Italy to cut VAT on Art to 5% on market decline

Competition from EU states forces reduction from 22% VAT rate to 5% reduced rate

Italy’s Council of Ministers on 20 June agreed cut the VAT rate on sales of art, antiques and collectors’ items sales from the standard 22% rate to the reduced 5% rate, responding to mounting pressure from the national art market and increased competition from other EU Member States with lower VAT rates on art. The measure is part of a raft of tax reforms in a draft decree circulated on 20 June 2025.

It is expected the VAT cut will go into effect from 1 July 2025.

The move comes in the wake of similar action by Germany to cut Art VAT rate, which recently cut its VAT rate on art to stay competitive within the European market.

In April 2025, Italian artists and dealers issued a strong appeal to Prime Minister Giorgia Meloni, warning that the 22% VAT rate on art sales was creating an “alarming situation” for cultural professionals and contributing to Italy’s decline as a major art trading hub. An industry letter described the impact as transforming the country into a “cultural desert.”

See our Italian VAT guide for more information.

Background: 2025 EU VAT rate freedoms

The shift is largely driven by reforms introduced by Council Directive (EU) 2022/542, adopted in April 2022 and in force from 1 January 2025. One of the key changes was the limitation of the VAT margin scheme, which previously allowed dealers to apply VAT only on their profit margins, not the full sale price.

Under the new rules, VAT must now be charged on the entire sale price of most artworks, collectibles, and antiques. This affects both EU-resold works and imported items, even if a reduced import VAT rate was paid. Member States can no longer combine reduced VAT rates with margin-based VAT mechanisms.

Reduced EU VAT rates on Art

Several EU countries have already adjusted VAT to support their art sectors:

• Germany: 7% reduced rate on art

• France: 5.5% for direct sales by artists; 20% standard otherwise

• Belgium: 6% for sales by artists; higher rates for dealers

• Netherlands: 9% reduced rate

• Austria: 13% on art sales

With Italy’s move to 5%, it joins the ranks of EU countries using VAT policy as a lever to stimulate the domestic art trade and counterbalance the loss of the margin scheme. This shift is expected to revitalize the Italian art market and restore its competitiveness across Europe.