Brussels, 14 December 1999
Proposed Directive on artists' resale right -Clarification
The 1996 proposal for a Directive on artists' resale right (see IP/96/219) aims to eliminate distortions of the EU art market and promote creativity, notably by ensuring equal treatment for artists in all Member States. An artist's resale right entitles the author (or after his death his heirs/beneficiaries) to receive a modest but fair percentage of the resale price of a work in the field of visual arts each time it is resold by or through an art-market professional. The resale right is limited to 70 years and therefore mainly concerns 20th century art.
Wouldn't the resale right be just a further tax imposed by Brussels?
No. It is not a tax but a royalty, because the proceeds go to artists not to the state. It ensures that artists (or their estates, for 70 years after their death) benefit from their work when they are sold on and so allow artists to achieve similar treatment to other categories of authors such as writers and composers who receive ongoing copyright royalties. Why should David Hockney, Damien Hirst or Tracey Emin be differently treated from the Spice Girls or Elton John?
In the case of Member States such as the UK, where the resale right does not exist currently, adoption of the Directive would reward artists with a small but fair share in the benefits of their success It therefore has the strong support of artists' associations.
Within the EU as a whole, approximately 250,000 artists would benefit from the resale right. Any suggestion that the resale right would benefit only eight rich families (e.g. Picasso's heirs) is therefore inaccurate.
Would the resale right Directive harm the European art market?
No. The Directive would reduce the rates of resale right currently applicable in most of continental Europe (11 EU Member States plus 3 EEA States currently apply resale rights). Indeed, the major international auction houses are very keen to expand their operations in France, which they will be able to do once France abolishes its hundreds of years old state-backed monopoly of "commissaires-priseurs". At the insistence of the European Commission, the French Government is doing so and draft legislation to this effect is currently being passed by the French Parliament.
Would the resale right Directive drive out the art market to the US and Switzerland?
No. First of all, 85% of EU art sales concern works worth less than €50,000 (in the UK, such sales are handled by South Kensington auction houses), for which it is not commercially viable to transfer sales to third countries.
In the case of sales worth more than €50,000 (handled in the UK by Bond Street auction houses), the rate of resale right applied would be degressive (3% for the portion of the sale price from €50,000.01 to €200,000, 1% for the portion of the sale price from €200,000.01 to €350,000, 0.5% for the portion of the sale price from €350,000.01 to €500,000 and 0.25% for the portion of the sale price exceeding €500,000). Under the current Presidency compromise text, there would be a ceiling of €10,000 on the total amount of resale right payable.
Moreover, the level of resale right under the Directive (maximum 4%, on sales worth up to €50,000, then degressive) is not significant compared with charges levied by auction houses (buyers and sellers premiums) which can make up to a total of 25% on the sale of a work of art. When the major international auction houses increased in 1992 and 1993 their buyers premium from 10% to 15% on works up to £30,000, there was apparently no transfer of sales from the UK to other countries.
There is no evidence sales are being transferred from Germany (which currently applies a 5 % resale right) to Switzerland (its neighbour). Expertise and specialisation of different market places must be taken into account. Burdensome import procedures and capital gains tax requirements in certain third countries can also act as a disincentive to transfers of sales to non-EU countries.
Would the resale right Directive not cost thousands of jobs, for example in the London auction houses?
No, because only a very small proportion of the staff employed by the London art trade are dealing with contemporary and modern art. In 1996, less than 10 % of the turnover of the major multinational auction houses in works of art would have been affected by the Directive. Most auction houses sell a wide range of items including real estate, antiquities, furniture, jewels, postage stamps and fine wines. Therefore, even under a worst case scenario, the potential effect on employment would be minimal.