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ITax Papers on Taxation
Art and Taxation in Italy
Marco Greggi, Professor, Università degli studi di Ferrara
Department of Law
Corso Ercole I D’Este, 37 - Ferrara - Italy
www.dirittotributario.eu
Working Paper: 09-23 ISSN: 2281-3179
Date: 30 December 2023 (All rights reserved by the Author)
DOI
Art and Taxation in Italy
by Marco Greggi1
1. Introduction: the Relevance of Art in the Italian Legal System
Italy is allegedly one of the countries in the world with the greatest cultural heritage.
For sure, it is the state with the highest number of UNESCO recognised properties2: this
is thanks to a multi-millennial history of development and passion for beauty and
innovation in terms of style, art and fashion.
It is no surprise, with such premises, that art has always taken a central position in the
legislative system of the country, both in terms of protection and an incentivization of
such a crucial activity3. The Italian Constitution, at Article 94clearly points out that art is
one of the assets to be protected and tasks the state and the other institutions with the
duty to preserve it, and to stimulate further development.
This goal has been achieved through decades with a Ministerial structure aimed at this
scope, and with a strict legislation regulating the cultural and artistic heritage of the
Country5. Most of these measures, though, have been concentrated on places,
buildings and spaces, and have been essentially dedicated to their preservation and
custody. The promotion of new arts, to be intended as a stimulus to new creations and
original innovation, has been scarce, erratic and lacking a coherent framework
depending as it is on the financial constraints that have become tougher and tougher
in recent times.
Taxation is no exception to this, as artworks in taxation have always been treated as
any other tradeable asset, with only a few (but important) rules introduced to address
5Marianna Marzano and Monia Castellini, “The Reform of the Italian Ministry of Cultural Heritage:
Implications for Governance of the Museum System,” The Journal of Arts Management, Law, and
Society 48, no. 3 (May 27, 2018): 206–20; Luca Zan, Sara Bonini Baraldi, and Christopher Gordon,
“Cultural Heritage between Centralisation and Decentralisation,” International Journal of Cultural
Policy 13, no. 1 (February 2007): 49–70; Donata Levi, “The Administration of Historical Heritage: The
Case of Italy,” in National Approaches to the Governance of Historical Heritage Over Time: A
Comparative Report, ed. Stefan Fisch (IOS Press, 2008), 103–26.
4“The Republic promotes the development of culture and of scientific and technical research. It
safeguards the natural landscape and the historical and artistic heritage of the Nation”.
3Felicia Caponigri, Lorenzo Casini, and Sabino Cassese, “Securing Cultural Heritage? Understanding
the Law for Our Monuments, Artworks, and Archives Today,” International Journal of Constitutional
Law 19, no. 5 (January 27, 2022): 1683–89; Lorenzo Casini, “‘Italian Hours’: The Globalization of
Cultural Property Law,” International Journal of Constitutional Law 9, no. 2 (April 1, 2011): 369–93.
259 properties are inscribed in Italy as of 2023. https://whc.unesco.org/en/list/stat/.
1Professor of Tax law at the University of Ferrara, Italy (marco.greggi@unife.it).
1
it. Artistic activity does not differ substantially from other professional (independent)
ones6.
This article is aimed at providing a legal understanding of what “Art” actually is in the
Italian legal system (that is, within the boundaries of the concept of art, if any). It will
then subsequently consider the tax-related aspects of dealing with art, that is the sale
of artworks or the assistance to their negotiation in the framework of business income,
or “other” kind of revenue.
A special emphasis shall be attributed to VAT, and in particular to the cases in which
trading in arts becomes a business, overtaking the routine activity of a collectionist,
hence becoming subject to the application of the tax.
Eventually, some forecasts shall be given as to the forthcoming reform of the Italian tax
system which is placing a specific emphasis on the tax aspect of art development and
trade.
2. Defining Art for Tax Purposes
Despite the different positions in the matter, a common understanding exists on the
fact that art has no boundaries, and is time dependent7. Some activities of the man
now are considered art while they were not in the past, not to mention the fact that the
rise of IA in creative tasks is raising concerns on how to attribute the ownership of the
product created and whether they could be considered art or not since the author is
not a human8.
Italian academics point out that the idea of art has changed through decades: in the
past the phenomenon was connected with a good, a tangible item in most of the
situations, while more recently art has embraced a much wider understanding,
encompassing an activity, a performance and alike9. On some occasions the border
between artist and art is blurring, creating original and unexpected scenarios.
On other occasions art products are limited in time and destined to be enjoyed by the
very few who can have access to them10.
