Sale of artworks: taxation even with one deal

by Francesco Daniele Di Donato

In Judgment No. 19363 of 15 July 2024, the Court of Cassation, regarding the sale of art works, confirmed the tax relevance of the following categories of seller (art dealer, occasional speculator and the art collector) in accordance with the specific features of the transaction.

The case
The Italian tax authority issued a tax assessment notice, for higher income pursuant to Article 67 of the Income Tax Code (TUIR), against a taxpayer who had sold a Monet painting for €6,500,000 in 2013, purchased seven years earlier for €1,443,752.

The taxpayer appealed against the tax assessment, pointing out that the sale of the painting was the only transaction carried out in the reference year due to the need to increase his private collection. The lack of habituality allowed his qualification as a private collector. 

However, the favourable first instance ruling was completely reviewed by the second instance tax judge, who qualified the taxpayer as an occasional speculator, observing that he had also purchased and sold numerous other works through world-class auction houses in the years following and prior to 2013.

The taxpayer appealed to the Supreme Court against the second instance ruling, claiming that a private collector can sell artworks he owns, both to cover conservation costs and to increase his collection.

The decision
The Court of Cassation confirmed the second instance judgment and rejected the appeal.

In particular, the Court considered that the appeal judge had correctly qualified the taxpayer as a speculator and therefore applied Article 67 of the TUIR, according to the following categories of seller in the art business:

  • Art dealer, who trades professionally in art works;
  • Occasional speculator, who occasionally purchases art works in order to resell them for profit;
  • Collector, who purchases for cultural purposes without the intention of generating a capital gain.

However, the classification described in this judgment results in uncertainty as to the qualification of the seller and the intention realised by the transaction.