Taxation in the
circulation of artworks

In Italy the purchase and sale of artworks carried out by an individual is subject to taxation if the person regularly and professionally engages in the trade of artworks and is therefore considered an “art dealer.” In this case, the income generated is classified as "business income" and taxed according to the progressive IRPEF rates, ranging from 23% to 43%, plus regional surtaxes (1.23% – 3.33%) and municipal surtaxes (0% – 0.8%).

Even in the absence of a regular and professional business activity, the individual may still act as an "occasional speculator" and be subject to taxation on the income generated, which is classified as "miscellaneous income." However, if the individual is a private collector, the sale of artworks is not taxable.

To determine whether and how the income is subject to taxation, it is necessary to analyze factual elements such as the number of sales, their frequency, the ultimate purpose of the sale, and the existence of a dedicated space for the sale and marketing of artworks.

For example, the tax authorities have ruled out the commercial nature of income obtained by a non-profit association (which, for the purposes of Italian income tax, is treated as an individual) from the sale of donated artworks: such sales do not constitute a commercial activity and, as such, are not taxable.

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In Italy if the purchase and sale of artworks represent the main activity of a legal entity, the artworks are recorded as inventory, and the difference between the initial and final inventory is considered part of the taxable business income, along with the purchase cost and sale price. 

If the purchase and sale of artworks do not represent the main activity, the artworks are recorded under non-current assets. Upon sale, the legal entity realizes a taxable capital gain or a deductible capital loss, calculated as the difference between the sale price and the acquisition cost. It is important to note that the purchase cost cannot be amortized due to the unique nature and indefinite useful life of the asset.

The tax applicable to corporations is the corporate income tax (IRES) at a rate of 24%, plus the regional production tax (IRAP) at a rate of 3.9%.

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In Italy for pure collectors, owning artworks through legal entities is not advisable from a tax perspective, since sales of artworks made by private collectors are not subject to income tax, whereas those made by legal entities are.

For art dealers, a comparison should be made between the personal income tax rates (IRPEF) and the corporate income tax rates (IRES and IRAP), also taking into account the taxation on distributed dividends.

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In Italy if the deceased/donor is a resident in Italy, the inheritance/donation tax is due on assets held both in Italy and abroad. If the person is not a resident, the tax is only due on assets located in Italy.

The applicable rates are as follows:

• 4% for transfers in favor of the spouse or direct line relatives, applied on the net total value exceeding €1,000,000;
• 6% for transfers in favor of siblings, applied on the net total value exceeding €100,000;
• 6% for transfers in favor of other relatives up to the fourth degree and collateral relatives up to the third degree, applied on the total net value;
• 8% for transfers in favor of all other subjects, applied on the total net value without any exemption threshold.

The taxable base for inheritance and donation tax is generally the market value of the assets at the time of ownership transfer.

For the inheritance of artworks, a lump-sum criterion applies (Article 9 of the Consolidated Law on Inheritance and Donations): jewelry and furniture (including artworks) are considered part of the estate's assets “for an amount equal to 10% of the net total taxable value of the estate, even if not declared or declared at a lower amount.”

This favorable regime does not apply if the artworks are stored in locations other than the main residence (e.g., safety vaults); in such cases, the standard tax rate is applied to the market value.

If artworks are subject to legal constraints (under specific provisions of the Cultural Heritage Code), they are exempt from inheritance and donation tax. Moreover, transfers to specific recipients (e.g., charitable entities) are also exempt.

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In Italy assets (including artworks) transferred via trusts are subject to inheritance and donation tax according to the rates and exemptions described above. In this case, the relevant family relationship is that between the settlor and the beneficiary. The tax is due when the trust assets are transferred to the beneficiaries.

Transfers in favor of legally recognized associations and foundations with exclusively public utility purposes are exempt from inheritance and donation tax, as are those to ONLUS entities pursuing social solidarity goals.

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In Italy the standard VAT rate applied to the sale of artworks is 22%. However, there are specific exceptions and special provisions worth noting. 