10 This would be for instance the case of the 2021 temporary artwork / performance by Christo and
Jeanne-Claude who wrapped the Arc de Triomphe in Paris for two weeks. The installation, although
provoking different reactions on the citizens of the city, was considered and authentic artwork.
9Vittorio Sgarbi, “Arte E Bellezza : Il Tesoro d’Italia,” Nuova Antologia, 2014, 191–96; Manrica Rotili,
“Che cosa è un’opera d'arte? : l'evoluzione del readymade a un secolo dalla sua nascita,” in Cose. - (
Sensibilia ; 6), vol. 6 (Milan: Mimesis, 2013), 279–95.
8See for instance the very recent UK Supreme Court case Thaler vComptroller-General of Patents,
Designs and Trade Marks, [2023] UKSC 49.
7R. Stecker, “Definition of Art,” in The Oxford Handbook of Aesthetics, ed. Jerrold Levinson (Oxford:
Oxford University Press, 2005), 136–54; Stephen Davies, “Defining Art and Artworlds,” Journal of
Aesthetics and Art Criticism 73, no. 4 (October 2015): 375–84.
6Marco Greggi, Profili fiscali della proprietà intellettuale nelle imposte sui redditi (Pisa: Pacini, 2010).
2
In general terms the Italian legal system mirrors the French one and differs from the
Common law ones. Consistently with the Berne Convention (1886)11 the law protects all
the œuvres de l’esprit which are creative and belong to music, literature, figurative arts,
architecture and theater, cinematograph irrespective of the way in which they are
conveyed.
Any product as a consequence can be considered a piece of art (irrespective of the
value of it) as long as it is an original expression of creativity. It has been pointed out in
Italy that an intrinsic connection should exist between originality and form (or shape)
of the item12.
No doubt the case law of the Court of Justice of the European Union has played a role
in the matter, defining the originality of the work, and arguing that the latter has to be
assessed taking into account the material footprint of the artist on the product, in a
way to make his personality evident to the others.
The necessity of such a fingerprint to be recognizable is the distinction between the
artworks and other creative products, such as music or writings (copyrights). This is
also a limit to the possible application of the copyright to visual artworks, which are not
intended to last or other works which are readymade13.
3. Art and Direct Taxation
The trade in artworks may originate taxable income or not, according to the entity
which is involved in the sale of the artifacts and on quantitative aspects of the activity
(the number of transactions, the overall amount of them, etc.).
In Italy, every profitable trade operated by a Commercial company originates taxable
revenue which falls into the tax base for Corporate tax purposes14. In such a scenario,
an artwork is not different from any other good sold or traded: any revenue is qualified
as business income and treated accordingly, thus taxed according to an accrual basis
principle, and for the actual amount received in consideration for the sale15.
In case of non-business legal entities or of natural persons the scenario is much more
complicated, as it is necessary to consider the nature of the person operating on the
15 Article 83, Income Tax Act.
14 Article 81, Income Tax Act (Presidential Decree n. 917 passed on 22 December 1986).
13 Chloe Francis, “The Protection of Contemporary Art under UK Copyright Law,” Art Antiquity & L. 23
(2018): 289; Alison Kearney, “Beyond the Readymade: Found Objects in Contemporary South African
Art Alison Kearney,” ed. Anitra Nettleton (PhD, University of the Witwatersrand, 2016); Martin Wilson,
Art Law and the Business of Art (Edward Elgar Publishing, 2022).
12 Alessandra Donati, “L’artista è Presente: Autorialità E Originalità Dell’opera D’arte Contemporanea,”
in Studi in Onore Di Antonio Gambaro, ed. Ugo Mattei, Ugo Candian, Albina Pozzo, Barbara Monti,
Alberto Marchetti, Carlo (Giuffré edizioni, 2017).
11 Gustavo Ghidini and Laura Moscati, “Authors Moral Rights in the Berne Convention,” in Improving
Intellectual Property (Edward Elgar Publishing, 2023), 204–13.
3
artworks market. With a certain margin of appreciation, Italy gives relevance16 to three
distinct figures: (1) the collectionist; (2) the occasional reseller and (3) the Art merchant.
Although they aren’t formally disciplined and ruled by the law, a common
understanding exists in their definition.
The Art merchant is the person who professionally and routinely operates in the art
market either as an intermediary (a proxy) in purchases and sales, or directly trading in
such goods, thus purchasing and subsequently selling them in his personal capacity.
The occasional vendor is a person who is similar to the full fledged art merchant (he is
a professional trader in this respect), but whose activity is not part of his routine,
limited as it is to occasional events or situations.
