Italy: a masterpiece of taxation
By Andrea Enrico Maria Eliseo and Prof Stefano Loconte, Loconte & Partners
In addition to the aesthetic return generated by art, there are many good reasons to consider art as an attractive asset class in terms of long-term investments. Art retains value and generates moderate real return, which is why art and collectible assets represent sizable assets for many high net worth individuals (HNWIs).
Italy is a particularly tax-friendly country for those who inherit or sell artwork, especially those who face high taxation – as is the case with the USA, the UK, France and Germany – where private collectors may need to undertake estate planning, resorting to the creation of trusts or similar vehicles for tax purposes.
Firstly, Italy’s Wealth Tax is not applied to works of art owned by individuals or companies.
In addition, income tax for individuals depends on whether the individual is engaged in a commercial activity: no tax is levied on income that does not result from a commercial activity (e.g. non-recurring sales made by private collectors).
Furthermore, the current Italian tax regulations on inheritance and gifts are more favourable than those applied in France, Germany, the USA and the UK, where taxation can be up to 40% of the value.
With regard to inheritance tax, the value of the art assets subject to taxation (including money, jewellery and furniture, defined as the personal property intended for use or decoration of housing including unrestricted cultural assets) may be limited to 10% of the entire estate.
Therefore, let’s recall the words of Andy Warhol: “Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art”. With this in mind, remember that Italy is one of the most tax-friendly countries for those who inherit or sell works of art.
Andrea Enrico Maria EliseoLoconte & Partners, Bari, Italy
T: +39 080 572 2880
Andrea Eliseo is an Associate at Loconte & Partners, a member of the firm’s Global Wealth Management department and a full member of STEP. His practice focuses on advising high net worth individuals and family offices regarding private client matters (including trust, asset protection, generation skipping and estate planning).
Prof. Stefano LoconteLoconte & Partners, Bari, Italy
T: +39 080 572 2880
Stefano Loconte Stefano Loconte is the founder of the law firm Loconte & Partners. He is a Law and Tax Consultant to the Ministry of Labour, counsel to the Chair of the VI Permanent Commission – Finance of the Italian Chamber of Deputies and a Professor of Tax Law, International Tax Law and Trust Law at the Università LUM “Jean Monnet” in Casamassima, Italy.
Publishes: October 2016 l Photo: bluraz - Fotolia.com