Good news for the funding of the cultural sector. A decision of the Revenue Agency has extended the application field of the normative on tax relief in favour of companies that provide funding for the art sector.
The identity of the institutions involved in this matter is not known but this does not invalidate the importance of the evaluations that can be drawn from this episode. A firm intends to supply money to a non-profit mixed public-private foundation. The foundation’s purpose is to create a cultural space and organize important exhibitions at national and international level.
The firm in question, before proceeding to fund the money, has decided to ask the Revenue Agency for an opinion regarding the possibility of accessing the normative for the tax relief planned for this case.
The doubt rises from the fact that the foundation results to be qualified as a commercial institution. In theory, the fact of being non-profit, which is typical of foundations, does not conflict with the commercial character of the institution. This means that non-profit institutions can deal in commercial activities as long as they are subjected to the bond of non-distribution of profits: the earnings relative to such activities have to be invested for institutional purposes. Despite this theoretical statement, in practice there were still many doubts about the applicability of the benefits reserved to non-profit institutions with commercial characteristics. The decision of the Revenue Agency has solved the matter.
The decision published quotes all the normative references on the basis of which it has been formulated, retracing among the complex multitude of laws the motivations in favour of a positive opinion.
In synthesis it expresses clearly that:
- deductibility from business income is taken into account in favour of non-profit institutions for the organization of shows and exhibitions (Art. 100 paragraph 2 letter f of the TUIR);
- the concept of non-profit does not coincide with the concept of non-commerciality (resolution n.299/E of 2007).
On the basis of this decision, what was previously provided for expressively only for non-profit organizations and associations, has now been extended also to other non-profit bodies.
The text published by the Normative and Legal Department of the Agency Central Management also states that exhibitions have to be authorized “by the Ministry for cultural heritage and activities, which has to approve the expenditure prevision and the final balance. […] Liberal outpayments, which are not integrally used within the terms assigned, that is not used in conformity with their destination, flow totally to the State revenue”.
Now it is up to regional directorates to ensure that the principles expressed in the decision are applied with uniformity. Hopefully this intervention will favour an increase in private contributions to the cultural sector, contributes that prove to be essential for the financial support of the sector, given the constant shortage of public resources.
The deductibility of donations from the profit income is an important instrument to incentivize the collaboration between public and private in this sector. It entails finding a new balance in the composition of public and private resources that finance culture. Indeed this way, on the one hand the State gives up a share of tax receipts, on the other it sees the increase in private funding to the sector, otherwise totally chargeable to public bodies.
Studies carried out in countries where the practice of private funding is definitely better-established, such as the United States, have shown the triggering of a vicious cycle. Indeed, we could say that the variation of resources destined to culture is exclusively in their composition (private resources increase thanks to incentives, public funding falls proportionally). On the other hand it has been proven that in presence of tax relief, private resources increase more than proportionally. Therefore, it is an instrument that could benefit significantly the participation of privates, which is still very limited in Italy.

(translated by Giorgina Arcuri)