The third, and the most fascinating figure, is the art collectionist. He is a person who
routinely purchases artworks for his personal pleasure, but that might occasionally sell
one (or more) piece if good commercial conditions are met.
The Italian Income Tax Act n. 917 dated 22 October 198617, in its current version,
regulates these situations.
In the first case (the Art merchant) the revenue obtained would fall into business
income (Article 55) in a way which is identical to the one ruled for companies. There are
no differences (nor special provisions) in the Italian system to address business income,
if the revenue is obtained via the sale of artworks.
Income is taxable as soon as the sale is concluded (that is, in the fiscal year in which the
transaction occurs) and for the amount the parties agreed on.
In the second case (the Occasional trader) no business income arises, as a continuous
activity is needed to that purpose.
Yet the Italian Income tax system has a residual clause, a sort of “Catch all” provision
targeting revenue made via the occasional sales of goods outside of the business
activity: this is article 67, § 1 letter (i) of the Income Tax Act.
The provision rules “Other income”18 produced by an individual, providing for its
taxation net of the costs that are specifically pertinent to the goods sold (such in this
case) or the services provided. In the situation in which the trader purchases the
artwork to sell it, the taxable base would be the increase in value of it: the capital
gain19.
Eventually, in those situations in which the trade is operated by a collectionist (this
would be the third case out of those mentioned above) no taxable revenue would
emerge, and the entire transaction would be entirely tax free both for income and for
VAT tax purposes.
19 In the Italian tax system there’s no specific tax on Capital gains, which are routinely treated as items
of income for tax purposes.
18 That is, income not falling into any other provision of the Income Tax Act.
17 Citations of articles from this point onwards are intended to this text unless otherwise specified.
16 In the case law the difference has been drawn recently by Supreme Court (Corte di Cassazione)
case n. 6874, 8 March 2023.
4
From a practical point of view, it is crucial to distinguish the different figures that are
involved in artworks trading and sale, as the law does not provide a clear guidance in
the matter.
The silence of the legislator has been filled by the Case law, which has addressed the
issue several times in the recent past, identifying a number of hallmarks that are
routinely used to decide borderline situations20.
In this respect, an individual has been deemed to operate as a merchant (thus being
table for personal income tax purposes) when it is evident that the purchase of an
artwork has been executed just to sell it immediately afterwards (the timing between
the two transaction has been considered important by the Italian judiciary to decide in
the matter)21.
In other cases the number of transactions (purchases and sales) has been deemed
relevant to this purpose either22, even if in other circumstances the judiciary pointed
out23 that a single business transaction may transform an individual into a commercial
subject (a trader or an entrepreneur) if it is quantitatively relevant, or if it has been
preceded by a series of preliminary operations (negotiations, meeting with business
counterparts and alike).
In other words, the Italian legal system still abide to the Roman principle una mercantia
facit mercatorem24.
Eventually in other scenarios, the side-activities implemented have been considered
relevant. These performances might include exhibitions, promotions, advertisement
about the artwork on sale, etc25.
The Italian understanding is consistent with the Court of Justice of the European Union
rules, when it decided that “Business” is any legal entity carrying on a commercial
activity, irrespective of the legal status of it and of the way in which financial means are
raised26.
26 CJEU C-41/90 Klaus Hofner decided on 23 April 1991, ECLI:EU:C:1991:161.
25 See Supreme Court n. 21776, 20 October 2011.
24 One trade makes you an entrepreneur. This principle is taken from Baldus de Ubaldis, Super quarto
et quinto Codicis, de constituta pecunia, n. 16, c. 32 r. See for the full reference Vito Piergiovanni,
“Norme, Scienza E Pratica Giuridica Tra Genova E l’Occidente Medievale E Moderno,” Annali Della
Facoltà Di Giurisprudenza dell’Università Di Genova 4 (1965): 230–75.
23 Supreme Court n. 9776, 18 June 2003.
22 Tax Court of Appeal Trentino alto Adige n° 72, 20 May 2013.
21 See Supreme Court case n. 21776, 20 October 2011. See also Regional Tax Court of Piemont n.
1412, 18 September 2018.
20 Roberto Cordeiro Guerra, “Il Fisco per L’arte. Proposte Di Misure per Agevolare E Promuovere Il
Patrimonio Culturale Italiano,” Le Arti E La Dimensione Giuridica, 2020.
5
4. Art and VAT
The sale of artworks falls under the scope of VAT27 and is charged accordingly, if the
conditions ruled by EU law are met (in particular the subjective ones28).
