Our Head of ARTE Generali Germany Iris Handke takes you to the Alte Pinakothek in Munich, to speak about ARTE Generali's mission to support art collectors, protecting and preserving art and culture and innovative, digital insurance solutions. 

PS: Save The Date! ARTE Generali booth at the Exponatec Cologne!

The ARTE Generali team hopes to welcome you at our booth from 17 to 19 November at our stand A051 in hall 2.2 at the Exponatec Cologne, Cologne/Messe. Come and learn about our innovative insurance solutions powered by innovative technological tools to address your specific needs!

When comparing traditional art with digital art, one should focus on the following three fundamental elements:


The art piece itself:

• Traditional art: exists in space and is intrinsically tangible. From a fiscal standpoint, it is possible to identify the jurisdiction under which an art piece falls
• Digital art: created using data, which makes it visible on a screen, yet there may not necessarily be a physical and tangible component. It is complex to identify the jurisdiction under which a digital artwork falls, since the data used in the blockchain technology is stored on decentralized servers which potentially may not be located in single and specific jurisdictions.

The artist: one or more physical persons (both in the case of digital and traditional art)

• Traditional art: the artist is physically present in a specific jurisdiction during the art piece’s creation and immediately after the artwork’s completion
• Digital art: the artist is a physical person, yet the data are created and then uploaded on online servers which may be located in a different jurisdiction. This inevitably leads to uncertain fiscal implications.

Exhibiting the art piece:

• Traditional art: the artwork is exhibited in a tangible location. Should the artwork be sold, it will be physically transferred to another location with all associated fiscal implications (i.e. VAT, import duties)
• Digital art: the art piece is exhibited in a virtual space through digital means with a potentially uncertain geographic localization. The lack of VAT implications is imputable to the fact that these artworks are not seen as comparable to physical ones, rather than to the absence of the art piece’s “physical movement” (see reply to Consultation of September 2nd 2020 n.303 related to a similar circumstance in which a set of sculptures were created by an artist via 3D printing).
• Furthermore, fiscal implications differ depending on the subject involved in the NFT sale or purchase.

• The art dealer: individual who professionally and systematically operates in the trade of artworks.
• Reason of purchase: generate profits from the increase over time in the artworks’ value.
• Fiscal implications in Italy: profits counted as business income and therefore VAT registration is mandatory.
• The speculator: individual who sporadically purchases artworks guided by the lucrative aim of reselling them for a profit.
• Reason of purchase: generating a profit, however the purchase or sale of an artwork occurs occasionally, mostly where there is the potential for significant profit margins.
• Fiscal implications in Italy: speculator may generate different types of income (e.g. capital gains on sale of artwork) leading to an economic return. However, these subjects are not required to register themselves for VAT purposes.
• The collector: individual who buys artworks led by passion, interest in culture and desire of enjoying the beauty of purchased artworks. Artworks may be sold for pleasure and not for profit.
• Fiscal implications in Italy: none.

Potential fiscal implications tied to NFTs from their creation, to their sale, to subsequent resales (phenomenon also referred to as “flipping”):

• Creation: event is not taxable. The artist creates the artwork which is then associated with an NFT.
• Sale: event is subject to taxation. By selling the artwork, the artist creates an income. The artist is sold using cryptocurrencies instead of traditional currencies. In Italy, the amount in cryptocurrencies earned from the sale must be converted into Euros for tax statement purposes.

The transaction, transfer of ownership and amount paid for the NFT are recorded on the blockchain’s ledger every time a private individual or a company purchases an NFT. The system’s transparency allows to identify the price for which the artpiece was traded in every transaction. Should a private client purchase an NFT artwork, he or she is not subject to taxation but if another subject purchases it there may be different fiscal implications.

For what concerns the reporting obligations tied to NFTs in Italy, there is currently a regulatory gap. For RW bill statement purposes, it is not possible to include NFTs under the “art work” category amongst one’s assets. However, all subjects who are resident in Italy from a fiscal standpoint must compile the RW bill statement as part of the tax declaration process and should indicate:

• Financial assets: investments in foreign assets held by taxpayers residing in Italy
• Assets: all assets held by taxpayers residing in Italy

The risk is for NFTs to be considered as financial assets, due to their similarity to cryptocurrencies, rather than assets. However, since NFTs are not fungible, these should not be treated as currencies or cryptocurrencies. The issue is that NFTs are traded using cryptocurrencies and this inevitably generates a risk profile associated with them. The “Agenzia delle Entrate”, Italian equivalent of the IRS, has yet to release a statement regarding its position on this matter. Lastly, accounting and taxation are closely interconnected. When managing clients who own cryptocurrencies or NFTs, it is necessary to identify them from an accounting standpoint. At present though, ad hoc standards and regulatory frameworks on this subject matter have yet to be introduced.

