Italy is poised to make a significant move in the global art market by slashing VAT rates on art imports to 5.5%. Currently, Italy applies a higher reduced VAT rate of 10% on art imports compared to countries like France (5.5%), Belgium (6%), and Germany (7%). This development follows a revised directive by the European Commission in 2022 that aims to align VAT systems among member states and avoid distortions in competition. The directive allows EU countries to lower VAT on art imports to a minimum of 5% if they choose to adopt it.
The revised directive, published in April 2022, specifically includes “works of art, collectors’ items, and antiques” among the commercial categories eligible for further VAT reductions. This reduction in VAT not only applies to art imports but also extends to primary and secondary market sales of works of art by artists and galleries within the EU. Member states are required to incorporate these changes into their national laws by January 1, 2025.
Vittorio Sgarbi, an undersecretary in the Italian culture ministry, recently held discussions with Maurizio Leo, the deputy minister for finance and economy, regarding the proposed changes. Sgarbi stated to the Italian newspaper Il Sole 24 Ore that the government intends to adopt the EU directive and lower VAT on the importation of works of art from 10% to 5.5%.
The potential impact of this move is significant. According to the Art Market 2023 report compiled by Art Basel and UBS, France currently commands 7% of the global art market, making it the fourth largest player worldwide and the leading EU country. This is partly due to France’s advantageous 5.5% VAT rate on art. In contrast, Italy does not feature in the top nine countries for market share. Lowering VAT on art imports could position Italy as a strong competitor and potentially attract more collectors and investors.
Experts and industry insiders are optimistic about the benefits this change could bring. Jose Graci, the director of the Turin- and London-based Mazzoleni gallery, believes that both collectors and Italian galleries would benefit from the reduced VAT rate. Italian galleries currently acquire approximately half of their Modern and contemporary works from foreign suppliers. Franco Broccardi, a partner of Milan’s BBS-Lombard tax consultancy and advisor to Federculture, a group of Italian cultural organizations, supports this move, stating that it would help create a genuinely competitive art market in Italy. It would also serve as a signal of the country’s commitment to prioritizing its art market.
While the Ministry of Economy and Finance in Italy has declined to comment on whether they will adopt the changes, there is anticipation that the government will take swift action. Proposals recommending VAT reductions on art were submitted by Franco Broccardi and Federculture to the culture ministry in March, indicating that the government is receptive to the idea.