If the seller is the artist or their heirs/legatees, the VAT rate is reduced to 10%.

Art galleries, auction houses, and other professional art dealers may apply the margin scheme, whereby VAT is charged only on the difference between the selling price and the purchase cost (gross of tax). 

To qualify for the margin scheme, the items must have been purchased from private individuals. The margin scheme provides three VAT calculation methods:

1. Analytical: VAT is applied on the margin of each individual sale, and input VAT is non-deductible. This method applies to all taxable persons who habitually sell artworks, as well as to occasional sellers such as entrepreneurs and professionals.
2. Flat-rate: VAT is applied to a margin calculated as 60% of the selling price. This method applies to those trading used goods exclusively through mobile outlets or when the purchase price of the sold goods is not available.
3. Global: VAT is calculated on the total margin for a monthly or quarterly period, rather than on a per-sale basis. This method is rarely used in the art trade.

In any case, sellers can choose for each transaction whether to apply the margin scheme or the standard VAT regime.

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In Italy the import of artworks, antiques, or collectibles is subject to a reduced VAT rate of 10% instead of the standard 22%. Such imports are exempt from customs duties, whether for exhibitions or fairs (temporary admission) or for sale.

Goods stored or imported into so-called free ports (warehouses considered outside the customs boundary) are not subject to customs inspections, duties, or VAT, as long as they remain within these facilities. Artworks may be stored in free ports indefinitely.

Regarding sales of artworks outside Italy:

• EU Countries:
  • If the buyer does not have a VAT number, Italian VAT is applied.
  • If the buyer has a VAT number, the VAT of the destination country is applied. However, if the margin scheme is used, Italian VAT still applies.

Non-EU Countries: sales are considered VAT-exempt regardless of the buyer's status, as established by Article 8 of Presidential Decree no. 633/1972.

It should be noted that for certain exports of artworks, prior authorization may be required. Specifically, it may be necessary to obtain an Export License (Attestato di Libera Circolazione), issued by the competent Export Offices of the Ministry of Culture. This requirement is governed by the Cultural Heritage and Landscape Code (Articles 65 and following), which regulate the international movement of cultural goods.

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In Italy the main incentive supporting artistic and cultural patronage is the so-called “Art Bonus,” a tax credit for charitable donations made to support culture and the performing arts. This tax credit, available to individuals, businesses, and non-profit organizations, equals 65% of the donated amount, to be spread over three equal annual installments (1/3 per year). The credit cannot exceed 15% of taxable income for individuals and non-profit organizations, or 0.5% (five per thousand) of annual revenues for businesses.

To qualify for the Art Bonus, donations must support the following:

• Maintenance, protection, and restoration of public cultural assets;
• Support of public cultural institutions (e.g., museums, libraries, archives, etc.), opera foundations, traditional theatres, and entities funded by the Unified Performing Arts Fund (including orchestral institutions, national theatres, festivals, distribution circuits, etc.);
• Construction or restoration of facilities by non-profit entities exclusively engaged in performing arts.

A more general measure supporting the non-profit sector offers tax relief for anyone making donations to public or private non-profit entities, including those operating in the arts and culture sector. Generally, individuals benefit from a personal income tax deduction (IRPEF) of 19% or 26%, depending on the beneficiary, while businesses are granted a full or partial deduction based on the type of recipient.

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In Italy art market operators must comply with the obligations established by Legislative Decree 231/2007, as updated by Legislative Decree 125/2019, for transactions exceeding €10,000.

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In Italy the sale of artworks by artists or their heirs is subject to a 10% VAT rate (Art. 39, Law Decree 41/1995). Other sales are taxed at 22%, with the possibility of applying the margin scheme. Law Decree “Cultura” no. 201/2024 did not introduce any changes to the reduced VAT rate.

Delegated Law no. 111/2023 provides for the potential taxation of capital gains from collecting, but this has not yet been implemented.

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