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Italy: Taxes and culture—the Scotti Law
The Internattonaljournal
of Museum Management and Curatorship (1983), 2, 279-282
Italy: Taxes and Culture-the
Scotti Law
H. LEE BIMM
In August of 1982 the Scotti Law, named after the then Minister of Culture, came into being. Preparatory work was instigated in 1980 by the Ministry of Finance which set up a joint commission with the Ministry of Culture to study and examine the effects existing laws had had on cultural properties and cultural activities in Italy. There were in essence three problems to confront: restoration, conservation and preservation of structures considered to be of the national heritage; the protection of objects considered part of the national heritage, and the encouragement of those activities considered part of the national culture. The changes and modifications in the Scotti Law, principally in the fields of income and inheritance taxes, attempt to deal with them.
Income
Taxes
Real estate recognized by the nation as of historical or artistic interest would no longer be classified as ‘luxury’. It was felt that many villas, palaces, and castles were abandoned by their owners because of lack of funds for upkeep. Accordingly these properties are now placed in the lowest category and their income is calculated at 50 per cent. Furthermore, buildings whose premises are completely given over to cultural activities are excluded from all taxes. These would be museums, galleries, libraries, archives, cinema clubs, open to the public and operated by the state, public entities, public and private institutions and foundations. Such organizations must be non-profit and have authorization from the Ministry of Culture. Parks and gardens open to the public are also included in the list. As an aid to owners of properties considered part of the national heritage, liberalization was made in the case of expenses incurred for maintenance, conservation and restoration. These were, heretofore, deductible for those properties already qualifying under previous laws. Now, also, these expenses can be claimed if there are certificates of authorization from both the local office of the Ministry and a technical consultant from the local land office. Perhaps the greatest departure in the new law was the proviso that financial contributions to recognized cultural enterprises could be used as deductions from income tax. More specifically these would be donations to state, public entities and institutions, foundations and associations recognized by the state as being non-profit, involved in developing and promoting study, research and documentation of relevant cultural and artistic values. The .purposes of the donations would be for purchase, maintenance, conservation, restoration of cultural properties as outlined in previous relevant laws, or for the organization of shows and exhibitions of those activities heretofore outlined, as well as study and research projects of the same. Such donations can be eligible for tax deduction only if they are applied for those purposes authorized by the Ministry of Culture with the approval of the Comitato de1 Settore. The Ministry will determine the period of time in which the donor must make the 026~4779/83/030279-04sO3.00:(‘m1983Butterworth & Co (Publishers) Ltd
Italy:
280
Taxrs and Culture-the
Srotti Las
said funds available and it will check that the funds are used for the purposes originally intended. Another innovation was the possibility to pav income taxes by donation of real property or cultural objects. The claimant must file a detailed and documented description of the items of the donation to the Ministry. The Ministry will study the individual items to see if they are of interest to the state; in the case of works of living artists or works less than 50 years old, these will be examined by the Comitato de1 Settore of the Ministry which will announce their acquisition. The Comitato de1 Settore is composed of seven members, plus a director general, selected by the Minister of Culture from the National Council of the Ministry of Culture (whose members serve for four years). This special committee consists of representatives from the regions, towns and cities, universities, an administrative official from the hlinistry-, and two experts on art-one of whom is a specialist on religious art. The valuation and the conditions of acceptance of such a donation are decided by a special commission appointed by- the Minister which he, or his delegate, will chair. The members consist of two representatives from his Ministry, two from the Ministry of Finance and one from the Ministry of Treasury. Upon receipt of the proposal the Minister will seek the opinions of those public bodies in whose territories the cultural properties are located. Upon their request, a member of their body may be appointed to the commission. The donor may elect to speak, or have his delegate speak, before the commission, at which time he may retract his proposal, or within fifteen days after his appearance before the commission. Regarding the donation, the Minister, in concert with the Minister of Finance, will publish a decree within sis months from the presentation of proposal of donation and notifv the donor who will have two months to reply. Upon acceptance of the decree, he will have thirty days to transfer the properties to the state. The transfer of real property must be accompanied by a certificate from the title office that the property is free of all liens and encumbrances. After the transfer has taken place, the donor may apply for a reimbursement of taxes paid during the period from the proposal of donation to the actual transfer of the cultural properties. Should the value of the donation be more than the tax for the year in which the donation is affected, the difference can be applied to taxes for a subsequent four-year period. If, at the end of a total five-year period, a difference still remains, the taxpayer may obtain a reimbursement from the state.