If the trade is operated by the artist (or the good is imported) the rate in Italy is 10%:
this is possible under Article 103, § 1 of the 2006/112 directive, allowing member states
to apply a reduced rate for the artworks that are defined in the Annex IX, Part A (Points
1 to 7) of the aforesaid directive.
The cited provision and the Article 9929 of the directive rule that the reduced rate can
not be lower than 5%: Itay has chosen a 10% rate with Article 39, Decree 41/9530, that
implemented the equivalent measure as it was introduced by the VI Directive, in force
ratione temporis31.
In this respect it is also important to remember that Article 127 - septiesdecies, table A,
part III of the Italian law (Decree 633/72) rules fo the 10% rate irrespective of the nature
of the importer (private art consumer, or business).
In all the other situations the chargeable rate is the ordinary one in Italy (22%), but in
cases where VAT is not applicable due to the nature of the seller. If the seller is a
non-business, the Italian Stamp tax (in italian Imposta di registro32) might be applicable33
and calculated on the value of the artwork if conditions are met.
In many situations artworks are negotiated between business and non-business
individuals, who eventually resell the same goods to other businesses. The marketplace
of artworks is perhaps the one in which the mix between business and non-business
transactions is the most intense one, taking into account the fact that artworks are
goods whose consumption might last for an indefinite period of time, and that they
serve several purposes: actually they might be owned for pleasure and cultural
satisfaction, but more and more often they are used as reserve of value and wealth34:
they are therefore to be sold when necessity arises, or when the market fluctuations
encourage this.
The sheer application of VAT rules as we know them, as a consequence, might disrupt
the need for neutrality of the system35. The ordinary application of the tax would
eventually lead to a duplication of it, as it could hit the very same taxable base which
35 Charlène Adline Herbain, VAT Neutrality (Windhof: Larcier, 2015); Marco Greggi, “Neutrality and
Proportionality in VAT: Making Sense of an (Apparent) Conflict,” Intertax 48, no. 1 (2020): 122–31.
34 Oddný Helgadóttir, “The New Luxury Freeports: Offshore Storage, Tax Avoidance, and ‘invisible’
Art,” Environment & Planning A 55, no. 4 (June 1, 2023): 1020–40.
33 Article 2, Tariff of the Tax, Part I.
32 Decree 26 April 1986, n.131.
31 Directive 1977/388/EEC.
30 Decree passed on 23 February 1995, n.41
29 This provision regulates the cases in which a reduced VAT rate is applicable.
28 Article 9, § 1, 2006/112/EC Directive rules that “‘Taxable person’ shall mean any person who,
independently, carries out in any place any economic activity, whatever the purpose or results of that
activity”.
27 In the Italian tax system VAT is currently introduced and regulated essentially under Decree 26
October 1972, n. 633.
6
was in turn increased by the previous application of the tax when the artwork was sold
from a business to a non-business … who eventually decided to sell it to another
business entity.
This is a challenge to VAT actual neutrality that has to be dealt with every time used
goods are traded and their exchange involves business (with the right to deduct input
VAT) and non-business entities (without such a right).
The VAT special regime for “second hand” goods, works of art collectors’ goods and
antiquities36 is used in this scenario to avoid duplication of the charge, and Italy has
introduced a special variation of it37 to be applicable to the auction houses when they
sell artworks, eventually making liable to VAT only the variation of value of the asset
sold to the purchaser.
All the other compliance duties inherent to the implementation of the tax (such as
invoicing, etc.) are valid and applicable.
5. The Italian “Art Bonus” and the Other Tax Incentives Applicable
The Italian tax system has never stimulated the trade of artworks or their negotiation
via tax incentives, rather it has promoted (and is currently promoting) new creations,
new artistic performances and their protection via the so called “Art bonus”38.
The use of tax incentives / expenditures to promote artistic creations is coherent with
Article 9 of the Constitution, and has been validated in the past by the Constitutional
Court39.
The “Art Bonus” is a tax relief granted to whom subsidizes art and is made available on
several occasions and in different ways (depending on the activity to be promoted). Its
goal is to facilitate intellectual creation via the attribution of a tax credit for an amount
of 65% of the donation given to the artist (individual or an entity) or to anyone engaged
in the artistic sector. The idea is that the credit should stimulate generosity and
Mécénat: in this respect there’s nothing new as to similar initiatives taken in other
countries40.
40 J. Schuster, Supporting the Arts: An International Comparative Study. Canada, Federal Republic of
Germany, France, Italy, Great Britain, Netherlands, Sweden, United States, ed. Massachusetts
Institute of Technology (ERIC, 1985).
