Italy/ 5.1 General legislation  

5.1.5 Tax laws

Legislation to foster support for the cultural sector from private donors was introduced in the 1980s, when Law 582/82 allowed the total deduction from taxable income of all donations and sponsorship given by individuals and corporations, as well as of expenditures for the restoration of privately owned built heritage: which led to a "boom" in capital investments in the restoration of palaces, castles, and historical gardens. The amount of such incentives was, however, progressively and significantly reduced by subsequent budget laws, in particular by the Budget Law for 1992, when the tax deductions (more favourable for citizens in the higher tax brackets) were transformed into tax credits, within the limit of 19% of the amount of the donation, equal for all citizens, non-profit organisations and companies.

After nearly twenty years, private donations, if earmarked to a list of cultural institutions drawn up by the Ministry for Heritage, became again totally tax deductible – albeit only for companies - thanks to Law 342/2000: however, the law establishes a ceiling of 52 million EUR for the potential loss of revenue for the state, which cannot be exceeded. Bureaucratic strings, though, may have affected the law's implementation, which yielded in 2001 much less than expected: only 16 million EUR. The amount of such donations increased in the following years, reaching a peak in 2008, and subsequently decreasing as a result of the economic crisis (see chapter 6.3). The cuts affecting donations by private individuals and non-profit organisations in the same years have been even more drastic.

The next step envisaged by the present government to raise the amount of private contributions for culture is to make tax incentives again more appealing for individuals and non-profit organisations. It is estimated that – by following the US model, where around 75% of private donations are given by individuals – a higher tax relief could significantly increase private support to the cultural field. However, an agreement between the Ministry for Heritage and the Ministry for the Economy – historically always opposing such measures – although sought by previous governments, has been until now out of reach for any kind of political majority.

It should be added that substantial fiscal incentives – in the form of tax credits and tax shelters – are, at least temporary, in force for investments in the cinema industry (see chapter 5.3.6).

Finally, as shown in Table 4, the VAT rate on cultural goods is generally lower than the usual rate, notably for books and newspapers. However, for the category of recorded music, VHS and DVDs, the much needed VAT reduction, to foster the week demand by Italian consumers, has not been possible for the time being, as an agreement at EU level could not be found, yet.

Table 4:     VAT rate of cultural goods and activities, 2010

Source: elaboration by Associazione per l'Economia della Cultura.

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