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Livigno enjoys a particular tax status as duty-free area. Italian VAT is not paid. Although tax advantages for Livigno were recorded as far back as the sixteenth century, the current VAT exemption was introduced by the Austro-Hungarian Empire around 1840. It then was confirmed by the Kingdom of Italy around 1910, then by the Italian Republic and the EEC in 1960.
The reason for such a status is justified by the difficulty in reaching Livigno during winter times, for up to six months a year, and the century-long history of poverty in the region. The various states, therefore, wanted to make sure people would have an incentive to continue living in the area (so that they could still claim it territorially); at the same time, the tax income from Livigno was likely negligible for any state involved.
Even nowadays, only three roads lead to the town, two from Switzerland, through the Forcola pass (2315 m, open in summer only) and the Munt La Schera tunnel, and one from Italy, through the Foscagno pass (2291 m). However, given the astonishing increase in wealth of the recent decades, the improvement of roads and the widespread availability of cars, many outsiders see this exemption as an unjustified privilege.
Livigno once made a living from agriculture and a little commerce. Smuggling was widespread but not socially deprecated, being often the only way to survive in such a harsh environment. This generated some prejudice in the remaining population of Valtellina, with the local proverb gent de cunfin, tücc' lader o asesin, or "border people, all thieves or murderers".
Nowadays Livigno is a very rich area, and the main activities are linked to tourism, especially as a ski resort. Many inhabitants of Valtellina visit once in a while to buy goods at substantially lower prices, especially tax-free gasoline, sometimes from as far as Sondrio. There is a maximum quota of goods that one can take back to Valtellina, but controls are usually slack due to the volume of traffic.
Despite its little size, there are many cultural organizations in Livigno. These are:
- Local street band (Corpo Musicale)
- Folk group (Gruppo folkloristico)
- Monteneve Chorus
- Carcent theatre group 
- A few rock/pop bands, the most well-known being Metal Dreit 
The mass-media sector is quite developed as well. In the 80s a local radio, Radio Alteuropa, used broadcast from Livigno, covering up to a wide part of the neighbouring Valtellina valley. The local monthly newspaper, Al Restel, , was founded in the same period and it is still published today.
Nowadays, most of information is given by a TV channel, TeleMonteNeve , which broadcasts the City Council's meetings, a news report 3 times a week and other information both for residents and for tourists. New media is also growing. An example is Senzaiva, an on-line cultural magazine. Its name means "without VAT", referring to the special duty-free status of Livigno. 
The local dialect is being categorized in a dictionary, funded by the local administration.
Sport also plays an important role. In Livigno there are nearly 20 sport associations, most of them are supported by an association called Sporting Club . Many young athletes often end up with good results in their discipline. (see below)
 Prominent people from Livigno
- Giorgio Rocca, Italian skier (winner of slalom specialty cup in 2006 Alpine Skiing World Cup)
- Gianluigi Galli (better known as Gigi Galli), rally car driver in World Rally Championship
- Daniela Zini, Italian team skier (9th place in 1980 Alpine Skiing World Cup)
- Katia Zini and Mara Zini (bronze medal winners in short track speed skating in 2006 Winter Olympics in Turin)
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