39 Constitutional court sentence n. 346, 28 November 2003. G. Marongiu, Le agevolazioni
per gli immobili di interesse storico o artistico, in Giurisprudenza tributaria, 2004, p. 312 and sub.; F.
D’Ayala Valva, La tutela del patrimonio storico e artistico della nazione e la funzione di stimolo della
corte costituzionale, in Rivista diritto tributario, II, 2004, p. 23 and sub.
38 Decree 31 May 2014, n. 83, Article 1.
37 Decree 23 February 1995, n.41. See in particular Article 36 and sub.
36 Directive 94/5/EC of 14 February 1994 (Special arrangements applicable to second-hand goods,
works of art, collectors' items and antiques). The directive is no longer in force as it has been recasted
in the 2006/122 one. Now the so-called “Margin scheme” is addressed by articles 311, 312 and sub.
of the last mentioned directive.
7
The Art bonus is just the latest of a number of measures that are present in the Italian
Tax Act41 to stimulate artistic growth and creativity, yet none of them is applicable to
the trade of artworks. All of them, to the opposite, are aimed at stimulating creativity
and, where necessary, investments in the artistic sector.
The first, and more comprehensive, measure to this purpose has always been a part of
the Income Tax Act ever since its inception. Under Article 15, § 1, letter (h) a tax credit
equal to 19% of the donation is attributed to the donor (natural; legal persons are
admitted to this credit only insofar they aren't company operating for-profits42).
Such credit is granted only if the donation goes in favor, inter alia, to entities operating
in the artistic sector or for protection of the cultural heritage of the Country. These
might include entities operating for the preservation and protection of immovable
properties, or real estates, with an historical or cultural value43.
The provision also covers the donations in favor of exhibitions or equivalent events, as
they are intended to promote cultural development or to showcase artistic
achievements: alas, the measure is not intended to promote the sale of artworks
neither in a profit nor in a non-profit environment.
If a donation qualifies for the “Art bonus”, the tax credit / allowance (equal to 19% of the
donation) is not attributed as this would end in a duplication of the benefit.
Shows and artistic performances are promoted also, although the provision taking care
of them (Article 15, § 1 letter (i), Income Tax Act) does not draw a precise distinction
between art exhibitions and shows intended to entertain the people44.
In this case any donation (or gratuity) to entities which are not for profit, active in the
art sector, cultural shows, or anyway operate for the preservation of the cultural and
historical heritage can be credited for an amount of 19% but within the 2% of the
overall taxable income of the donor. As a consequence if the donation is
disproportionate, considering the revenue of the donor, it can not be fully credited.
44 Although the distinction would be anything but clear in most of the circumstances, in the Italian
legals system a distinction occurs between shows and other activities aimed at entertaining. In the
first case the goal would be to enrich the person for a social or cultural perspective while in the
second the main goal for have to grant distraction and fun. To this extent, a ballet would fall into the
first category, while a disco would fall in the second. This difference is not very much relevant here,
but it is for VAT purposes and in the case of the (possible) application of special taxes on
entertainment (which is not charged if the event is cultural). Likewise VAT is charged in a different way
depending on the nature of the performance delivered or proposed.
43 These are defined according to the Code of the Cultural Heritage and of the Italian landscape
(d.P.R. 1409/1963).
42 In the case of for-profit entries the law provides fro the full deductibility for tax purposes of the
amount donated under Article 100, § 2, letter (f) of the Income Tax Act.
41 Quite surprisingly, in Italy it is possible to pay taxes returning artworks to the State if their value is
assessed and if the Ministry of Culture (MiBAC) shows interest in this purpose. If conditions are met,
an artwork is evaluated, given to the Ministry of Art and its value can be used to offset outstanding tax
liabilities (Article 28 bis Decree n. 602, 29 September 1973). Such a possibility has been introduced
via the Act 2 August 1982, n. 512.
8
Under Italian law donations to artistic activities are considered equal to those for the
improvement and preservation of immovables and buildings of historical value and for
their renovation45.
Music, as artistic performance, enjoys a special provision in the Italian tax system
either. For this special kind of art, donations and equivalent gratuities given to
foundations46 operating in the music sector with a non-profit purpose a tax credit up to
the amount of 19% is granted within the limit of the 2% of the revenue of the donating
entity47.
Irrespective of all these measures, the “Art bonus” introduced in 2014 is still the most
important and comprehensive measure to stimulate artistic development through a
fiscal instrument. Article 1 of the Decree n.83 passed on 31 May 2014 introduces the
core of the discipline that has been clarified and shaped subsequently by several
regulations and rulings by the Tax office48.
