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Italy could reduce VAT on imported works of art

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Italy is set to reduce VAT rates on art imports to 5.5% in a bid to make the country a major competitor in the global art market. Italy currently applies a reduced VAT rate of 10% on art imports, higher than France (5.5%), Belgium (6%) and Germany (7%). The proposal follows the revision of a 2006 European Commission directive which aims to better align VAT systems between Member States. The revised directive – which proposes that member states reduce VAT in specific commercial categories, “to preserve the functioning of the internal market and avoid distortions of competition” – allows EU countries to lower VAT on imports of art at a minimum of 5%, if the government chooses to adopt it.

From 10% to 5.5%

The revised guideline, first published on April 5, 2022, now lists “works of art, collectibles and antiques” among the 29 trade categories eligible for new VAT reductions. In addition to imports of works of art, the revised document allows VAT reductions to be applied to the entire commercial chain, including sales on the primary and secondary markets of works of art by artists and galleries within the EU. Member States are
invited to apply the changes with national laws by January 1, 2025.

Vittorio Sgarbi, undersecretary at the culture ministry, recently met with Maurizio Leo, deputy finance and economy minister, to discuss the changes, the Italian newspaper reported. Le Sole 24 Ore reports. “The government intends to adopt the EU directive and reduce the VAT on the import of works of art from 10 to 5.5%,” Sgarbi reportedly told the newspaper.

Jose Graci, the director of the Mazzoleni gallery based in Turin and London, tells The arts journal that Italian collectors and galleries – who acquire about half of modern and contemporary works from foreign suppliers, he says – would benefit from the change.

Franco Broccardi, partner at tax consultancy BBS-Lombard in Milan which advises Federculture, a group of Italian cultural organisations, says: “This would help us create a truly competitive art market in Italy. He adds that the change would “send a signal” that the country intends to prioritize its art market.

Broccardi and Federculture submitted proposals in March to the Ministry of Culture recommending that the government apply the VAT reductions to art. “The government listened carefully,” says Broccardi. “We may not have to wait very long [for the change].”

Thanks in part to its low 5.5% VAT rate on art, France currently controls 7% of the global art market, making it the fourth largest player in the world and the largest in the EU, according to the Art Market 2023 report compiled by Art Basel and UBS. Italy, on the other hand, is not among the top nine countries in the world in terms of market share.

Thaddaeus Ropac, the founder of the eponymous gallery brand, recently said The arts journal that the EU tax directive “would be fatal” for the French art market if its government decided not to continue applying the reduced VAT to art. In this case, France would lose its competitive advantage compared to other States that adopt the reduction of VAT on art (potentially including Italy). Italy’s economy and finance ministry declined to say whether it would adopt the changes.

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