Inheritance
Taxes
The committee was guided by the experience of the French Government in dealing with the Pablo Picasso estate. It has been decided that works which represent national historical, artistic and documentary interest are excluded from inheritance taxes. More specifically this would cover those already described in pre-existing laws and would therefore cover those items of archaeology, palaeontologp, prehistorp and primitive cultures, numismatics, manuscripts, autographs, correspondence, incunabola, books, prints, engravings, paintings, sculpture, and other original works of art that considered singularly or together are of a rarity and quality. Also included are archives and individual documents declared to be of noteworthy historical interest. The heir is required to present to the Ministry a detailed and documented list of each item which he feels is excludable from inheritance tax. The Ministry will check the list and prepare a certificate of attestation which the heir will present to the registry office where the estate has been filed. The registry office will then submit its necessary papers to the Ministry. The Comitato de1 Settore will study the claim and within thirty days give its findings to the registry office, with details if there is a reimbursement to be made.
H. LEE BIMM
281
constructed in 9 AD by the Roman Senate in honour of the Emperor Augustus. One of two panels recently restored by Italgas, such
Panel from the Arch of Peace, Rome, a donation
would be, under
the Scotti
Law, deductible
from taxable
income.
In the case of real estate considered to be of national historical, artistic, military, architectural or monumental interest, the inheritance taxes are reduced by 50 per cent. The procedure is the same as for cultural objects. Again, as in the situation with income taxes, the heir may donate cultural properties to the state to pay inheritance taxes. The procedure would be exactly the same. The only difference would arise if the value of the donation were greater than the inheritance tax; the state would then retain the whole sum, and make no reimbursement to the taxpayer. Purchase
Tax
The disparity years and 18 elderly living The new law
that existed in the Value Added Tax (IV.4) of 36 per cent on works over 50 per cent on works under 50 years old was considered a particular hardship on artists. It also led to many clandestine transactions, to avoid paying the high tax. fixes a flat rate of 18 per cent on all purchases.
Italy:
282 Transfer Transfer national
The
Taxes and Culture-the
Scotti Law
Taxes taxes on real estate were lowered historic, artistic and archaeological
Ministry
50 per cent for those properties considered interest, as outlined in the previous laws.
of
as Organizer
Under. the law, for the first time, funds are set aside in the ministerial budget for the organizing by the Ministry itself of exhibitions and shows it considers of particular national and international relevance. Before this, exhibitions and shows were handled only through public museums and galleries, often, but not necessarily, with the close collaboration and supervision of the Ministry.
of Museum Management and Curatorship (1983), 2, 279-282
Italy: Taxes and Culture-the
Scotti Law
H. LEE BIMM
In August of 1982 the Scotti Law, named after the then Minister of Culture, came into being. Preparatory work was instigated in 1980 by the Ministry of Finance which set up a joint commission with the Ministry of Culture to study and examine the effects existing laws had had on cultural properties and cultural activities in Italy. There were in essence three problems to confront: restoration, conservation and preservation of structures considered to be of the national heritage; the protection of objects considered part of the national heritage, and the encouragement of those activities considered part of the national culture. The changes and modifications in the Scotti Law, principally in the fields of income and inheritance taxes, attempt to deal with them.
Income
Taxes
Real estate recognized by the nation as of historical or artistic interest would no longer be classified as ‘luxury’. It was felt that many villas, palaces, and castles were abandoned by their owners because of lack of funds for upkeep. Accordingly these properties are now placed in the lowest category and their income is calculated at 50 per cent. Furthermore, buildings whose premises are completely given over to cultural activities are excluded from all taxes. These would be museums, galleries, libraries, archives, cinema clubs, open to the public and operated by the state, public entities, public and private institutions and foundations. Such organizations must be non-profit and have authorization from the Ministry of Culture. Parks and gardens open to the public are also included in the list. As an aid to owners of properties considered part of the national heritage, liberalization was made in the case of expenses incurred for maintenance, conservation and restoration. These were, heretofore, deductible for those properties already qualifying under previous laws. Now, also, these expenses can be claimed if there are certificates of authorization from both the local office of the Ministry and a technical consultant from the local land office. Perhaps the greatest departure in the new law was the proviso that financial contributions to recognized cultural enterprises could be used as deductions from income tax. More specifically these would be donations to state, public entities and institutions, foundations and associations recognized by the state as being non-profit, involved in developing and promoting study, research and documentation of relevant cultural and artistic values. The .purposes of the donations would be for purchase, maintenance, conservation, restoration of cultural properties as outlined in previous relevant laws, or for the organization of shows and exhibitions of those activities heretofore outlined, as well as study and research projects of the same. Such donations can be eligible for tax deduction only if they are applied for those purposes authorized by the Ministry of Culture with the approval of the Comitato de1 Settore. The Ministry will determine the period of time in which the donor must make the 026~4779/83/030279-04sO3.00:(‘m1983Butterworth & Co (Publishers) Ltd