The Italian “Art bonus” is a tax credit whose amount may climb up to 65% of the
financial support granted to the artistic initiative. Such a credit has to be splitted on
three different (and consecutive) fiscal years, starting from the one in which the money
is provided to the beneficiary.
It is important to remember that only donations (and other gratuities) in money are
covered by such a measure, as donations or gifts in kind can not be calculated for the
determination of the credit.
Although the Bonus is intended to cover the art sector, only qualified activities are
entitled to enjoy its benefits, as the law expressly mentions four cases49.
These would include (1) the maintenance and protection and restoration of public
cultural goods: goods belonging to the Church (in most of the situations catholic, but
other confessions are implicitly included) do not enjoy such a benefit. It is not
necessary that the entity receiving the donation would be the owner of the goods,
rather, it could also be a private entity which has been entrusted with the artistic goods
or has the duty to manage them. This would be the case of a private foundation which
is taking care of a public good (and artwork of high value, for instance)50. Any donation
to the (private) foundations taking care of the (public) artwork does qualify for the art
bonus. Similarly the religious entities having in custody (or taking care) of public goods
do qualify for the credit either, and their donors may enjoy the 65% tax credit.
50 This possibility has been admitted by the tax office in the recent Circular letter n. 34/E issued on 31
March 2023.
49 Chiara Carolina Donelli et al., “Financing Sustainability in the Arts Sector: The Case of the Art
Bonus Public Crowdfunding Campaign in Italy,” Sustainability: Science Practice and Policy 14, no. 3
(January 30, 2022): 1641.
48 For instance, Circular letter of the Tax office n. 24/E issued on 31 July 2014.
47 Decree 31 may 2014, n. 83.
46 These foundations are ruled by the legislative decree 29 june 1996, n. 367.
45 The conditions for such a benefit to be granted have been recently clarified by the Tax office in the
Ruling n. 461, 14 November 2023.
9
Another case of “Art bonus” is (2) the one covering all forms of assistance to “Places of
culture” which belong to the public. These would include museums, libraries, archives,
ecological parks (including gardens) and monuments, as defined under Article 101 of
the Italian Code on Cultural Heritage and landscape51.
The third case (3) covered is the one concerning the lirico-symphonic orchestras,
theaters of the traditions and local festivals. This broad category is intended to
embrace the several cultural initiatives, which are so frequent in Italy and date back
decades (if not centuries), and are very often the outcome of local traditions and
provincial costumes and habits. Music, theater, festival are included as well, making this
clause one of the broadest of the art bonus out of the four, as it is intended to address
local necessities and traditions that otherwise might disappear without a proper
financial subsidy.
On the contrary, the fourth (and last) case (4) of Art bonus is intended to provide a tax
relief for donations in the “Art of the future”, as it covers the creation of new structures,
facilities that are needed to stimulate artistic performances and alike.
In this case the structure (an atelier, an auditorium or alike) does not need to be of
artistic relevance, rather it has to be used for artistic purposes, in a non-profit scenario.
It is evident that this possibility opens the floor to an unprecedented series of
situations and possibilities.
Duer to the inclusive nature of the legislation , which is in theory addressing a
significant number of situations, the actual application of the Art bonus is giving rise in
the ast to a number of abuses or improper applications. Some artworks or initiatives
were labeled as artistic as they could loosely fall into one of the above mentioned
cases, but they actually turned out to be of other nature.
For these reasons the Tax office has subsequently restricted the application of the Art
bonus via ruling or interpretive guidelines in the matter.
The first and the most restrictive measure addresses the donating entity qualifying for
the 65% credit to be calculated on the amount of money given.
First of all, the taxpayers eligible for the “Art bonus” are: natural persons resident or not
in Italy, non commercial entities (resident or not), partnerships and cooperative
societies, businesses and eventually permanent establishments in Italy of non resident
commercial entities.
Natural persons and non commercial entities (resident or not, as the law does not
discriminate in the matter) can enjoy the tax credit up to an amount not exceeding 15%
of the taxable income, while commercial entities can enjoy a credit not exceeding in
any case 0,5% of the overall amount of revenue in the relevant taxable year.
As it was pointed out above, all donations and gratuities are included for the art bonus
calculation, but donations in kind and in cash are not.
51 Legislative decree n. 42, issued on 22 January 2004.
10
6. Supporting Art via Sponsorships
The Art bonus described above, generous as it might seem, meets qualitative and
quantitative limitations. There are cases where the 65% credit can not be granted or
there might be entities active in the Art industry that might fall outside the scope of it.
