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Artworks with variable taxation in Italy

Italy does not have a specific regulation for the tax treatment of the sale of artworks, and disputes with the tax authorities often arise regarding the relevance of the disposal and the identification of the correct income category.

A prior distinction must be made between:

  • Art dealer – who carries out intermediation in the circulation of artworks in a professional manner;
  • Collector – who cultivates a passion for art by collecting and sometimes exchanging works; and
  • Occasional speculator – who stands between the previous two figures.

The sale of artworks by an art dealer on a professional and non-occasional basis, regardless of the existence of an organisation, generates business income (even if it is a single disposal with considerable economic significance and with the performance of several prodromal activities).

The sale of artworks by a collector who purchases artworks to satisfy their personal need for aesthetic gratification and not for profit, if isolated, sporadic, and not consequent to an activity of “valorisation” of the artwork (e.g. publicising in catalogues, showing in exhibitions, etc.), is considered a simple asset disposal of personal property that is not taxable.

The sale of artworks by an occasional speculator who decides to buy and sell an artwork to make a profit on an episodic basis as a form of self- financing for their hobby can result in a capital gain as a non- habitual business activity, which is evaluated on a case- by-case basis.

The distinction is made on a case-by-case approach that considers the ways in which the selling activity is carried out, and the transferor's motivation. Indicators of a commercial activity include, among others: a large number of actions carried out to finalise the sale a series of acts to increase the value of the work, the value of the bargain, a short time of possession before resale, and the origin of the financial means used. On the other hand, the bulk sale of a collection, the origin by inheritance/donation, and a prolonged time of possession of the artworks demonstration an income irrelevance.

21 March 2023

Prof Roberto Maria Cagnazzo

THREE & PARTNERS Accounting Tax Legal, Founder & Partner

THREE & PARTNERS Accounting Tax Legal