Private art collector or commercial art dealer?

From a tax law perspective, the purchase and sale of art objects raises in particular the question of whether the activity of trading in art objects qualifies as commercial art trading or as mere private asset management. If the activity qualifies as commercial trading, the capital gain from the sale, realization or accounting revaluation of the business assets is subject to Individual Income Tax and social security contributions. In the case of private asset management, on the other hand, the profit remains tax-free. For the taxation of capital gains, the distinction between self-employed (= commercial) and dependent (= private asset management) gainful employment is therefore of primary importance. In the past years, the Federal Supreme Court has developed numerous indications for the distinction between dependent and self-employed gainful activity. These indications are shown and explained below on the basis of a current Federal Court decision (9C_606/2022 of June 6, 2023) in the area of art trading.

The initial situation in the current Federal Court decision

Prof. Dr. A. is an art historian and expert on Italian art of the late Middle Ages and the Renaissance. As a sideline, he has regularly worked as a self-employed expert and appraiser. Over time, he has accumulated a considerable number of works of art. In total, he acquired about 80 works of art between 1982 and 2016 (61 works of art by the end of 2014). In 2009, he sold nine works for total proceeds of EUR 479'500, which remained untaxed. In 2014, the second disposal took place, when he sold "en bloc" 33 more artworks for USD 1 million, whereby he acquired 21 works in 2009 or later, 14 artworks even in the sales year 2014 itself.

In 2014, the Zurich Cantonal Tax Office classified the transaction in the assessment procedure as taxable commercial art trading, which led to an increase in Prof. Dr. A.'s taxable income by CHF 710'500.

The indications for the delimitation according to the Federal Court in general

According to the Federal Supreme Court, a self-employed activity is characterized by the activity of a natural person with which this person participates in economic transactions at his own risk, using the production factors labor and capital, in a work organization freely chosen by him, permanently or temporarily, full-time or part-time, but in any case with the intention of making a profit. Whether the activity is profit-oriented must be assessed in light of all the circumstances of the individual case. The indications can lead to the assumption of a self-employed activity together with others, but under certain circumstances also alone. According to the Federal Supreme Court, circumstantial evidence includes:

  • Close connection with the professional activity of the taxable person
  • Special expertise
  • Frequency of transactions
  • Short tenure
  • Systematic or planned way of proceeding
  • Use of the profits generated or their reinvestment in assets of the same type
  • Use of substantial external funds to finance the business

Application of circumstantial indications for delimitation in the specific case

In its ruling of June 6, 2023, the Federal Supreme Court affirmed that Prof. Dr. A. was self-employed and therefore a professional on the basis of the following indications:

  • The special expertise of Prof. Dr. A. as an art historian and expert of Italian art.
  • The sale of 33 works "en bloc" in 2014, with Prof. Dr. A. having acquired 21 works in 2009 or later. In 2014, he himself acquired 14 works of art. Thus, Prof. Dr. A. fulfilled two indications at the same time, which speak for his self-employed gainful activity. Namely, on the one hand, Prof. Dr. A. carried out numerous transactions within a short period of time (purchase of 21 works in the period from 2009 to 2014) and, on the other hand, he owned the works of art for a comparatively short period of time, 14 works of art even for less than 1 year (short period of ownership).
  • The sale was offset by timely repurchases in that Prof. Dr. A. reinvested in new 21 plants after partial sales in 2009. He thus used targeted profits to reinvest in the same or similar assets.


The special expertise of Prof. Dr. A., the targeted build-up of the collection - after the partial sale in 2009 -, the reinvestment of the profits in new works of art and finally the considerable number of transactions within a short period of time led the Federal Supreme Court to affirm a systematic and planned manner of proceeding and thus to support the income tax set-off of the Cantonal Tax Office Zurich.


In order to assess whether a commercial activity exists, the individual indications developed by the Federal Supreme Court must be assessed in an overall consideration. The more indications can be affirmed, the more likely the tax authority will affirm a self-employed activity and tax the capital gain accordingly. The reclassification of a private tax-free sale into a taxable profit from commercial trading has direct consequences in terms of social security contributions and can lead to additional VAT claims, which can mean considerable additional burdens.

Since the criteria developed by Jurisprudence to distinguish between private management and commercial activity leave the authorities with considerable discretion, we generally recommend that art sales of significant transaction value be implemented in close advance consultation with the tax authorities in order to avoid unexpected surprises, as happened in the present case.

Bucher Tax AG, tax consultancy, tax advisor, Lucerne
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