Omnibus Decree 2025: introduction of 5% VAT on art trade

| Insights

With the approval of the Omnibus Decree dated 20 June 2025, which is now awaiting final approval by Parliament, the Italian government has implemented a significant tax measure for the art market, giving operational effect to the provisions already established in Legislative Decree No. 180/2024, in alignment with EU Directive 2022/542. Specifically, Art. 8 of the Omnibus Decree should provide for the application of a reduced 5% VAT rate to the sale and importation of works of art, collectibles and antiques, thereby redefining the tax treatment of the cultural and artistic sector. Ratification by Parliament is now awaited before the provision can enter into force.

This measure has been long awaited by gallery owners, dealers, artists, and art professionals, who have been advocating for years for a reform to align the Italian framework with that of other European countries. Currently, France applies a 5.5% VAT rate, Germany 7%, and the Netherlands 9%, while Italy had until now applied the standard rate of 22%, with a reduced 10% rate only applicable to sales made directly by artists or their heirs.

With this reform, Italy becomes more competitive at the international level, facilitating the purchase, import and circulation of art works, and attracting new capital into the cultural sector.

The art market and the margin scheme

It is important to clarify that the new reduced VAT rate applies to sales made by VAT-registered entities, including galleries, auction houses, and art dealers, as well as to sales by artists and their heirs, and to imports of art pieces from abroad.

However, the option to apply the margin scheme, introduced in Italy by Law No. 85/1995, remains available and valid. This regime allows VAT to be applied only on the margin (i.e., the difference between the purchase and resale price, with application of the standard VAT rate of 22%), thereby avoiding double taxation on second-hand goods that re-enter the commercial circuit.

The Italian Revenue Agency, in Circular No. 177/E of 22 June 1995, clarified that the margin scheme aims to avoid repeated VAT charges on second-hand goods, art works, antiques and collectibles when they are resold by VAT subjects. In light of the new 5% VAT regime, the margin scheme continues to apply and offers important fiscal flexibility for art market operators

The margin scheme continues to apply on condition that the gallery owner does not import or purchases from another gallery owner (or artist) who has already benefited from the reduced VAT rate of 5%: in this case, the margin scheme cannot be applied. Considering the alternation between 5% VAT and the margin scheme, each gallery owner retains the right to assess which tax regime is most advantageous for them.

How taxation on art changes

Specifically, Art. 8 of the Omnibus Decree would provide, starting from the date of entry into force, for the application of a 5% VAT rate for the following transactions:

  • sale of works of art by VAT-registered subjects, including galleries, art dealers, and auction houses
  • sale of works of art created by living artists or by their heirs or legal successors
  • importation of art works, collectibles and antiques, including for example stamps, rare coins, manuscripts, and antiquarian books

In summary, the 5% rate applies to all imports, sales made directly by artists or their heirs, and sales by retailers who do not participate in the margin scheme.

The aim of the provision is to harmonise Italy’s VAT regime with those of other EU Member States, reducing the regulatory gap that has long penalised the Italian art market.

A “turning point” for the Italian art market

This tax reform has been welcomed by many in the cultural and artistic sectors, who have long called for legislative action to boost investment and increase Italy’s market competitiveness. The reduction of the VAT rate from 22% to 5% is expected to have several significant effects, including:

  • greater competitiveness for Italian galleries and operators, who can now offer conditions like those available in more fiscally favourable European markets (in Europe, only Cyprus, Malta, and the UK apply a 5% rate, and only on imports)
  • increased attractiveness for international collectors, who will be more inclined to acquire art works in Italy under a lighter tax burden
  • support for patronage and cultural investment, with positive spillover effects on the creative economy and the art industry, which is currently facing a period of contraction

Italy strengthens its position on the international art scene with 5% VAT

In conclusion, with the introduction of a 5% VAT rate on works of art and collectibles marks a significant legislative development, aligning Italy’s tax framework with broader European trends. It aims to strengthen Italy’s position as a cultural and economic hub in the international art market.

For galleries, collectors, professional operators, and VAT-registered entities involved in the trade of art works, this new regulatory framework calls for a reassessment of business and tax strategies, considering both the opportunities of the reduced rate and the continuing applicability of the margin scheme.