Italy:
280
Taxrs and Culture-the
Srotti Las
said funds available and it will check that the funds are used for the purposes originally intended. Another innovation was the possibility to pav income taxes by donation of real property or cultural objects. The claimant must file a detailed and documented description of the items of the donation to the Ministry. The Ministry will study the individual items to see if they are of interest to the state; in the case of works of living artists or works less than 50 years old, these will be examined by the Comitato de1 Settore of the Ministry which will announce their acquisition. The Comitato de1 Settore is composed of seven members, plus a director general, selected by the Minister of Culture from the National Council of the Ministry of Culture (whose members serve for four years). This special committee consists of representatives from the regions, towns and cities, universities, an administrative official from the hlinistry-, and two experts on art-one of whom is a specialist on religious art. The valuation and the conditions of acceptance of such a donation are decided by a special commission appointed by- the Minister which he, or his delegate, will chair. The members consist of two representatives from his Ministry, two from the Ministry of Finance and one from the Ministry of Treasury. Upon receipt of the proposal the Minister will seek the opinions of those public bodies in whose territories the cultural properties are located. Upon their request, a member of their body may be appointed to the commission. The donor may elect to speak, or have his delegate speak, before the commission, at which time he may retract his proposal, or within fifteen days after his appearance before the commission. Regarding the donation, the Minister, in concert with the Minister of Finance, will publish a decree within sis months from the presentation of proposal of donation and notifv the donor who will have two months to reply. Upon acceptance of the decree, he will have thirty days to transfer the properties to the state. The transfer of real property must be accompanied by a certificate from the title office that the property is free of all liens and encumbrances. After the transfer has taken place, the donor may apply for a reimbursement of taxes paid during the period from the proposal of donation to the actual transfer of the cultural properties. Should the value of the donation be more than the tax for the year in which the donation is affected, the difference can be applied to taxes for a subsequent four-year period. If, at the end of a total five-year period, a difference still remains, the taxpayer may obtain a reimbursement from the state.
Inheritance
Taxes
The committee was guided by the experience of the French Government in dealing with the Pablo Picasso estate. It has been decided that works which represent national historical, artistic and documentary interest are excluded from inheritance taxes. More specifically this would cover those already described in pre-existing laws and would therefore cover those items of archaeology, palaeontologp, prehistorp and primitive cultures, numismatics, manuscripts, autographs, correspondence, incunabola, books, prints, engravings, paintings, sculpture, and other original works of art that considered singularly or together are of a rarity and quality. Also included are archives and individual documents declared to be of noteworthy historical interest. The heir is required to present to the Ministry a detailed and documented list of each item which he feels is excludable from inheritance tax. The Ministry will check the list and prepare a certificate of attestation which the heir will present to the registry office where the estate has been filed. The registry office will then submit its necessary papers to the Ministry. The Comitato de1 Settore will study the claim and within thirty days give its findings to the registry office, with details if there is a reimbursement to be made.
H. LEE BIMM
281
constructed in 9 AD by the Roman Senate in honour of the Emperor Augustus. One of two panels recently restored by Italgas, such
Panel from the Arch of Peace, Rome, a donation
would be, under
the Scotti
Law, deductible
from taxable
income.
In the case of real estate considered to be of national historical, artistic, military, architectural or monumental interest, the inheritance taxes are reduced by 50 per cent. The procedure is the same as for cultural objects. Again, as in the situation with income taxes, the heir may donate cultural properties to the state to pay inheritance taxes. The procedure would be exactly the same. The only difference would arise if the value of the donation were greater than the inheritance tax; the state would then retain the whole sum, and make no reimbursement to the taxpayer. Purchase
Tax
The disparity years and 18 elderly living The new law
that existed in the Value Added Tax (IV.4) of 36 per cent on works over 50 per cent on works under 50 years old was considered a particular hardship on artists. It also led to many clandestine transactions, to avoid paying the high tax. fixes a flat rate of 18 per cent on all purchases.
Italy:
282 Transfer Transfer national
The
Taxes and Culture-the
Scotti Law
Taxes taxes on real estate were lowered historic, artistic and archaeological
Ministry
50 per cent for those properties considered interest, as outlined in the previous laws.
of
as Organizer
Under. the law, for the first time, funds are set aside in the ministerial budget for the organizing by the Ministry itself of exhibitions and shows it considers of particular national and international relevance. Before this, exhibitions and shows were handled only through public museums and galleries, often, but not necessarily, with the close collaboration and supervision of the Ministry.