to be a “wasting asset”. By definition, a wasting asset is: An entity which has a limited lifespan, and irreversably declines in value over time.
Examples include, vehicles, machinery and in this case, wine. As all wines will someday be reduced to an undrinkable state, it is considered a wasting asset, and therefore is exempt from all tax.
As a wasting asset, fine wines are not subject to capital gains tax. Furthermore, as wine is not considered to be an income bearing investment, it is also free of income tax. Hence, an investor who supplements his investment portfolio with fine wines will almost certainly not hold the wine for more than 50 years – the cutoff point for a wasting asset; therefore, this investment, and most importantly the profits obtained therefrom, will be excluded from all taxes.
Fine Wine Tax and Storage Terms
It is important to point out that fine wine taxation is dependent on storage terms. If the wines are held in storage for at least 12 months, they will not incur any taxes whatsoever. If however, the wines are sold within the first 12 months, the profits gained will be subject to income tax. Seeing as fine wines are considered to be a medium to longterm investment, they will almost always be stored in a bonded warehouse for at least 12 months.
Moreover, investing in fine wine through Bordeaux Traders guarantees that all purchased stocks will be fully insured and stored in a bonded warehouse. Consequently, if your stock is stored in a government bonded warehouse, it will not incur any further charges, VAT (Value Added Tax) or Duty.
In conclusion, the tax benefits of investing in fine wine makes this alternative investment vehicle extremely enticing to savvy investors, especially in the currently turbulent fiscal environment. Due to the fact that the benefits of investing in wine are manifold, it is no surprise that this lucrative asset class is showing an explosive growth in popularity across the globe.
NOTE: Bear in mind that tax laws differ from country to country. Therefore we are not giving any global tax advice, but only talking about a few selected countries such as Austria, Germany, France, the UK, Hong Kong etc. Naturally, the obvious tax havens such as Luxembourg, Bermuda, Panama etc. that do offer completely tax free wine investments are also included.
Bordeaux Traders - The Fine Wine Investment Brokerage GmbH
Mooslackengasse 17, 1190 Vienna
Phone: +43 676 490 51 19