Is New York sales or use tax due on an art collector's overseas-delivered artwork, its bequest to his children, transferred company shares, or a nonresident's artwork brought into New York upon relocating?

Plain-English summary

X was a European art collector who never lived in or was a citizen of the U.S. (though he occasionally visited New York). In 2004, X bought four new pieces of art ("Personal Artwork") — two from New York auction houses/dealers, one from an out-of-state dealer — but never took possession in the U.S.: all four pieces were shipped straight to a free-trade zone in Geneva, held in escrow pending authentication, and only released to X (with title passing there) after he wired payment from Switzerland. X died in 2005 with the Personal Artwork still in the Geneva free-trade zone. His estate (administered under Swiss law) bequeathed all his art — the Personal Artwork plus other art/furnishings already in his European homes ("Residential Artwork") — to his children, who live in New York and plan to bring it there, along with shares in companies X owned that themselves hold additional artwork. Separately, X's former spouse Y, a longtime Paris resident who recently bought a New York apartment and is relocating permanently, wants to bring her own long-owned Paris art collection and furnishings to New York.

The Department worked through four distinct questions with four separate answers, all landing on "not taxable." First, X's purchases of the Personal Artwork from the New York dealers were NOT subject to New York sales tax, because delivery and title transfer happened in Geneva — New York's sales tax is a "destination tax," and a sale where delivery occurs entirely outside the state isn't taxed there, regardless of where the seller is located. Second, the bequest of both Personal and Residential Artwork from X's estate to his children — with no consideration paid — isn't a "sale" at all under the statutory definition, so no sales tax applies, and since the children didn't purchase anything, no use tax applies either when they bring the art into New York. Third, the no-consideration transfer of company shares/interests (which themselves hold more artwork) to the children is likewise not a taxable sale, and stock sales aren't taxable to begin with. Fourth, Y's own artwork and furnishings — acquired while she was a nonresident of New York, before she took up New York residency — are exempt from New York's compensating use tax when she relocates and brings them into the state, under the standard nonresident-purchaser exemption.

What this means for you

Art collectors buying from New York dealers for delivery abroad

If a New York gallery or auction house ships your purchase directly to a location outside New York (with title passing there), the sale itself isn't subject to New York sales tax — the destination, not the seller's location, controls.

Estates and heirs inheriting art, furniture, or company interests

A true bequest (with no consideration paid by the heir) is never a taxable "sale," whether it's the artwork itself or shares in a company that owns art — no sales tax on the transfer, and no use tax when the inherited property is later brought into New York by the heir.

People relocating to New York with property they already owned as nonresidents

Property you acquired while genuinely living outside New York is exempt from New York's use tax when you bring it with you upon becoming a resident — this is a standard, broadly useful exemption for anyone moving into the state with pre-owned belongings, art, or furnishings.

Accountants, estate planners, and tax professionals

This ruling is a compact four-part reference for high-net-worth relocation and estate planning: the destination rule for cross-border art sales, the no-consideration-means-no-sale rule for bequests (extending even to company-share transfers), and the nonresident-purchaser use tax exemption for relocating individuals — each independently verified and none requiring New York tax.

Common questions

Q: If I buy art from a New York dealer but it's shipped and delivered to me overseas, do I owe New York sales tax?
A: No — New York's sales tax follows the destination of delivery; a sale where delivery and title transfer occur entirely outside New York isn't taxed there.

Q: Do heirs owe sales or use tax on artwork they inherit by bequest?
A: No — a bequest with no consideration isn't a taxable sale, and since the heir didn't purchase anything, bringing the inherited property into New York doesn't trigger use tax either.

Q: If I move to New York, do I owe use tax on furniture and art I already owned as a nonresident?
A: No — property acquired while you were a nonresident is exempt from New York's compensating use tax when you relocate and bring it with you.

Q: Can another estate or relocating individual rely on this Advisory Opinion?
A: No. It binds the Department only for the petitioner and facts described; another situation's residency status, delivery location, and consideration facts need to be verified independently.

Citations and references

Statutes and regulations:

• Tax Law §§ 1101(b)(5), (6), (7) (sale; tangible personal property; use)
• Tax Law § 1105(a) (retail sale of tangible personal property)
• Tax Law § 1110(a) (compensating use tax)
• Tax Law § 1118(2) (nonresident-purchaser use tax exemption)
• 20 NYCRR 525.2, 526.7(e), 526.8(c), 526.15, 531.5(b)(2)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2006.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a06_26s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-06(26)S
Sales Tax
October 19, 2006

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S051012A

On October 12, 2005, the Department of Taxation and Finance received a Petition for
Advisory Opinion from WTAS, Inc., 452 Fifth Avenue, 23rd Floor, New York, NY 10018-2706.
Petitioner, WTAS, Inc., provided additional information pertaining to the Petition on August 11,
2006.
The issues raised by Petitioner are:

1. Whether the purchase from a New York art dealer of Personal Artwork, as
   described below, that is shipped to a Geneva, Switzerland free trade zone is
   subject to New York State sales or use tax.
2. Whether the transfer of an art collection from an individual’s estate to the
   individual’s children is subject to New York State sales or use tax.
3. Whether the transfer from an individual’s estate of shares and/or interests in
   companies that own artwork is subject to New York State sales or use tax.
4. Whether the artwork and furnishings located in an individual’s Paris, France,
   residence that were acquired by the individual prior to establishing a New York
   residence are subject to use tax when the individual relocates from Paris to
   New York.
   Petitioner submitted the following facts as the basis for this Advisory Opinion.
   An individual (X) was an art collector who resided in Europe. X was never a U.S. citizen
   or resident and his permanent place of abode was in Switzerland. X occasionally visited
   New York City; however, X did not maintain a permanent place of abode in New York.
   X had three European residences. The majority of X’s substantial art collection was
   located in these European residences. In 2004, X purchased four new pieces of artwork
   (“Personal Artwork”). Three of the pieces of Personal Artwork were purchased from auction
   houses or dealers within the United States. Two purchases were from New York auction houses
   or dealers and one was from an auction house or dealer outside New York. In each case, X did
   not take possession of any of these pieces of Personal Artwork in the United States. The
   Personal Artwork was shipped to and stored in a free trade zone (FTZ) located in Geneva,
   Switzerland, to defer paying European duties while X decided at which of his European
   residences he would display the artwork. Prior to X taking title, the Personal Artwork was held
   in escrow in the FTZ until its authenticity was verified by X. Subsequent to such verification, X

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wired payment for the Personal Artwork to auction houses or dealers. Upon receipt of the wire
transfer, the auction houses or dealers released the Personal Artwork to X. X paid for the storage
of the Personal Artwork in the FTZ and insured the Personal Artwork during the period of
storage. The Personal Artwork was in the FTZ at the time of X’s death. X also owned other
artwork and furnishings (i.e., paintings, sculptures, antique furniture, etc.) that were not in the
FTZ (“Residential Artwork”).
In addition to the Personal Artwork and Residential Artwork owned by X, there are
numerous pieces of artwork (“Company Artwork”) that are owned by closely held companies in
which X was the sole shareholder or member. Such companies are located and operated entirely
within Europe. The Company Artwork was acquired from all over the world, including the
United States. To the extent that X or any of the companies took delivery of any artwork in New
York, he or the company paid New York sales tax on the artwork.
X died in 2005 prior to placing the Personal Artwork he purchased in 2004 in any of his
European residences. All of X’s artwork, including the Personal Artwork, are part of X’s estate
and were bequeathed to his children who live in New York and anticipate bringing the items to
New York. X’s estate is being administered under the laws of Switzerland. By operation of
Swiss law, upon X’s death, X’s children immediately became the owners of the Personal and
Residential Artwork and other furnishings. For purposes of this Advisory Opinion, it is presumed
that the transfers of the artwork in question from X’s estate to his children are solely by bequest
with no consideration paid. X’s children also inherited shares and/or interests in X’s companies
that, in addition to operating businesses in Europe, own the Company Artwork.
X’s former spouse, Y, has lived in Paris, France, for many years. Beginning in 2001, she
also rented an apartment in New York City. Y recently terminated the New York City lease and
purchased a New York City apartment. She now plans to sell her Paris residence and move to
New York City permanently. Y has a substantial art collection, furniture, and other furnishings
in her Paris residence that she desires to bring to the newly purchased New York City apartment
upon her relocation from Paris to New York City. Much of Y’s artwork and furnishings were
acquired prior to the inception of the New York City lease in 2001.
Applicable law and regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by subdivisions
(a), (b), (c) and (d) of section eleven hundred five and by section eleven hundred ten, the
following terms shall mean:
*

*

*

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(5) Sale, selling or purchase. Any transfer of title or possession or both, exchange
or barter, rental, lease or license to use or consume (including, with respect to computer
software, merely the right to reproduce), conditional or otherwise, in any manner or by
any means whatsoever for a consideration, or any agreement therefor, including the
rendering of any service, taxable under this article, for a consideration or any agreement
therefor.
(6) Tangible personal property. Corporeal personal property of any nature. . . .
*

*

*

(7) Use. The exercise of any right or power over tangible personal property or
over any of the services which are subject to tax under section eleven hundred ten of this
article or pursuant to the authority of article twenty-nine of this chapter, by the purchaser
thereof, . . .
Section 1105(a) of the Tax Law imposes sales tax upon:
The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.
Section 1110(a) of the Tax Law provides, in part:
Except to the extent that property or services have already been or will be subject
to the sales tax under this article, there is hereby imposed on every person a use tax for
the use within this state . . . except as otherwise exempted under this article, (A) of any
tangible personal property purchased at retail,. . .
Section 1118 of the Tax Law provides, in part:
The following uses of property and services shall not be subject to the
compensating use tax imposed under this article:
*

*

*

(2) In respect to the use of property or services purchased by the user while a
nonresident of this state, except in the case of tangible personal property or services
which the user, in the performance of a contract, incorporates into real property located in
the state. A person while engaged in any manner in carrying on in this state any
employment, trade, business or profession, shall not be deemed a nonresident with
respect to the use in this state of property or services in such employment, trade, business
or profession.

