The principle of tax benefits for cultural activities emerges in a series of provisions which aim to encourage the contribution of private actors – individuals and businesses – in this sector.
Tax incentives for legal entities:
- Art Bonus is a facilitating measure introduced by the D.L. n. 83/2014, then stabilized and made permanent by the 2016 stability law, which allocates to private individuals and firms a tax credit equal to 65 percent of the disbursements made to promote projects for the restoration of publicly owned cultural assets, for the support of publicly owned cultural institutions and places (e.g. museums, libraries, archives), and for the construction, restoration and strengthening of structures of public bodies or institutions that carry out activities in the entertainment sector. In particular, for the holders of business income, the tax credit is recognized within the limits of 5 per thousand of annual revenues (see chapter 7.3).
- The tax legislation (Article 100, paragraph 2, letter m) of the TUIR/ Testo Unico delle Imposte sui Redditi) already provides an incentive for cultural patronage with the total deductibility of the taxable income of donations in cash made by subjects holding business income in favor of the State, Regions, Local Bodies, Public Bodies or Institutions, as well as Foundations and legally recognized non-profit Associations for the performance of their tasks and for the implementation of programmes in the cultural heritage and entertainment sector. In addition, donations made by companies in favor of non-profit organizations of social utility that carry out activities in the field of protection, promotion and enhancement of cultural heritage, as well as in the sector of the promotion of culture and art, are also encouraged (Article 100, paragraph 2, letter h) of the TUIR). Furthermore, tax benefits are provided for sponsorships which, like donations in cash, are totally deductible from business income if it is not a normal advertising activity.
- A widely used measure is the tax credit in the film sector, which allows companies that invest in film and in the audiovisual sector to access the tax credit by offsetting tax debts with the credit accrued following an investment in the film sector. Examples are the production tax credit (Article 1, paragraph 327, Law 244/2007 and Decree 7.5.2009 “tax credit producers”) and the distribution tax credit (Article 1, paragraph 327, Law 244/2007 and Ministerial Decree 21.1.2010 “tax credit external investors and distributors”).
- A particular measure is represented by the so-called Bonus Facciate, a tax discount to embellish buildings in the historic centres of cities, which allows tenants and owners, residents and non-residents of the State, individuals and businesses, to recover 90% of the costs incurred in 2020 for the renovation of existing buildings, of any cadastral category, including instrumental ones, without a maximum spending limit.
- The 2021 Budget Law (Law No. 178/2020) established the Fund for Small and Medium-sized Creative Enterprises, with an endowment of 20 million euros for each of the years 2021 and 2022, which can be used to promote the creation and the development of businesses in the creative sector through straight grants, subsidized loans and combinations of the two. In particular, the legislator clarified that the “creative sector” should be interpreted as “the sector that includes activities aimed at the development, creation, production, dissemination and conservation of goods and services that constitute cultural, artistic or other creative expressions and, in particular, those relating to architecture, archives, libraries, museums, artistic craftsmanship, audiovisuals, including film, television and multimedia content, software, video games, material cultural heritage and immaterial, design, festivals, music, literature, performing arts, publishing, radio, visual arts, communication and advertising”.
- In order to increase the competitiveness of Italian industry, the 2022 Budget Law (Law no.234/2021) has extended the discipline of the tax credit for investments to research and development, ecological transition, technological innovation 4.0 and other innovative activities. In particular, for design and aesthetic conception activities, aimed at significantly innovating the company’s products in terms of form and other non-technical or functional elements, a tax credit of 10% was recognized up to the maximum limit of 2 million euros.
Tax incentives for individuals:
- Art Bonus: also applies to cash disbursements made by individuals and gives the right to obtain a tax credit corresponding to 65% of the disbursement made, within the limit of 15 percent of taxable income.
- Art. 15 paragraph 1, lett. h) of the TUIR: this rule allows the deduction from IRPEF (personal income tax) of 19 per cent of cash donations in favor of public entities or foundations and legally recognized non-profit associations, which carry out or promote study, research and documentation activities of significant cultural and artistic value, for the purchase of cultural assets (given the validity of the Art bonus, in order to avoid the possibility of benefiting from multiple concessions with a single payment, the other forms of concessions recognized by this provision do not apply). Furthermore, paragraph 46 of art. 23 of Law no. 111/2011 extended the possibility for taxpayers to allocate the 5 per thousand (5 per mille) of the income tax of individuals to financing the protection, promotion and enhancement of cultural and landscape assets.
- Incentives for the restoration of protected property: Article 15, paragraph 1, letter g) of the TUIR provides for the deduction from gross tax of 19 percent of the cost incurred for the restoration of protected property.
- Fund for restoration and other conservation interventions on buildings of historical and artistic interest: established by the d.l. 73/2021 (Law no. 106/2021) within the budget of the Ministry of Culture, with an endowment of 1 million euros for each of the years 2021 and 2022, it allows for individuals who hold such buildings a tax credit equal to 50 percent of the expenses incurred in 2021 and 2022 for conservation interventions, up to a maximum of 100,000 thousand euros.
- Another incentive (even if of a non-fiscal nature) is the Bonus Cultura, a measure introduced in 2016, which consists of a 500-euro bonus for 18-year-olds for the purchase of various types of cultural products and activities. Starting from the 2022 budget law, the culture bonus has established itself as a structural measure and provides for the assignment of an electronic card that allows the purchase, for example, of tickets for theatre, cinema and live performances, books, tickets to access museums, exhibitions and cultural events, as well as language courses.
VAT and indirect taxes on cultural goods and services
The most detailed treatment in terms of indirect taxation is reserved for book production, which benefits from the reduced VAT levy of 4%; the thorniest issue in this regard is that of VAT on the circulation of works of art, subject to a 22% Value Added Tax, the ordinary rate, which, in relation to art, is one of the highest in the world. The national association of Italian art galleries pointed out how this distances many exchanges from the national territory and favors tax evasion and avoidance. It therefore proposed an alignment with the regime of other countries, which apply a 10% rate. Many scholars believe that the measure would also bring benefits to public revenues and political advantages in terms of repercussions, because the art market, if considered in its broad perimeter (framers, blacksmiths, carpenters, transporters, insurers, fitters, communicators, experts, technicians, popularizers, critical interpreters, etc.), is labor intensive.
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