Art and taxation in Italy [Art et Fiscalité en Italie]

Italian law does not provide for a clear, comprehensive regime applicable to business activities connected to art and artwork negotiation. For this reason, the relationship between art and taxation is built, on one side, on the ordinary rules as they apply to ordinary business (and non-business) activities and, on the other side, on special, tailor-made tax incentives granted to selected artistic initiatives. Most of these incentives consist of tax credits granted to those investing in art development and various initiatives connected to the world of art. In all the other circumstances, due to the silence of the legislator, literature and judicial decisions took over in the definition of the fiscal regime applicable to artistic activities and, in particular, to the negotiation of artworks. Both doctrine and case law draw a distinction between occasional artwork trade and professional ones. In the first case, collectors are included as well: their revenue, if any, falls into the "other income" residual category of the Italian Income Tax Act and is taxed accordingly. Occasional sales, in contrast, are usually excluded from income tax. Eventually, professional traders in art, on the opposite, are considered ordinary businesses and treated accordingly both for income and VAT purposes.