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Wednesday, July 17, 2024

‘Scream’ seller can avoid tax

Norwegian shipping heir Petter Olsen probably won’t have to pay any income or capital gains tax on last week’s sale of the famed Edvard Munch painting he inherited, Skriket (The Scream). That means he likely can keep or re-invest most of the NOK 600 million (around USD 105 million) he stands to collect on the sale, with much of it already earmarked for a new gallery to house his still-sizeable private collection of local art by Munch and other artists.

Sotheby's auction of Edvard Munch's "The Scream" was a huge success, not least for seller Petter Olsen. PHOTO: Sotheby's/NTB Scanpix

Tax authorities in Norway reportedly were as interested in the highly publicized auction of Munch’s most famous painting as many others. Any documented capital gain seen to have been realized on the sale of the painting would have been taxable. In this case, however, the painting will likely be viewed not as part of Olsen’s personal fortune but rather part of what’s called innbo in Norway, literally household goods. The sale of items from a household aren’t taxable in Norway, despite the country’s onerous tax reputation.

“Gains on the sale of items comprising one’s fortune are generally taxable,” Astrid Mjærum of the state authority Skatteetaten told newspaper Aftenposten. “The tax law, however, says that gains on the sale of items in a household, such as a painting, which have been used in the owner’s home or household, are exempt from tax.”

Petter Olsen in one of his interviews with Norwegian Broadcasting (NRK). PHOTO: NRK/Views and News

Olsen conducted several interviews with Norwegian media before his version of The Scream was auctioned by Sotheby’s in New York last week. Olsen described how and where the painting had hung in his childhood home, how he had grown up with the painting and what effect it had on him.

He thus can likely argue that the painting, considered a masterpiece that attracted the highest price for any work of art ever at a public auction, was indeed simply part of his household.

“Art is generally characterized as part of household goods,” Gunnar Krogh-Hansen, an art expert at Blomqvist art dealers in Oslo, confirmed to Aftenposten. “Inheritance tax can be demanded, if you sell something that recently was inherited. If you steadily buy and sell art on the open market, gains can be taxable, too.” Something hanging on the wall for a while can, however, escape a tax bill.

Monetary proceeds from the sale of The Scream, on the other hand, would be considered part of Olsen’s fortune the instant the cash hits his bank account. Norway taxes personal net worth year after year through its controversial formueskatt (literally, “fortune tax” due on the difference between the value of a person’s assets and debts, with assets including everything from cash to real estate to vehicles).

Olsen paid NOK 111 million in tax in 2009 – the last year for which public tax lists are readily available – on a fortune of NOK 1.4 billon, reported Aftenposten. He has said he intends to use the proceeds from the sale of The Scream to finance construction of the new cultural center and Munch Gallery he’s building on the family property at Hvitsten, south of Oslo.

Olsen has also said that Munch “will continue to be a major force in my life,” not least through his “own Munch project.” He intends to participate in the 150th anniversary celebrations of the birth of Munch in Norway next year, is remodeling the house and studios on his property once used by Munch and is collaborating with the Munch Museum in Oslo on an exhibition due to open June 2, 2013.

The millions from the Scream sale therefore may not sit in his personal accounts for long, while many Norwegians may feel the money will be used for the public good even without being taxed.

Views and News from Norway/Nina Berglund

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