ITALY Trends and Developments Contributed by: Angela Saltarelli, Jacobacci Avvocati
Introduction: Italian Art Law Between Protection and Market Dynamics Italy has one of the richest concentrations of cultural heritage in the world and currently holds the high - est number of UNESCO World Heritage Sites in the world with 61 recognised locations. This extraordi - nary historical wealth, however, is accompanied by a dense regulatory framework and complex administra - tive procedures that have significantly shaped the art market, at times limiting its ability to compete with more dynamic international jurisdictions. In recent years, Italian art law has been character - ised by a structural tension. On the one hand, public authorities have reinforced cultural protection mecha - nisms, particularly in relation to the circulation and reproduction of cultural property. On the other hand, the legislator has sought to enhance the competitive - ness of the Italian art market through fiscal reform, notably the introduction of a reduced VAT rate, and to address emerging technological challenges by providing guidance on AI-generated art and related copyright issues. The following sections highlight the most significant trends and developments currently shaping the Italian art law landscape and outline their practical implica - tions for operators active in this jurisdiction. VAT reform and the shift of competitiveness of the Italian art market One of the most significant recent developments in the Italian art market is the introduction of a uniform 5% VAT rate applicable to works of art, antiques and collectors’ items. For years, Italy was perceived as less tax competitive than other European jurisdictions, particularly France, where reduced VAT rates have attracted cross-border transactions and encouraged market growth. The reform significantly reshapes the fiscal landscape and is widely regarded as a strategic step towards strengthening Italy’s competitiveness both within the European market and at international level. Under the previous regime, artworks were generally subject to a 10% VAT rate when sold directly by the artist or imported, while sales by dealers were typi - cally subject either to the margin scheme or to the
ordinary VAT rate of 22%. This fragmented system differentiated between primary and secondary market transactions and often placed galleries and dealers at a competitive disadvantage compared to artists. The new regime has been applicable since 1 July 2025, following Italy’s implementation of Directive (EU) 2022/542. The 5% VAT rate applies to sales by artists, their heirs or legatees, galleries, dealers and auction houses, as well as to imports of artworks into Italy. By extending the reduced 5% rate, the legislator has simplified the framework and enhanced Italy’s fiscal positioning within the European art market. However, the reform introduces an important opera - tional choice. Taxpayers may apply either the reduced 5% VAT rate or to operate under the margin scheme, but the two regimes cannot be combined. The margin scheme, which taxes only the dealer’s profit margin rather than the full sale price, remains subject to the standard 22% VAT rate and becomes alternative – not cumulative – to the reduced rate. Margin regime shall be applied only under specific conditions, for instance when works are acquired from private individuals or from taxable persons without VAT deduction, or when imported or purchased with VAT deduction under the previous regime. The seller’s status and the supply chain therefore remain crucial in determining the appli - cable tax treatment. This 2025 reform has immediate commercial implica - tions. For artists and their estates, the reduced rate enhances market accessibility and may stimulate pri - mary market transactions. For collectors and galleries importing artworks into Italy, the 5% rate reduces entry costs and may encourage the relocation of inventory to the Italian market. More broadly, the measure sig - nals a policy shift: fiscal reform is being used as an instrument to reposition Italy within an increasingly competitive global art market. Growing anti-money laundering compliance in the art market A further structural development affecting the Italian art market is its progressive integration into broader financial compliance frameworks. What was once per - ceived as a relationship-driven and relatively discreet
104 CHAMBERS.COM
Powered by FlippingBook