In all these situations, donations and gratuities might not be the best tool to be used to
stimulate art production and art development.
Italy, as many other countries in Europe and in the world, has recognized from a long
time the sponsorship contract52 which, although non expressly regulated by the Italian
Civil code53, has been codified in the praxis and is commonly used54.
There is no room here (not even need) to describe the mechanics of the contract in
detail55, yet sponsorship differs from donation and gratuities due to the consideration
in it, and the bond between two performances.
In this case money is given by the sponsor to the sponsee in order to have the activity
of the former promoted, put under the spotlight for commercial purposes.
Yet in the Italian tax law a difference exists between advertisement and sponsorship,
and it lies in the intensity of the consideration and the nature of the performance
under contract56.
In the case of advertisement money is given in consideration for a clear and evident
message to be given by the promoter to the audience or to the people in general. Such
a message should consist in the direct, evident and manifest promotion of the goods or
of the services provided by the entity giving the money. Most of the online influencers
operate via advertisement contracts although they qualify their performances as
sponsorships.
In the case of sponsorship such correlation exists, but it is looser and may assume
more sophisticated, indirect forms.
Art is suitable for this purpose, as sometimes money is given to art developments or
artistic performances without the necessity by the artist to expressly acknowledge such
an endowment or without the duty on him to promote expressis verbis the virtue of the
business who subsidized him.
56 Alberto Maria Gambino, I contratti di pubblicità e di sponsorizzazione (Giappichelli Editore, 2012).
55 Pippa Collett and William Fenton, The Sponsorship Handbook: Essential Tools, Tips and
Techniques for Sponsors and Sponsorship Seekers, ed. Pippa Collett and William Fenton (Chichester,
England: John Wiley & Sons, 2011); Mary Hutchings Reed, “Sponsorship and the Arts: A Brief
Overview of Legal Issues for Not-for-Profits,” University of Miami Entertainment & Sports Law Review
13 (1995): 9.
54 Tina Mermiri, “Arts Sponsorship: The Facts, Trends and Potential,” Journal of Sponsorship 3, no. 4
(2010): 307; Iryna Antoshyna and Alina Bondarenko, “Models of Administrative and Legal Regulation
of Sponsorship and Patronage in the EU,” Baltic Journal of Economic Studies 5, no. 5 (February 8,
2020): 18.
53 Alberto Musso, “La Sponsorizzazione Come Contratto Commerciale,” Aedon, no. 2 (2013): 9–19.
52 Martina Gianecchini, “Strategies and Determinants of Corporate Support to the Arts: Insights from
the Italian Context,” European Management Journal 38, no. 2 (April 1, 2020): 308–18; Gaetana
Trupiano, “Financing the Culture in Italy,” Journal of Cultural Heritage 6, no. 4 (December 1, 2005):
337–43.
11
Both the contracts (sponsorship and advertisement) demand payment to be made by
the sponsor and by the advertised entity. Should these subjects be businesses,
normally the costs would be tax deductible for tax purposes under the general rules of
corporate tax: yet a remarkable difference exists.
While the costs for advertisement are ordinarily deductible in their full amount, under
the condition that the contract is fair and the payment made, sponsorships costs are
capped according to the revenue of the business and to their amount57.
Such a capping has been introduced by the Ministry of Finance in order to prevent
abuses that occurred in the past when sponsorship was used to erode tax liability of
companies thanks to the higher flexibility of this contract as compared to
advertisement.
In the case of art, the Italian Ministry of Culture (MiBAC) has ruled58 that sponsorship
programs connected with arts and artistic performances are to be considered as
advertisements for tax purposes. Although such a qualification should come from a
ruling of the Tax office (or from the Ministry of Finance) it has always been upheld in
the practice, eventually making sponsorship connected to art more advantageous for
tax purposes as no capping to their amount can be introduced.
Of course such a benefit is not cumulative with others: as a consequence a payment
made for sponsorship might not be considered for any other purposes of tax law (such
as attribution of tax credit, if conditions are met) when it is made deductible under the
ordinary corporate tax rules.
7. Taxation of Artworks Trade in the Forthcoming Italian Fiscal
Reform
The Italian tax system is experiencing an unprecedented overhaul that will include
direct and indirect taxation, procedures and taxpayers’ fundamental rights.
To this purpose, the Parliament has delegated59 and enabled the Government to issue
several decrees: some of these provisions include the relationship between Art and
taxation, and are aimed at addressing most of the uncertainties pinpointed above and
to stimulate the market of artwork.
