Will the 5% VAT on art trade make the market more transparent?

VAT drops from 22% to 5% for the trade in art, antiques and collectibles, i.e. also stamps, coins, old books, etc. with Article 8 of the Omnibus Decree approved on Friday 20 June by the Council of Ministers. It is the lowest rate in Europe, only Cyprus, Malta and the UK apply 5% but only on imports. Of course, this new rate will compete on art trade with the French rate, which from 1 January 2025 is at 5.5 per cent, the German rate at 7 per cent, the Dutch rate at 9 per cent and even the Swiss rate at 8.1 per cent. All the conditions are now in place for the Italian market to compete with the most dynamic centres of the art market that have been able, like France with Brexit and the crisis in the British market, to take advantage of favourable conditions. But what will we read in the Official Gazette in 60 days' time?

Stand di miart 2025

We tried to translate the subparagraphs and the various references to previous laws in Article 8 of the Omnibus DL with Marco Cerrato, partner at Studio Maisto e Associati, who discussed tax issues with Italian institutions on behalf of the Apollo Group. What are the terms of the new law, which in Article 8 provides for three paragraphs relating to the art market: 'Paragraph 1 says that the margin scheme continues to apply provided that the gallery owner had not purchased the work from a private individual who had previously benefited from the 5% rate,' explains the lawyer and tax law expert. Therefore, if the gallery imports or buys from another professional operator - artist or gallerist - already at 5%, it cannot apply the margin. Paragraphs 2 and 3 are those that respectively provide for the 5% rate on all exchanges of art objects and collectibles and antiques (as in the aforementioned Table annexed to Decree-Law no. 41 of 23 February 1995, ndr), without prejudice to the application of the margin, and the repeal of the 10% rate on imports. In summary, the 5% applies to all imports and all supplies by artists and their heirs and applies to all supplies by resellers who do not opt for the margin. To be clear, the rest of the art supply chain does not automatically go to 5%, just as the supply chain in France is not at 5.5% either, i.e. VAT remains ordinary and unchanged for insurance companies, transporters and auction houses,' Cerrato concludes.

Of course when we refer to the margin regime we mean 22% with an absolute alternation between margin or VAT at 5%: each gallery will be able to do the maths on the most favourable tax regime. "The big difference in the comparison on VAT will be between gallery owners working in Italy and international operators with less favourable regimes, and then on imports," explains Franco Broccardi, accountant, expert in cultural economics and co-founder and partner of the Lombard DCA studio in Milan. In France where gallery owners already work at 5.5%, the Italian market will not be so attractive, it may become so for gallery owners who work at higher rates and there are many of them: in the UK it is 20%, in Spain 21%, in Austria 20%. In Italy in recent years Gisela Capitain, Thomas Dane, Richard Saltoun, Cadogan Gallery, Gregor Staiger, Peres (which has since closed), Ciaccia Levi and in autumn Thaddaeus Ropac will open at Palazzo Belgioioso in Milan. "Gallery owners in Italy will now be able to gain market share, but there is a psychological and cultural aspect that will make the difference because 5% VAT does not solve all ills, a culture of transparency must prevail. Will this measure be enough to bring out the underground in the art market?" wonders Broccardi. And transparency can also be seen when a gallery owner has no difficulty, as happens at fairs abroad, in declaring the price at which the work is offered and issuing an invoice at full price. Cultural paradigm shifts.

Stand a miart 2025

The Apollo Group naturally brings home the result. "This synergy between the operators in the sector - galleries, auction houses, collectors, professionals - with the institutions, first and foremost the Government, in particular the Ministry of Culture and the Ministry of Economy and Finance, and the Parliament played a decisive role in achieving this goal, in transposition of what is envisaged at EU level by European Directive 542/2022. A special thanks goes to the Presidents of the Culture Committees of the House and Senate Federico Mollicone and Roberto Marti and the Honourable Alessandro Amorese for their dedication and support'.

"I have just returned from Basel and I can only join the many friends and colleagues who at this very moment are celebrating the wonderful news of the introduction of the 5% preferential VAT rate for the art market in Italy," comments Nicola Ricciardi, artistic director of miart, who announced in Basel the title of the 30th edition of the fair "New Directions" that will be held from 17 to 19 April 2026 in the new South Wing of Allianz MiCo, adjacent to the pavilion that has always hosted it. "This is a measure that is as long-awaited as it is necessary, representing a real breath of fresh air for a sector that, despite its extraordinary cultural vitality, is going through a particularly delicate phase in economic terms. Today, the market requires vision, courage and support, and this measure represents a clear and positive signal from the institutions: it is an important step towards a more conscious and structured cultural policy that recognises art's strategic role in the economic and civil life of the country. A step, however, that would not have been possible without the many professionals, starting with the galleries and trade associations, who have worked day and night to convey this message to politics," concluded Ricciardi, who will be able to reap the benefits of the new tax measure at the next miart.