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Italy: New tax incentives for cultural activities and tourism sectors

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Giuliano Foglia


Giovanni d’Ayala Valva

The Italian Government has introduced a new set of rules providing for tax, financial and administrative measures aimed at the protection and promotion of national cultural patrimony and of the tourism industry. Indeed the conversion into law of Law Decree No 83 of May 31 2014 (so called Culture Decree converted into Law No 106 of July 29 2014) is a significant change of gear in certain key areas providing new models of collaboration in financing Italian cultural activities and tourism sectors.

One of the most significant tax related measures is the introduction of a tax credit – dubbed the Art Bonus – to encourage private donations to support culture and arts during fiscal years 2014, 2015 and 2016.

In particular, the Culture Decree grants to resident and non-resident taxpayers (including permanent establishments of non-resident taxpayers) a tax credit for contributions made to maintain, protect and restore Italy's public heritage, to support cultural institutions and public sites or to renovate and expand lyrical symphony foundations and other non-profit cultural institutions. Such tax credit is granted also if the beneficiary of the donation is a "concessionaire".

The tax credit is equal to 65% of the contributions made for tax years 2014 and 2015 and to 50% of the contributions made for tax year 2016.

The maximum amount of tax credit granted to individuals and non-commercial entities is capped at 15% of their annual taxable income. For companies and other taxpayers engaged in an entrepreneurial activity, the tax credit is capped at 0.5% of their annual revenues.

The tax credit must be equally spread over three fiscal years and can be used, also through the "compensation procedure", without the ordinary limitation provided by the Italian tax laws.

In addition, to further attract foreign investments in Italy, the Culture Decree provides for tax measures to boost films production in Italy.

In particular, the Culture Decree: (i) confirms the tax relief available at 25% of the production costs; and (ii) raises from €5 million ($6.4 million) to €10 million the maximum amount of tax credit available to be granted to film producers, distributors and technicians for costs incurred in Italy. The overall tax credit available for the cinema and audiovisual industry is also increased from €110 million annually to €115 million.

Finally, to enforce the competitiveness of the Italian tourism sector, the Culture Decree introduces, for fiscal years 2014, 2015 and 2016 and up to certain amounts, a tax credit of 30% of the expenses incurred (i) in the modernisation and digitalisation of the tourism services (for example, expenses related to wi-fi services, optimisation of mobile communications website, marketing and online advertisement), and (ii) in the renovation and improvement of existing hotels (an upcoming Ministerial Decree will set forth the admission procedures).

Giuliano Foglia (foglia@virtax.it) and Giovanni d'Ayala Valva (dayala@virtax.it)

Tremonti Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome); +39 02 58313707 (Milan)

Website: www.virtax.it

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