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Section 525.2 of the Sales and Use Tax Regulations provides, in part:
Nature of tax. (a) Sales tax.
*

*

*

(2) Except as specifically provided otherwise, the sales tax is a "transactions tax,"
with the liability for the tax occurring at the time of the transaction. Generally, a taxed
transaction is an act resulting in the receipt of consideration for the transfer of title to or
possession of (or both) tangible personal property or for the rendition of an enumerated
service. The time or method of payment is generally immaterial, since the tax becomes
due at the time of transfer of title to or possession of (or both) the property or the
rendition of such service . . . .
(3) Except as specifically provided otherwise, the sales tax is a "destination tax."
The point of delivery or point at which possession is transferred by the vendor to the
purchaser, or the purchaser's designee, controls both the tax incidence and the tax rate.
Section 526.7(e) of the Sales and Use Tax Regulations provides, in part:
(1) Except as otherwise provided in paragraph (3) of this subdivision, a sale is
taxable at the place where the tangible personal property or service is delivered, or the
point at which possession is transferred by the vendor to the purchaser or his designee.
*

*

*

(2) Except as otherwise provided in paragraph (3) of this subdivision, a sale of
tangible personal property, in which the title to the property passes in New York State,
but in which delivery occurs outside of New York State, is not subject to tax.
Section 526.8(c) of the Sales and Use Tax Regulations provides, in part:
Tangible personal property does not include:
(1) real property;
(2) intangible personal property.
Example 1: A corporation has bonds printed. It purchases paper, which is
tangible personal property, printing and signature services, and must pay the tax
on these charges. When the corporation issues the bonds as evidence of
indebtedness, the bonds at this point in time are not tangible personal property
subject to the sales tax. If, after the bonds are redeemed by the corporation, the

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bonds are sold for display or collection purposes, they become tangible personal
property which is subject to the sales tax.
Section 526.15 of the Sales and Use Tax Regulations provides, in part:
Resident. (a) Individuals. (1) Any individual who maintains a permanent place of
abode in this State is a resident.
(2) Permanent place of abode is a dwelling place maintained by a person, or by
another for him, whether or not owned by such person, on other than a temporary or
transient basis. The dwelling may be a house, apartment or flat; a room, including a room
at a hotel, motel, boarding house or club; a room at a residence hall operated by an
educational, charitable or other institution; housing provided by the Armed Forces of the
United States, whether such housing is located on or off a military base or reservation; or
a trailer, mobile home, houseboat or any other premises.
Section 531.5(b) of the Sales and Use Tax Regulations provides, in part:
The compensating use tax shall not be imposed on the use of:
*

*

*

(2) Property within this State when purchased by the user while a nonresident of
this State, except when the property is, in the performance of a contract, incorporated into
real property located in this State (a nonresident is any person who is not a resident as
defined in section 526.15 of this Title).
Example 1: A resident of Vermont purchased a television set in Vermont for his
home in Vermont. At a later date he moves and takes up residency in New York
State and uses the television set in this State. No use tax is due on the use of the
television set in New York State.
Opinion
X purchased the Personal Artwork from auction houses and dealers located in and outside
of New York State. X did not take title or possession of any of the Personal Artwork in
New York. The auction houses and dealers, pursuant to X’s directions, shipped the artwork to a
free trade zone (FTZ) in Geneva, Switzerland, where title passed and the artwork was held in
storage on X’s behalf pending his decision as to where in Europe he would display it. X died
while the Personal Artwork was in the FTZ. Under section 526.7(e) of the Sales and Use Tax
Regulations, the sales of the Personal Artwork to X were not subject to New York State and local
sales tax since delivery occurred at a location outside of New York.

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The Personal Artwork and Residential Artwork described in this Opinion were
bequeathed by X to his children. The children were not required to give any consideration to X’s
estate for the artwork. Since there was no consideration provided by X’s children to the estate
for the artwork, there was no sale as defined in section 1101(b)(5) of the Tax Law. Therefore,
there is no sales tax due on the transfer of the artwork from X’s estate to his children. Likewise,
since the children did not purchase the artwork from the estate, there is no use tax due if the
artwork is brought into New York State by the children or delivered to them by X’s estate. See
section 1110(a) of the Tax Law.
X’s estate also transferred shares or interests in X’s companies to X’s children for no
consideration. The transfer of the shares or interests in companies without any consideration is
not a sale as defined in section 1101(b)(5) of the Tax Law. Further, receipts from the sale of
shares of stock in a corporation are not subject to sales tax. See section 526.8(c)(2), Example 1 of
the Sales and Use Tax Regulations. Thus no sales or use tax is due on the transfer of the shares
or interests in X’s companies from X’s estate to his children.
Pursuant to section 1118(2) of the Tax Law, artwork and furnishings acquired outside
New York State by Y while Y was a nonresident of New York State are exempt from New York
State and local use tax when Y relocates and brings such artwork and furnishings into New York.
See also section 531.5(b)(2) of the Sales and Use Tax Regulations.

DATED: October 19, 2006

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.