The 31st edition of Artissma in Turin, Italy’s oldest contemporary art fair (until 3 November), takes place at a precarious time for the country’s art trade. An upcoming decision on tax rates for art could have significant impacts on the 87 Italian commercial galleries exhibiting at the fair this year, potentially reviving the country’s promising but stymied art market.

Despite Italy’s significant number of private foundations and other philanthropic organizations supporting contemporary art – especially in the wealthy, industrialized north – high sales taxes and strict laws governing the trade in cultural goods continue to hinder trade. According to data published by UBS/Art Basel, France’s share of the global art market is approximately six times greater.

Change may come soon: Italian lawmakers must decide by the end of this year on a proposal to reduce taxes on the arts, spurred by new EU regulation that aims to simplify VAT structures by January 1, 2025. This could result in import VAT on art falling from 10%. Up to 5.5%. Meanwhile, general VAT on both primary and secondary market sales of non-imported works could also be reduced from 22% to between 10% and 5%.

“New regulations could have a transformative effect. “We are waiting with hope,” says Luigi Fassi, Artissima’s manager since 2022. Fassi’s words are echoed by many Italian dealers at the fair, such as Thomas Dane’s Naples-based manager Maria Giulla Rocco. The gallery’s booth includes a wall sculpture by Lynda Benglis, a large photograph of a basketball player by Paul Pfeiffer, and sculptures by Jean-Luc Moulène. Despite the looming deadline, a decision still needs to be made, as Rocco emphasizes: “We are spending time in Italy.”

Among the most reported sales among Italian galleries at the fair was the work Maggi Hambling by Thomas Brambilla of Naples, which sold for €50,000. And Repetto of Lugano sold works by Arte Povera artists to “various Italian collectors” for between €60,000 and €150,000. These include Jannis Kounellis’s 1983 iron and wood sculpture, Fausto Melotti’s 1979 plaster and brass work, and Mario Merz’s 1982 mixed media work, whose centenary of birth was celebrated with an exhibition at the Fondazione Merz in Turin. Something that takes away the heaviness that preserves the absurdity and lightness of the tale. (until February 2, 2025).

Adding to the expectations around the tax proposal are significant changes in government leadership. According to Italian consultant Mattia Ponzi, lowering VAT on art was advocated by former junior culture minister Vittorio Sgarbi, who resigned in February amid allegations that he was laundering stolen art. “He was instrumental in the fight to get this proposal accepted,” Ponzi says. “Without it, everything is less clear.”

If the proposal is rejected and tax rates remain the same, Italy’s position in the European art trade could be jeopardized. This is because neighboring France and Germany will benefit from much more advantageous VAT rates in 2025: France has secured the future of its already advantageous 5.5% VAT rates in 2023, while in June the German parliament raised VAT on art sales to 19%. voted to reduce it from 19% to 19%. 7%, widening the gap between Italy and its neighbors to the north.

This concern was expressed in an article published in June by the Apollo Group, a working group of Italy’s leading auction houses, consultants and galleries that lobbies the government to help the art market. It states that if Italy does not secure the new VAT rate, “any collector who wishes to import or purchase a work from the European Union will certainly not do so in Italy.”

Such sentiments are also expressed by Lia Rumma’s manager, Paola Potena. “It would be a disaster if the offer is not accepted. We’re all going to have to pack up and move to Paris.” Potena says Lia Rumma, one of the largest galleries in Italy with locations in Milan and Naples, “has a very international program and our presentation at Artissima always reflects this.” This year, the gallery at the fair exhibits the drawings of artists such as South African star William Kentridge and Wael Shawky, who represented Egypt at the Venice Biennale.

Dealers aren’t the only ones expecting a positive outcome. Turin’s distinguished contemporary art collector Patrizia Sandretto Re Rebaudengo says she is “lucky” to see VAT reduced on art. He adds that this is just one of the ways he hopes the government will help the arts industry. Another thing he would like to change is the inclusion of private foundations with public roles, such as the one he runs, in the Art Bonus program, where companies that sponsor public art and heritage organizations receive a 65% tax deduction.

However, Italians also have some reasons to be happy. Thanks to attractive income taxes, there has been an influx of millionaires from abroad into the country in the last few years. This phenomenon is expected to increase further this week as the UK closes tax loopholes for non-residents whose permanent residence is outside the UK for tax purposes.

“We have indeed observed a gradual shift among collectors away from the UK, a trend that started with Brexit and has since accelerated with Italy’s attractive flat tax,” says Jose Graci, director of the Mazzoleni gallery, which has branches in London and London. Turin. At the fair, the gallery sold Marinella Senatore’s paper collage from 2024, among other works, for between €15,000 and €20,000.

“The end of non-Dom tax benefits in the UK has also contributed to this trend of displacement, as Italy now provides a more stable tax environment for overseas wealth,” adds Graci. “While the long-term impact of these tax changes is yet to be fully seen, it is clear that those who were previously considering moving to the UK are now finding Italy to be a more attractive option.”