Italy slashes VAT on art to compete with EU rivals

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Italy’s rightwing government has slashed value added tax on art from 22 per cent to 5 per cent following intensive campaigning by artists and galleries warning the domestic market faced collapse.

Italian galleries, art dealers and artists have been calling for months for Rome to reduce taxes on art sales — which were at the highest level in the EU — to compete with rival markets. France and Germany both cut their own VAT rate on art to 5.5 and 7 per cent respectively earlier this year.

In March, more than 500 Italian artists wrote to Prime Minister Giorgia Meloni’s government, warning that the failure to bring VAT rates on art in line with those in other European markets would “endanger the survival” of the contemporary art industry in Italy.

“By maintaining the current burdensome, non-competitive and penalising taxation levels for works of art, Italy risks losing a large part of its creative enterprises and becoming a ‘cultural desert’,” the letter said. “Our country’s gaze cannot only be turned to the past.”

Signatories included Michelangelo Pistoletto, 91, a leading proponent of Italy’s Arte Povera (“poor art”) movement; painter Giorgio Griffa, and Maurizio Cattelan, the artist-provocateur, who recently sold his work “Comedian” — a banana stuck to a wall with duct tape — for €6.2mn

The tax cut was approved in a cabinet meeting on Friday, and will come into force within days, although it must also be approved by parliament within 60 days to remain in permanent effect.

The move has cheered Italian art galleries, which have been warning that wealthy collectors were opting to buy their art from dealers operating in lower tax jurisdictions.

With the vast disparity in VAT rates, plus other factors, artworks were up to 18 per cent more expensive to buy in Italy than in France, according to a report commissioned by The Apollo Group, an art industry association.

Italy’s art world had expected the VAT would be cut in February, as part of a new culture law approved by parliament. But politicians appeared to be concerned at the time that such a move might be perceived by the public as a sop to wealthy art collectors rather than a needed step to save an industry.

“We have been waiting for a long time,” said Pepi Marchetti Franchi, founding director of the Rome branch of the famed international gallery Gagosian. “Very good galleries have been closing, and the ones that haven’t closed are struggling tremendously.

“This high VAT rate has made our art fairs, and doing business with our galleries, completely uncompetitive and impossible to sustain,” she said.

Marchetti Franchi said closures were not merely the loss of a retail business, but would weigh down heavily on the prospects of emerging Italian artists, who would typically first be discovered and promoted by galleries at home before they made names for themselves internationally.

“One of the most important roles of galleries is the scouting of talent,” Marchetti Franchi said. “If you kill one element of the ecosystem, the rest really suffers and part of it will collapse.”

Culture minister Alessandro Giuli said he hoped the tax cut would bring much-needed relief to “the entire art ecosystem, one of the most vital bastions of our cultural identity”. 

“We can once again compete on equal terms, offering new opportunities to gallery owners, antique dealers, artists, restorers, transporters and scholars,” he said. 

Additional reporting by Giuliana Ricozzi