From Red Tape to Renaissance: Italy reduces the rate of VAT on art to 5%
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From Red Tape to Renaissance: Italy reduces the rate of VAT on art to 5%

Pierre Valentin
15/07/2025

Back in 2022, Council Directive (EU) 2022/542 introduced sweeping reforms to VAT taxation across the European Union. Among its most consequential provisions for the art world was the significant curtailment (some might say near-eradication) of the “margin scheme”, a mechanism previously relied upon by many in the secondary art market (we have unpacked the implications of that shift here).

In light of these changes, Member States were encouraged to adjust their VAT rates on works of art, collectors’ items, and antiques; reducing them from the standard rate (typically around 22%) to a lower threshold (no lower than 5%) by the end of 2024. The clock began ticking, and EU Member States all began to recalibrate their fiscal strategies accordingly.

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France took the lead with a reduction to 5.5%; Germany followed closely with a revised rate of 7%. Yet, for much of 2024 and well into the first half of 2025, Italy remained conspicuously silent.

Then, in a decisive move during the closing days of June 2025, the Italian government announced the reduction of VAT on eligible art sales from 22% to 5%.  The same lower rate of 5% applies to imports of art, collectors' items and antiques into Italy from outside the EU.

The rate of 5% is the lowest rate permissible under the Directive and Italy is now the only EU country to apply that lowest in the EU.

Looking forward, this reform does not appear to be an isolated gesture. Rather, it forms part of a wider legislative initiative aimed at modernizing Italy’s cultural and commercial regulatory framework. Further reforms are expected over the course of 2025, including proposals to streamline export licensing procedures and simplify the regulatory environment for cultural goods (these reforms are part of a proposal dramatically titled “Italy on Stage”). If enacted, these measures could meaningfully reduce red tape, improve legal certainty, and re-position Italy as an increasingly attractive jurisdiction for both domestic and international art commerce.

In sum, the VAT reduction to 5% marks a strategically important turning point in Italy’s approach to art-market policy. It not only brings the country in line with evolving EU standards but also addresses a long-standing fiscal disadvantage that has hindered competitiveness. More broadly, it signals a shift toward a more proactive, investor-friendly climate for collectors, galleries, auction houses, and institutions operating in or with Italy.

The margin scheme continues to apply in the UK.  The UK rate of import VAT for art, collectors' items and antiques is 5%, at par with Italy.