ARTFEED — Contemporary Art Intelligence

NFT and Art: A Tax Lawyer's Perspective

opinion-review · 2026-04-27

NFTs have become a hot topic in the art world, with digital artworks and tokenized physical pieces sold via blockchain. International artists like PAK and Urs Fischer are entering the NFT market through Sotheby's, PACE Gallery, FairWarning, and MakersPlace. Smart contracts enable automatic royalty payments to artists on secondary sales, a feature particularly beneficial for American artists who lack federal resale rights. However, legal and tax uncertainties remain in Italy, where the tax authority has not clarified whether NFTs qualify as "artworks" under tax law, which traditionally requires materiality. Issues include VAT treatment, monitoring obligations for foreign-held assets, and the applicability of reduced VAT rates, as seen in a 2020 ruling excluding 3D-printed sculptures. The article highlights the need for clearer regulations as the NFT market evolves.

Key facts

  • NFTs are digital artworks or tokenized physical works made unique via blockchain.
  • PAK, an anonymous digital artist, will auction works at Sotheby's.
  • Urs Fischer will sell NFT works through PACE Gallery, FairWarning app, and MakersPlace.
  • Injective Protocol tokenized Banksy's 'Morons' after purchasing it.
  • Damien Hirst has a notable NFT project.
  • Smart contracts automatically pay artists royalties on secondary sales.
  • American artists lack federal resale rights, making smart contracts advantageous.
  • The Siegelaub-Projansky model from the 1970s proposed royalty clauses for artists.
  • Italian tax authority has not ruled on NFT tax treatment.
  • A 2020 ruling excluded 3D-printed sculptures from reduced VAT as they were not considered artworks.
  • NFT holders face risks like cryptocurrency volatility and password loss.
  • Legal issues include contract regulation and sales traceability.

Entities

Artists

  • PAK
  • Urs Fischer
  • Banksy
  • Damien Hirst
  • Rafaël Rozendaal
  • Giulia Cipollini

Institutions

  • Sotheby's
  • PACE Gallery
  • FairWarning
  • MakersPlace
  • Injective Protocol
  • Christie's
  • Agenzia delle Entrate
  • Artribune

Locations

  • Italy
  • America
  • United States

Sources