Taxation of Artwork Sales: New Guidelines from the Supreme Court of Cassation
In the context of tax regulations, the systematic sale of artworks may constitute a business activity and generate taxable income, as established by ordinance no. 1603 of January 16, 2024, from the Supreme Court of Cassation. This decision follows the jurisprudential trend that continuous activity is not necessary to determine the entrepreneurial nature of sales; factors such as the number of transactions, significant amounts, the variety of goods sold, and the number of buyers are relevant.
The case in question involved an art dealer who had received two tax assessment notices from the Revenue Agency. The Agency argued that the individual qualified as a commercial entrepreneur, thus making the proceeds from the sales subject to direct taxes and VAT. In contrast, the taxpayer defended himself by claiming to be merely a private collector without an independent organization, and that his sales represented simply the disposal of part of his personal estate.
The Supreme Court of Cassation rejected the taxpayer’s arguments, reaffirming a distinction already made in the judgment no. 6874/2023 between the civil and fiscal definitions of “commercial entrepreneur.” For tax purposes, the essential organization required by civil law is not necessary; “habitual professionalism” of the economic activity suffices.
Articles 55 of the TUIR (Consolidated Income Tax Act) and 4 of the VAT decree clarify that habitual professionalism, even if not exclusive, of the activities listed in article 2195 of the civil code, meets the requirement for entrepreneurial qualification for tax purposes, without the need for an independent organization of means.
Furthermore, the Supreme Court of Cassation outlined a tripartition between art dealer, occasional speculator, and pure collector. The dealer, who acts professionally and habitually even without an organized business structure, is subject to direct taxes, VAT, and in some cases, IRAP. The occasional speculator, who buys and sells artworks sporadically for profit, generates different incomes, not falling within the scope of habitual entrepreneurial activities. Lastly, the pure collector, who purchases artworks for personal interest without the intention of resale, is not subject to taxation on such transfers, lacking the habitual and speculative intent requirements.
The judgment emphasizes the importance of analyzing the specific context to determine the nature of the activity, highlighting that even the mode of reinvesting profits (in goods rather than cash) does not alter the substance of the capital gain. This jurisprudential clarification provides a more defined framework for distinguishing activities in the art market, awaiting further legislative directives for complete regulation of the matter.