The recent reduction of VAT on transactions from 22% to 5% has been welcomed by industry professionals. It is a long-awaited measure that could reinvigorate a market which, in Italy, has experienced glorious seasons but also decades of decline. Yet, support from diagnostics is also needed.
The Golden Age: Italy as the Capital of Art and Antiquarian Trade
For much of the twentieth century, Italy was a central hub for the international art and antiques market.
The Biennale Internazionale dell’Antiquariato, founded in 1959, transformed Florence into a global showcase. In the 1960s and 1970s, museums such as the Metropolitan Museum of Art in New York and the Getty Museum in Los Angeles made their most important acquisitions there. TEFAF arrived much later. Those who were looking for quality came to Florence.
But also the Finarte auctions in Milan, starting in the 1960s, introduced a modern model of public sale. In the 1980s, there were spectacular records, such as that of an 18th-century Roman chest of drawers sold for over one billion lire.
In those years, art was also considered a safe investment, a hedge against inflation and economic uncertainty.
From Decline to Flight Abroad
In the 1990s and 2000s, the Italian market underwent a progressive downsizing, while other foreign markets rose.
Among the most evident causes of this reversal were export regulations, in particular the Bottai Law of 1939, embodied in the Cultural Heritage Code (Legislative Decree 42/2004), which imposed various restrictions on the free circulation of artworks. But the high VAT (22%) also made the price of artworks in Italy less competitive compared to other European countries. Many Italian dealers therefore preferred to relocate their sales or create commercial structures abroad, especially in Switzerland, Luxembourg, and the United Kingdom.
“Every law has its loophole,” one might say. In reality, there does not seem to have been a reckless intent to “plunder” the national heritage behind these relocations, but rather a reaction to a penalizing system.
The problem with Italian restrictions on free circulation is that they are often applied with unpredictable criteria: this generates uncertainty and pushes collectors to prefer more predictable markets, such as London or Paris. Cases of restrictions being misapplied or inconsistently enforced are often reported; procedures are long, cumbersome, and outcomes uncertain. As it stands, the system seems to generate more frustration than real benefit.
5% VAT: A New Beginning
With the approval of Article 9 of the Omnibus Decree by the Council of Ministers, which implements a European directive, the VAT rate on the sale and import of artworks in Italy will drop from the current 22% to 5%—the lowest in Europe. For comparison, France, at the end of 2023, and Germany, in 2024, opted to reduce VAT respectively to 5.5% and 7%, with effects from January 1, 2025.
By introducing the 5% VAT reduction on art transactions, Italian lawmakers are taking a significant step toward aligning the national antiques market with those of other European countries that have seen more dynamic markets, as well as with the United Kingdom. Although it is unclear whethere the lower tax regime will have an impact on auction houses, which in Italy currently charge as much as 26%, inclusive of the 22% VAT rate.
However, this measure—awaited for years by a substantial part of the trade—could also impact the emergence of the shadow market and the overall fiscal framework of the art sector.
Expected outcomes include:
- Repatriation of artistic capital and greater attractiveness for foreign investors.
- Incentives for collectors to formalize transactions in Italy, contributing to transparency and traceability.
- Greater operating margins for professionals, especially in a context of rising fixed costs.
- Increased demand for specialist services connected with sales: appraisals, condition reports, pre-sale diagnostic analyses, authentications, and conservation.
Scientific Diagnostics: The Value of Certainty
It must be said that taxation is not everything. As noted, circulation restrictions matter, but so do transparent processes and certainty in transactions.
TEFAF grew to become the world’s leading fair partly because of its proclaimed guarantee of authenticity for the works on sale. TEFAF introduced unique standards for catalogue vetting and scientific verification of artworks, which helped build trust between buyers and sellers worldwide.
For this reason, another essential pillar in rebuilding a flourishing market is certainly scientific diagnostics.
- It provides transparency and objectivity on the condition and authenticity of works.
- It reduces the risk of disputes, speeds up authorization processes, and increases trust between sellers and buyers—an indispensable condition in today’s art market.
The reduction of VAT to 5% is a historic step, promising to restore competitiveness to the Italian market. However, without simplification of restrictions, clarity on the applicable tax regime (for example, in the case of auction sales), and the systematic use of scientific diagnostics, this step alone may not be enough to generate a lasting renaissance.
