Selling online: taxation for artists and artisans

Nov 10, 2021 | Blog

On October 20th I had a very interesting chat on my Instagram profile (@magaly_arocha) with Elisa Antolini (@studio_antolini) accountant and statutory auditor who manages to explain taxation in a simple way.

You can watch the live broadcast here https://www.instagram.com/tv/CVQGUT3Itfx/?utm_source=ig_web_copy_link

Are you an artist, a craftsman or a freelancer and… 

  • Do you have doubts about the tax treatment of your business?
  • Do you want to sell online but don’t understand much about taxes?
  • Are you planning to open an e-commerce?
  • Don’t know which regime is best for you?

I recommend you read this article: you will find the answers to your doubts.

How to find the right professional?

There is no right or wrong one a priori, but the one best suited to our needs, dimensions and specific situations.

Finding the right path for taxation

Difference between artist and craftsman

The distinction between artist and craftsman on a fiscal level is subtle.

If you are an artist, but you produce and sell in series continuously and monetize, from a tax and contribution point of view you may have to be classified as an artisan.

VAT number: when is it necessary to have it?

The artist who creates 3 works in a year and sells them does not need to open a VAT number. These are occasional sales.

But if it starts to have a great demand and sales increase, the VAT number must be opened, because the activity has gone from occasional to habitual. 

What is the exact number of sales or receipts that determines the need to open a VAT number? 

There is no precise number, each situation must be contextualized to define whether it is habitual or not.

Attention: It’s not so much how much you sell, but the fact that you do it in a repeated and organized way

Difference between occasionality and habituality

The habit: If you have an organized sales structure, be it a physical store or an online shop (open by nature 24 hours a day, 7 days a week): for example a 24 hour shop site even if no one buys the products, the intention is to have a continuous and organized activity. There is an intention to sell. 

If you sell or offer for sale on an online platform, therefore, you are no longer occasional and therefore you need to open your VAT number. The threshold of €5,000 in sales, in this sense, does not exist.

Artist’s VAT number

There is no VAT number for an artist for the tax authorities and INPS. The Ateco code for artists requires registration with the separate INPS management.

Social security contributions (for pension, maternity, sickness) are in percentages. An expensive percentage but which allows, if there are drops in turnover (covid, crisis) and you don’t work that year, to reduce or eliminate contributions.

Always remember that if you start making mass-produced products, at that point the framework changes and you need to understand if the activity is of an artisanal/commercial type.

The VAT number evolves with the person. You can start as an artist and then if you find a market for your products and a large clientele then you need to review your position.

There is no double contribution exemption for separate management. The artist with separate management who is also an employee always pays contributions both as an employee and as an artist.

The separately managed artist who is also an employee pays contributions both as an employee and as an artist.

The artisans

️Those who work as an employee but do artisanal work and have a VAT number as an artisan cannot register in the register of artisans if the latter provides for exclusivity or prevalence.

️For INPS purposes, a full-time employee who pays full contributions or part-time work greater than 50% and opens a craft business will not pay contributions as a craftsman: the principle of exemption from double contributions applies but be careful, the specific case must be addressed together with the INPS of the territorially competent office before opening.

️The craftsman with a flat-rate regime can sell online but must ask the Municipality in which the business is based whether to sell online he must open another Ateco code (in Bologna another code is required) and complete the relevant S.C.I.A., i.e. the “certified notification of start of activity”, at the one-stop shop for businesses (Suap).

Artisans enjoy exemption from double contributions

Sales on platforms and market places (Etsy, Amazon, Saatchi art)

Anyone who sells on the platforms must have a VAT number: the same rules apply on the marketplaces as on your own site.

Since 2019, all marketplaces are required to communicate all sellers’ tax codes and receipts to the tax agency, so be careful not to regularize your position.

The costs to open the VAT number 

If you are an artist registered in separate management

Cost of the accountant who carries out the practice

  • Taxes and contributions that will be paid starting from the following year

If you are a craftsman or trader you have immediate costs: 

the rights of registration in the business register; 

  • The first year’s chamber fees that you pay immediately;
  • The cost of the accountant
  • INPS quarterly contributions.

Which body establishes sanctions in case of checks if you are not regular?

  • INPS (National Institute of Social Security)
  • Revenue Agency
  • Business register (chamber law) 
  • INAIL (National Institute for Insurance against Accidents at Work)
  • SUAP (One Stop Shop for Productive Activities)

Each institution does its own analysis. 

Tip: ask the offices for information on your specific situation, because every situation can be different.

Exhibitions 

To participate and sell at fairs you need a VAT number even if trade fair organizations often do not require it.

Can the prices of paintings in exhibitions be displayed without VAT number?

YES: if the event is occasional and does not take place in the artisan world. The ideal is that there is the participation of other artists, interviews, conferences, public meetings, in order to create real cultural value that goes beyond the mere sales strategy, because otherwise it would fall back into the case of the shop and would require a VAT number

NO: If it becomes a regular activity then you need a VAT number. 

Concessionary regimes

For artists who have a VAT number but who don’t sell much. 

Flat rate

It is a simple regime for those who do not have a VAT number or do another job: it allows you to have complete taxation without too much bureaucracy.

The only disadvantage is that expenses (e.g. medical, dependent children, renovations, etc.) cannot be deducted from the income deriving from this scheme.

It is best to contact accountants registered with the Order to understand your situation

Sell online courses

Teaching and training are activities that fall under the separate regime. One to one courses or consultations remain in the artist’s sphere.

To sell video courses, kits and webinars, you need a VAT number and mandatory registration with the Chamber of Commerce.

Invoices: When to issue them?

If you are a craftsman who only sells online, issuing an invoice is not mandatory. You can record the sale in the consideration book.

If it is a professional (accountant or social media manager for example) who sells online consultancy, he must issue the invoice.

Are you an artist and want to open an online shop? Here are the steps to follow

If the site is not a simple showcase, but a shop, also remember to follow the legal (non-tax) obligations relating to:

  • ️Privacy (what data do you collect from users and how do you process them)
  • Cookie Banner (declaration made when the site is opened regarding the presence of cookies)
  • Conditions of sale and management of purchase flow and bank data protection
  • Obligation to indicate VAT number in the website

Bonus:Ask the productive activities office of the municipality where your business is based if you need an Ateco code for online sales. 

The Ateco Code is an alphanumeric combination, which identifies an economic activity. Letters and numbers have different values.

The Ateco Code is essential for opening a new VAT number. When a new VAT number is opened, the Revenue Agency is notified, specifying the type of activity that will be carried out. 

Before acting, please: talk to your accountant!

If you have any doubts, you can contact Dr. Elisa Antolini who will kindly answer you @studio_antolini

Did you find this article useful? Do you have any suggestions?

If you want to share your opinion on the matter, I will be happy to read it!