Italy slashes VAT on art to 5%, boosting market competitiveness

On June 20, 2025, the Italian Council of Ministers approved Article 9 of the DL Omnibus, reducing VAT on sales and imports of artworks and collectors' items from 22% to 5%—the lowest rate in Europe. The measure, effective immediately, aligns Italy with France (5.5% since 2023) and Germany (7% since 2024). The reform was driven by EU Directive 2022/542, which allowed member states to apply reduced VAT to specific categories, including art, to pursue cultural policy goals. The Gruppo Apollo, a confederation of major Italian art industry associations, led lobbying efforts alongside politicians Federico Mollicone (Fratelli d'Italia), Roberto Marti, and Alessandro Amorese. According to a Nomisma study commissioned by Gruppo Apollo and Intesa Sanpaolo, the reduction is expected to boost gallery turnover by up to 50% for small dealers and 28% overall, generating up to €1.5 billion in quarterly revenue and €4.2 billion in total economic impact. The tax cut costs the state approximately €90 million but is projected to increase indirect tax revenue. Culture Minister Giuli stated that without the reduction, the art market would have lost 28% of total turnover. The reform positions Italy as a potential European art market hub, though further measures—including simplified export procedures for cultural goods expected in July—are needed. The reduced VAT may lower prices for collectors and institutions but is unlikely to democratize the market significantly, as broader wage issues persist.