Italy Finally Bows to Local Pressure and Slashes Art VAT to 5 Percent
It’s hard to make tax sexy, but Italy is doing its best.
On Monday, the Italian government announced will cut the country’s VAT on art sales from 22 percent—the highest in the European Union—to just 5 percent. The slashed rate, set to go into effect later this week, will now be the lowest in the EU. Germany and France are the closest, with 7 percent and 5.5 percent VATs on art sales, respectively.
The move was approved in a cabinet meeting on Friday, per the Financial Times, and comes after a pressure campaign from Italian galleries, artists, auction houses, and art market players. Italy’s culture minister, Alessandro Giuli, said in a statement that the tax break should bring relief to “the entire art ecosystem, one of the most vital bastions of our cultural identity.”
While the new legislation will come into force within days, it needs to be approved by the parliament within 60 days to remain in permanent effect.
A study published earlier this year by consulting and market intelligence company Nomisma estimated that cutting the VAT could see galleries, antique dealers, and auction houses in Italy generate €1.5 billion in three years. It also predicted that the Italian economy could swell by up to €4.2 billion as a result. On the flipside, Nomisma warned that if the VAT remained at 22 percent, the country’s art market risked shrinking by almost 30 percent.
The lower VAT on art transactions arrives on the back of a new EU rule called Directive 2022/542 that aims to standardize member states’ notoriously complex VAT system. It allows members to reduce taxes on art sales provided the rate remains at 5 percent or over. However, to do so, they must scrap their previous, more tedious taxing system.
In February, Italy government, led by right-wing prime minister Giorgia Meloni, said that it would not budge on its 22 percent rate, saying that it was concerned it would be bowing to pressure from well-heeled collectors, rather than helping rescue the industry. But the U-turn comes after mounting pressure from the culture sector.
At Milan’s Miart fair in April, several dealers circulated an open letter addressed to Meloni; it was signed by 600 artists and said the high VAT threatened to turn Italy into a “cultural desert.” Also, last year, the Apollo Group, an association of Italian antiquarians, art galleries, collectors, art logistics companies, and auction houses, issued a statement calling on the Italian government to lower VAT for the sale of art.
“[If the tax is not reduced] any collector who wanted to import or buy work in the European Union would certainly not do so in Italy,” read a paper published by Apollo.
The policy change seems to have caught many Italian dealers by surprise. Last week, at Art Basel in Switzerland, several such dealers merely shrugged their shoulders when asked if they thought change might be coming to the VAT. Maurizio Rigillo, cofounder of Galleria Continua, which has a space in Rome, told ARTnews last Wednesday. “We hope the VAT will come down, it would be fantastic. It’s a massive disadvantage for us. At the moment, Italian collectors are buying elsewhere in Europe.”
Despite Italy’s status as a historical cultural powerhouse, its art market has lagged behind its European neighbors. Clare McAndrew, the founder of Art Economics, told ARTnews that according to her “conservative” estimates, art sales in Italy hit somewhere between $381 million and $425 million last year. By comparison, the 2025 edition of the Art Basel UBS Art Market Report found that art sales in the UK totalled $10.4 billion in 2024, while France realized $4.2 billion.
“[Italy’s high VAT] arguably undermines the Italian art market relative to countries like Germany and France, where VAT rates have been strategically lowered by virtue of the EU Directive,” the report reads.
High sales tax is one thing holding Italian galleries back, but strict legislation regulating the trade of cultural goods is another. Releasing the VAT handbrake should help to mitigate the 10 percent decline that Italy’s art market suffered in 2024 (as per the Art Basel UBS report).
Andrea Festa, the founder of an eponymous contemporary art gallery overlooking Rome’s Castel Sant’Angelo across the River Tiber, told ARTnews that Italy’s high VAT on art sales put Italian galleries at a “competitive disadvantage.”
“We operate in a globalized art world where it’s increasingly common—and necessary—for artists to collaborate with multiple galleries across different countries. This made the disparities in national VAT rates impossible to ignore,” he said. “Moreover, until very recently, Italy had one of the highest import tax burdens on artworks in Europe. That rate has now been reduced to 10 percent, which is certainly a welcome shift, even if it still leaves us behind many of our European peers. In a moment when the art market has contracted, this kind of fiscal reform is not just helpful, but vital.”
Gallerist Davide Mazzoleni, whose eponymous gallery has spaces in London and Turin, plus a soon-to-open gallery in Milan, said a tax reduction is a “game-changer for Italian dealers.”
“Lowering VAT to 5 percent will significantly increase market turnover and generate a substantial overall economic impact,” he added. “VAT reform was therefore not merely desirable, but essential for the long-term sustainability and international competitiveness of Italy’s art system.”
Catarina Antonaci, the associate director of Richard Saltoun Gallery in Rome, told ARTnews that “she is pleased she can now offer collectors more favorable conditions—it’s undoubtedly a strong incentive for our market.” ( Saltoun also has spaces in London and New York.)
Luigi Fassi, director of Turin’s Artissima art fair, said the Italian government finally understands “the need for a drastic reduction in VAT to help maintain the completeness of Italian galleries.”
Just days before the lower VAT was announced, he told ARTnews: “The response from collectors will be significant, as anticipation is running high. In this regard, the Italian art system is showing strong unity. There is a shared desire to play an active role and to keep the extraordinary tradition of Italian collecting alive.”
Italian auction houses are also expected to reap the benefits of the reduced VAT. Agnese Bonanno, the head of marketing and communications at Il Ponte Auction House in Milan, told ARTnews in an email that “harmonizing VAT rates with European standards substantially enhances the structural competitiveness of the Italian art market, attracting both international collectors and market operators to invest in the country, while simultaneously promoting greater circulation of works of art.”