Filippo Buzzi is Head of Blockchain Desk at Fidinam in Hong Kong. He has 14 years of international experience in the field of accounting, taxation and Finance. Within Fidinam, he established a dedicated team who provides consulting services on the crypto sector.

This year we are proud partners of Fine Arts Paris: come and visit us at this year's edition of Fine Arts Paris (6 - 11 November) at the Carrousel du Louvre and enjoy the unique experience together with art lovers, collectors, dealers and ARTE Generali!

Watch our latest interview with Louis de Bayser, president of our partner Fine Arts Paris: "The partnership with ARTE Generali is interesting because it shows many collectors how to insure, transport delicate, fragile exhibits: these are important questions that collectors need to consider for their collections."

COP26, the UN climate change conference, is just around the corner. And as the world’s nations start to take a long hard look at what they’re doing to the planet, the world’s galleries and artists are doing the same.

The Gallery Climate Coalition is a relatively new endeavour, a charity that wants to help create a greener art world, and will this week be taking a stand at Frieze art fair in London. The coalition includes members like Thomas Dane, Sadie Coles, Kate MacGarry, and Frieze Board director Victoria Siddall, all of whom have been brought together to collectively reduce their carbon emissions by 50% over the next decade. Over 550 international institutions and individuals have joined so far. 

The main ecological issue facing the art world is transportation. In a normal, non-pandemic year, a major fair like Frieze or Art Basel will see collectors flying in from around the world, and art and staff being shipped from galleries in every corner of the planet. The carbon footprint of art fairs alone is massive. Art and ecology charity Julie’s Bicycle released a report in 2021 that found that  the art world’s total global carbon footprint was estimated at 70 million tonnes CO2e per annum based on 2019 activity, with shipping, travel and building use accounting for  52 million tonnes CO2e per annum of that.

You’d be forgiven for thinking that the future of green art would be digital. Surely digital art consumes fewer resources than painting, drawing or sculpture? Those are all physical, actual endeavours that use up wood, paper, cloth and stone - tangible commodities that have tangible environmental repercussions. A Jpeg on the other hand, or any digital image, must have a negligible impact in comparison. Well, you’d be surprised. The recent mania for NFTs has finally seen proper analysis of digital art’s physical footprint, and it’s not pretty. Minting an NFT is a serious environmental drain. The artist and climate activist Joanie Lemercier cancelled the minting of a series of new pieces because ‘my release of 6 CryptoArt works consumed in 10 seconds more electricity than [my] entire studio over the past 2 years.”

The same artist went on to point out that in just one day on the Nifty Gateway online auction platform ‘a single artist burned the equivalent of 49 years of electricity consumption, with an edition of just 2 artworks. CO2 emitted: 103,129 Kg’.

So how do galleries, artists and collectors combat this terrifying trend? One solution is to avoid flying, and use alternative transport - such as trains - to attend events and fairs. That solution is to put into practice in European countries, where the rail network is brilliantly connected and largely super-efficient. Another would be to change the kind of fuel used. Frieze organisers managed to reduce their carbon emissions in 2019 by 60% by changing to a waste vegetable oil called Green-D. And Christie’s, in tandem with the Gallery Climate Coalition, is exploring new sea freight routes as shipping alternatives. Other initiatives have seen a push for ecological packaging, which may not be as pristine or luxurious as the usual art shipping crates, but have far less of an environmental impact.

But the main aim of all this green-focus will be simply to spread awareness, and in the process foster a more mindful, ecological approach to the art world. If every gallery, every artist, and every collector does their bit, the art world will soon start to make the rest of the world’s industries green with ecological envy. 

What does it mean to create and distribute a digital art piece associated with an NFT from a legal standpoint? Which legal framework is used for the creation, circulation, exhibition and management of financial usage rights for digital creations associated with NFTs?

In order to better understand this innovative identification system for digital art creations, it is necessary both to examine the instruments and strategies adopted by conceptual artists to survive in the art market and the identification systems used so far in the sphere of digital art creations.

Classical art has led to the creation of “traditional” categories to qualify and evaluate it such as: uniqueness, authenticity, traceability, property and provenance. Throughout their careers, conceptual artists have challenged these categories. They have subverted the reference system for these values, by creating easily replicable art pieces where the concepts of property, uniqueness and exclusivity are represented by the certificate and not the art piece itself. In the case of digital art, where the lack of a physical and tangible support and the ease with which it may be reproduced are intrinsic characteristics, applying traditional artistic categories is even more complex. Therefore, over time, digital art has developed ways to protect itself by leveraging on alternative solutions, such as certificates with multiple watermarks for a single art piece. Nowadays, applying the NFT technology to easily reproducible art works is a solution gives the opportunity to replace traditional certificates by recording the artwork’s information on the blockchain, while simultaneously conferring uniqueness, exclusivity and non-modifiability to the uploaded artwork.

