This short text has the aim to explain the main tax reliefs which allow the art investment in Italy. The following remarks ate technically correct, but every fiscal subject can decide how to apply them, by asking his/her professional accountant or tax consultant for suggestions.
The main tax relief for private customers, in case of art investment, is that of not paying any tax on Capital Gain in case of appreciation from the sale of works of art. Another advantage is that no inheritance tax is applied on works of art, even when the inherited capital exceeds the non-taxability threshold.
As regards firms, in case of purchasing of works of art, if we want to understand the terms of removal of the exemption from taxes, we need to reason by following two lines of conduct: the contribution to income yield and the depreciation of the purchased good with the time.
If the work contributes to the income yield, you can save money on the VAT. In order to have this requisite, the work must improve the firm's image (either because it is placed in your own office or representative rooms, or because ir is used for advertisement goals, or both of them). The depreciation, on the contrary, determines a possible sinking plan for tax relief; according to the expectations of the market, a work should not lose value, but increase it. Nevertheless, there is no special heading about works of art in the consolidated act on revenue; therefore every firm is free to operate according to the instructions of its tax consultant. We must say that works of art are often seen as pieces of furniture and therefore amortized within 5 years (you can refer to a possible deterioration caused by exposure to dust or light, which could require periodical restoration works: for more information on this theme, /**/?subject=Come risparmiare l'Iva">please mail to ARTantide.com). In case of projects with works used for advertising goals, the amortization could be different and planned on the duration of the benefits expected from the advertising campaign (for example 3 or 5 years). On the contrary, if you include the work among the true investments, no sinking plan is expected and the work participates in the corporate assets.
We must also underline that the aforesaid remarks cannot be applied to historical works of art (older than 50 years) and to antiques, which do not benefit from tax reliefs.
In case of professionals, there are two options; in the first case they act as a firm (they are a society, with a VAT number), so they can apply the rules we indicated before for firms.
In the second case, they operate directly and the tax law provides the possibility to consider the purchasing of the works a cost. This, up to the 1% of the yearly turnover (the amount of the emitted fees). Those professionals who buy works up to this value, can save a percentage equal to their tax rate (which can variate from 25% to 40%). In this case, the VAT cannot be recuperated, but the works have a reduced rate.