Published: January 2, 2001
BRUSSELS, BELGIUM – Like dandelions, the issue of resale royalties for fine artists just keeps coming back. And like dandelions it keeps spreading, having done so most recently from continental Europe to England, with the United States potentially poised to take on the issue – again.
For now, England is the main battleground, with artists, art dealers and auction house officials all weighing in. Last year, after three years of wrangling, England acceded to the demands of the 15-member European Union to establish a resale royalty of up to four percent, although delaying full implementation of the law.
England has sought 15 years to phase in the statute, while the Brussels-based European Parliament is seeking two or three years maximum in order to make the process of selling art uniform throughout the member states as soon as possible. Tense discussions have been taking place over the timeline.
Resale royalties are payments to living artists or to their heirs (for 70 years after the artists’ death) based on the profits collectors realize when they sell the artwork they own. Of all the European Union members, only Austria, England, Holland and Ireland do not currently mandate the payment of resale royalties.
In the United States, where the issue of resale royalties has been debated periodically since 1970, only California has such a law on the books, enacted in 1976. That statute requires in-state sellers of art to pay artists who are residents of California five percent of the profit of a sale if the work is resold for $1,000 or more. If the seller cannot locate the artist, the royalty is to be paid to the California Arts Council, which holds the money for seven years. If after that time the royalty is not claimed, the money will be applied by the Council to the statewide Art in Public Buildings program.
The concept of resale royalties is based on the view, codified in the Berne Copyright Convention to which the United States and 62 other countries around the world are signatories, that artists maintain an ongoing relationship with the works they create. Intentionally altering, damaging or destroying a work of art may adversely affect an artist’s reputation, and laws in all of these countries (in the U.S., the Visual Artists Rights Act of 1990) permit artists to sue the owners of their work for damages.
Resale royalties (or droit de suite in France, where the concept was first enacted into law in 1920) continue that idea of the artist’s connection with their work, but in a different direction: The value of the prestige.
As an example, there would be little market for, or interest in, Picasso’s early work if it weren’t for his later work, which established his significance in the history of art. That early work was sold for very little money and, supporters of resale royalties contend, Picasso – or in this case, his heirs – deserve a percentage of the increased value because the artist is responsible for the increase.
The German resale royalty statute is premised on the view that the increased value represents the amount of money the artist should have received originally: Not paying a royalty to artists punishes them for their prescience.
Belgian law identifies the increased value as “unjust enrichment” on the part of the collector. Yet another argument for resale royalties, advanced by Martin Bressler, the founder and vice president of the New York City-based Visual Artists and Galleries Association, is that “the resale of a work of art like a replay of a song, [and therefore] the author is entitled to compensation each time it is replayed.”
The issue has been joined on both sides of the Atlantic. British sculptor Anthony Caro and painter David Hockney are among a group of artists who signed a petition against droit de suite. By e-mail, Caro claimed he is “concerned that the scheme would be terribly complicated to administer and just create more bureaucracy. It will mainly benefit artists who are already successful.”
Caro continued, noting “[w]hen the artist sells a work, he or she gets a payment that is reasonable at the time. The value may go down as well as up; this is the risk the buyer takes. The comparison with composers is not valid, since they do not normally get a substantial payment for the work upon completion, but rely on continuing royalties from performance.”
A variety of objections and complicating variables have been raised in England and the United States. Who would administer the program, and how many artists would actually benefit from resale royalties?
Gilbert Edelson, administrative vice-president of the Art Dealers Association of America, claims that in Europe 75 percent of all royalties go to a handful of “rich estates – Picasso, Leger, Matisse, Braque and a few others. It is designed to help the heirs of a few dead artists.” Another 15 percent, he said, goes to pay for the operation of the collection agencies, “and the remaining ten percent goes to everyone else.”
That view is disputed by Single Market Commissioner Mario Monti, who claimed in a statement on December 14, 1999, that within the European Union “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.”
The art trade’s worries have not been assuaged.
“The art dealers in Europe have come out unanimously against the royalties,” said Godfrey Pilkington, the director of Picadilly Gallery in London. “The people in favor are almost entire collecting agencies who see raison d’être for themselves and contribution to their expenses.” In a petition to Parliament, British Art Market Federation has also condemned the concept of resale royalties, because of its potential “damage to Britain’s international competitiveness in the global art market.”
The resale royalty is yet another cost of selling art in Europe. The European Union already requires member states to charge a value added tax of between 2.5 and 25 percent, payable by the seller, for all works of art that enters Europe.
The result of resale royalties, according to Chris Thompson, the international president of the London-based Phillips Auctioneers, will be to “divert the art trade” to places where there are fewer taxes on sales, such as Switzerland and the United States. This is a view seconded by Gilbert Edelson, who called a resale royalty statute in England “a break for American artists.”
Between 60 and 70 percent of all art sales in Europe currently take place in London, Thompson noted, but the attractiveness of England as a location in which to buy and sell art is likely to change dramatically because of, first, the value added tax and, second, resale royalties.
“France used to have an art market, but it shot itself in the foot,” he said. “There is a reason that both Sotheby’s and Christie’s moved their headquarters from London to New York. Are people paying attention?”
Buying and selling art in New York, of course, is no bargain. New York State charges an 8.5 percent sales tax. It is also conceded that buyers of art at auction are well used to paying extra fees. Sotheby’s and Christie’s have charged the buyer a substantial premium since the late 1980s, a practice that has not seemed to lessen the desirability of the art.
However, Thompson claimed, that increasing of the costs for buyers has allowed the two auction houses to lower the commissions they charge sellers, especially for the most valuable rdf_Descriptions.
Thompson added that the Internet (“where the physical location of the buyer, seller and the goods are less relevant”) and “tax-free havens” in Switzerland will also benefit from “this strange tax” called resale royalties.
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