In an eagerly anticipated volte-face, Italian lawmakers will reduce VAT on art sales from 22%, the highest rate in Europe, to 5%, its lowest. The decision, approved in a 20 June cabinet meeting and announced by Italy's culture minister Alessandro Giuli, is expected to come into effect this week.
"It's a momentous turning point," says Sirio Ortolani, the president of ANGAMC (National association of modern and contemporary art galleries) and vice president of the Apollo Group, an art market lobbying group that led the fight to achieve the long-awaited reform. "Italy can finally become a great international hub, attracting galleries from all over Europe and major fairs."
The decision marks a welcome reversal from the previous stance of Giorgia Meloni's ruling far-right party, which had appeared unwilling to lower rates. In April, a letter signed by 500 art world figures, including the artists Maurizio Cattelan and Michelangelo Pistoletto, expressed "serious concern" about the 22% rate, which they said was threatening to turn Italy into a “cultural desert”.
The tax cut must be passed in parliament within 60 days to remain in effect. Upon its approval, Italy's 5% VAT rate on art will be lower than both that of France (5.5%) and Germany (7%). Both those countries also managed to secure lower rates following lobbying from their art market sectors, after an EU-wide rule, which sought to standardise tax across the union, threatened to close a variety of loopholes availed of by the trade for years.
The new 5% rate may also be applied to Italy's import VAT on art, meaning the country might soon become an attractive trading hub for foreign art and international dealers.
"We are expecting the reduced rate to apply to imports too," says Mauro Mattei, a Milan-born tax advisor and art collector. "This could mean that from a tax standpoint, Italy becomes the most competitive art market in Europe. But the problem is that no one in the industry has seen the actual wording of the decree since the minister of culture announced it. We all need to see the text before we can celebrate."
It appears that the lowered tax rates are just the first step of widespread reforms planned by the Italian government to improve the competitiveness of its art market.
Federico Mollicone, who chairs the culture committee within Italy's chamber of deputies (the lower house of parliament), told the Giornalle dell'Arte that he plans to simplify the issuing of export licences required to move cultural objects older than 50 years outside of the country. Digital infrastructure is also on the agenda, and his Brothers of Italy party intends to roll out online registries for public cultural sites, among other initatives.
Mollicone cited a recent study by Nomnisma and the Intesa Sanpaolo bank, which estimated that a 5% VAT rate would boost the annual turnover of Italian galleries, antique dealers and auction houses to €1.5bn within three years, which would then generate an extra €4.2bn for Italy.