The basic idea is that capital gains realized in trading artworks are to be taxed upon the
non professional (that is non commercial) trader only if the speculative purpose
(mindset) is certain, or it can be presumed beyond any reasonable doubt according to
specific hallmarks.
In all the other cases, sales of artworks should be never relevant for income tax
purposes, and any profits incurred would be tax free.
59 Act n.111, 9 August 2023.
58 See on this MiBAC (Ministry of Culture) Decree 19 December 2012.
57 MInisterial decree 19 November 2008.
12
Rather than constituting an answer to the necessities raised by the practice through
years, this statement would demand some further clarification regarding the
“speculative" - that is, for profit - intent of the taxpayer, and would entail the abolition
between two groups of taxpayers60, the collectionists and the occasional traders.
Arguably, the forthcoming decrees amending the Italian Income Tax Act would
distinguish between full-fledged businesses and all the other taxpayers who deal
occasionally with artworks or other equivalent goods (such as the tradeable
antiquities). In this respect, the basic idea is that no (taxable) capital gain should ever
arise if the artwork sold has been inherited or received by donation.
In all the other circumstances, a significant time limit should be set for a capital gain to
be taxed. Arguably the five years limit which is already in force for immovable
properties might be extended to this kind of situation either. In the Italian tax system if
a real estate is sold after five years from its purchase, no capital gain is taxable on the
seller, unless it is a business.
The reverse however should also be true: every artwork sale would become potentially
taxable if made in the framework of a speculative operation.
In the case of VAT the tax reform under discussion would actually endorse the
guidelines suggested by the EU in the matter with the directives 2022/5412, which
amends directives 2006/112 and 2020/285.
The reduced VAT tax rate should be eventually implemented, to replace the current
ordinary one at 22% in Italy, bearing in mind however that the VAT rate is already
reduced to 10% if the sale is operated by the author or by an heir. Such a reduction
would also cover the trade in goods similar to artworks, including antiquities.
The reduced VAT rate should essentially be introduced to create a level playing field on
the Continent as currently significant distortions occur as some states use a reduced
rate and others don’t. Irrespective of the outcome of the reform, the adjustment of the
VAT rate for artworks, in Italy just like in France should be introduced in 2024 and
become effective no later than 1 January 2025.
Besides this, the legislative reform addressing the VAT regime for artworks in Italy will
be essentially based on two pillars.
Under the first one, the law shall provide for an updated list of the goods which might
benefit from the reduction of the rate (Annex IX, Parts A, B and C of the 2006/112
Directive).
The second pillar would be consistent with the new version of Article 98 of the
2006/112 directive, as it would allow member states to introduce a reduced VAT rate for
artworks and similar objects. Italy has planned so far to bring the rate down to 5,5%.
It is also important to bear in mind that under the new Article 98 bis the reduced VAT
rate is not applicable to artwork or antiquities to whom the special VAT system (Margin
Scheme) for used good is applicable instead, and under which the taxable base is the
60 See paragraph 3 above.
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spread to be calculated taking into account the purchase price (including VAT) and the
resale price.
8. Concluding Remarks
Despite the incredible abundance in terms of artworks and cultural heritage, Italy
hasn’t got a coherent and homogeneous tax system related to the trade in artworks or
for the promotion of the cultural and artistic heritage: this is actually the scenario at
the end of 2023.
Most of the measures currently in force are essentially tax credits or tax incentives
aimed at reducing transaction costs when investments occur in the world of art, with
no clear pattern of intervention and no precise strategy in the matter by the legislator.
This complicated scenario might derive from a lack of coordination as art and artworks
promotion ordinarily fall under the jurisdiction of the Ministry of Art and Culture, and
the Ministry of Finance, to a certain extent, is called to intervene only when policies are
decided by other stakeholders in the matter.
The lack of clarity in the chain of command and in the policy making has created a
scenario that the legislator is eventually trying to address in 2024, bringing clarity
about the tax regime of the entities involved in art production, sale and negotiation.
For these reasons great expectation are put on the forthcoming tax reform, which
should eventually draw a clear distinction between professional traders and occasional
ones, making liable to tax the first only, possibly attracting to the artworks ownership
an negotiation a higher number of individuals that these days are reluctant in investing
(also) because of the uncertainty of the tax consequences deriving from their choices
and the risk of being sanctioned by the Tax administration, to whom he ownership of
artworks abroad has to be reported61 by the owner annually, even if the artwork is
owned abroad via another entity (such as a Trust) whose beneficial owner is resident in
Italy.
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