As the conceptual art world created its own system of rules, the same is progressively happening in the movement of NFT artworks. In the latter, rules are not imposed by the artist on collectors and the art world, but instead by intermediaries who manage NFT platforms on their users. In order to upload their artworks on such platforms, creators have to adhere to the rules. Although at first sight it may seem a non-regulated system, it is actually highly self-regulated and it includes the protection of artists’ rights. All aspects on these platforms are highly contracted and detailed rules support these platforms’ functioning.

Currently, everything is based on self-certifications as described below:

• Uniqueness: determined by the attribution of a distinctive code for the artwork once it is uploaded on the platform. In the case of platforms where the artwork is uploaded directly by the artists, artists have the responsibility not to create two tokens for the same art piece. In this way, an easily reproducible artwork becomes non fungible.

• Originality:  the artist declares and explicitly guarantees that the art pieces uploaded on a platform (e.g. Super Rare) only contain original artistic contents or that the artist is entitled to their use. Should rights be violated, the artwork is removed from the platform. In the case of artworks with illicit provenance, the artist’s account may be suspended and removed from the platform with the consequent deletion of all his or her tabs and concealment of personal resources. However, it should be underlined that not all platforms monitor uploaded and traded contents.

• Authenticity: if the art piece was created by the artist himself, who then uploads it on the platform and recognizes it as his own artwork, the creation of the NFT in itself represents the artist’s signature and proof of authenticity. On the platform Superrare, only artists can upload artworks. If the artwork is uploaded by a third party (e.g. a gallerist), the artwork’s owner must possess the copyright rights for the artwork’s utilization in order to so do.

• Provenance: all transactions are recorded on a public blockchain. At present, these are published on Ethereum but more sustainable alternatives are under development. As all forms of technology, also the blockchain is subject to a rapid evolution with the risk of it becoming obsolete in the future. Should this technology become obsolescent, many artists would lose their artworks with the consequent impossibility of transferring them to more up-to-date solutions. To protect themselves from this risk, artists save copies of their artworks in an Interplanetary File System (IPFS), a decentralized archiving system capable of creating exclusive HASHes, to transfer artworks in high resolution directly to the collector.

The rights tied to NFT artworks should be managed as follows:

Exploitation rights- Copyright: Based on what established by platforms specialized in the trade of NFT artworks, exploitation rights are kept by the artist who only grants the collector (buyer) a very limited set of rights such as the rights to buy, to exchange, to transfer and to use the purchased item. On the contrary, the General Terms and Conditions of these platforms prohibit collectors from using the purchased artworks for commercial purposes or from creating and distributing copies of it.

The General Terms and Conditions are very articulated and include a detailed regulation concerning artists’ moral rights ex lege. It is forbidden for collectors to edit, distort and mutilate the artworks in ways that may damage the artist’s reputation; to hide or misrepresent the artwork’s paternity; to use the artwork’s image for any kind of commercial purposes, to incorporate it in a movie or video and lastly to further tokenize the artwork or to create additional cryptographic tokens which represent the art piece.

Resale right- the payment of royalties is required in the secondary market. The amount of royalties to be paid, which is often improperly labeled as “resale rights” may be decided directly by the artist and it is generally higher than those established in the resale right legislation which in Italy poses a maximum limit of € 12.500,00. In countries where the resale right legislation is in place, the seller is still obliged to pay resale rights to artists in addition to the royalties established by the artists related to their digital artworks.

Commissions and GAS: transaction fees must be payed to cover for the cost of production, for the energy consumed and for the consequent CO2 emissions.

Fiscal aspects: all platforms encourage the payment of taxes. If artists or collectors face issues or are convicted of tax evasion, their personal profiles on these platforms are blocked.

Lastly, whether a collector purchases conceptual art, Cattelan’s banana or the NFT artwork “Stay Free” by Snowden, in the end he or she is buying a certificate. The latter has traditionally been the true protagonist but in the case of NFTs there are actually two protagonists: the certificate and those who manage the art NFT platforms. The conditions with which transactions take place vary from platform to platform and it is fundamental to always consider this.

The lawyer Alessandra Donati is a Professor of Comparative Law at Università degli Studi di Milano Bicocca, teaches Art Law at NABA’s Master in Art Markets and is a lecturer at the Opificio delle Pietre Dure di Firenze’s Master in Restoration of Contemporary art. She works as an Art Law expert at the NCTM Legal Firm and her main areas of competence are contemporary art and all legal aspects tied to it.

Last week, ARTE Generali had the pleasure to visit Frieze London and Frieze Masters. The sheer amount of artworks was impressive! Artists and visitors came from all over the world and the city was buzzing with excitement for art.

Together with our CEO Jean Gazançon we also met some great people and had interesting conversations with the artist Mia Wilkinson and the Director of Frieze Masters Nathan Clements-Gillespie.