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     Europe

This page considers the application of droit de suite (a royalty for visual artists on the resale of artworks) in Europe.

It covers -

• the EU harmonisation directive
• the droit in EU states

     the EU harmonisation directive

The European Union agreed in 2001 on harmonisation of droit de suite (PDF), with consistency in resale royalty schemes across the EU.

The droit had been in place in several EU jurisdictions for many years but had been strongly resisted by British art dealers, with government support, amid claims that increasing the cost of works sold in galleries or at auction would cripple the local market and drive buyers offshore, particularly to New York.

The droit is being implemented in Britain from the beginning of 2006. It will initially only cover work by living artists, in contrast to the rest of Europe where it covers works that are in copyright (ie the intellectual property of both living and recently deceased artists). It is envisaged that the work of dead artists will become subject to the royalty in 2011.

The royalty is payable on a sliding scale, capped at €12,500 (around $20,000) and falling to 0.25% for sale prices over €500,000 (about $80,000). It covers works resold for more than €1,000, with the the royalty in most cases being 4% of the sale price.

It covers 'original work of art', identified as

works of graphic or plastic art such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs, provided they are made by the artist himself or are copies considered to be original works of art.

It has been the subject of argument for around a decade, with strong opposition from some stakeholders in the UK. Bunny Smedley for example declared that

the EU's harmonisation scheme will drag London down to the sclerotic decrepitude of Paris - much to the delight of New York, Geneva and Tokyo.

The UK agreed to special conditions for its art market and accordingly did not exercise its veto power (EU Directives are based on unanimous agreement).

A UK government study (PDF) reported that the total turnover of the UK art market industry in 1996 was around £2.2 billion (around 50% of the overall EU art market). The four largest auction houses - Christie's, Sotheby's, Phillips and Bonhams - had sales of £832 million (some 56% of auction sales and 28% of all art and antiques market sales).

If the droit had been in force in the UK at that time it would have applied to £242.8 million of auction house sales, resulting in payments of £6.5 million - arguably not a staggering sum. Art dealers would have faced estimated payments of £3.4m on the same basis.

One perspective on the figures is announcement by Sotheby's in 2004 that it had recorded "antitrust related special charges" of US$21.9 million and suggestions that the auction house lost over US$100 million in its dotcom venture. By 2005 we were encountering claims that

London currently accounts for over a quarter of the world's reported US$23.5bn art market, with the domestic contemporary market representing more than US$500m of that

In February 2007 the Art Newspaper reported that

"Sales have been as healthy as they were before the law came into effect," said Glenn Scott-Wright, director of London's Victoria Miro Gallery. "Clients haven't indicated that they were unwilling to buy because of the royalty. In fact, there hasn't really been much discussion of the law at all."

British auctioneers have reported similar results. Pilar Ordovas, head of Christie's contemporary art department in London, stated that 2006 brought "the best sales ever in contemporary art in our history." As far as paying royalties on sales, she said, "Nobody seems to be concerned."

By 2010 there were loud complaints, albeit dismissed by London-based dealer Rene Gimpel of Gimpel Fils, quoted in the Art Newspaper as reproaching the British trade for squabbling over "a relatively small, capped amount that benefits artists" and questioning anxieties over "the feared flight of art to non-European markets outside Europe".

Gimpel highlighted the implications of the European 5% import tax: "If a European collector buys in New York to avoid the capped resale royalty of €12,500, they will have to pay an uncapped 5% import tax to bring the work back into a European country."

There is an intriguing analysis of the EU regime in Do Resale Royalties Make Artists Better Off? An Economic Analysis of a New EU Directive, a paper (PDF) by Roland Kirstein & Dieter Schmidtchen published in 2000.

It is also considered in Alexander Weatherall's 2003 paper Harmonising the Droit de Suite: a Legal and Economic Analysis of the EC Directive and an Overview of the Recent Literature and in Martina Supper's 2000 thesis An Analysis of droit de suite from a Law & Economics Perspective (PDF).

A UK perspective is provided by Clare McAndrew & Lorna Dallas-Conte's 2002 report Implementing Droit de Suite (artists' resale right) in England (PDF) and the 2008 report A study into the effect on the UK art market of the introduction of the artist's resale right (PDF) by Katy Graddy, Noah Horowitz & Stefan Szymanski for the Intellectual Property Institute. Graddy & Szymanski had earlier produced The IPI Scoping Study: Artist's Resale Right (PDF). Louisa Buck's Market Matters: The dynamics of the contemporary art market (PDF) report for the UK Arts Council discusses demand for work by emerging artists.

     the droit in EU states

There has been significant variation between European countries regarding royalty thresholds and ceilings, royalty rates, complementary schemes and reliance on government or non-government agencies.

Rates range from 2% in Belgium to 10% in Iceland. The royalty is collected by government agencies in some countries (eg in Belgium and Hungary). Some schemes provide for payment to the artist/heirs; others use the royalty for a general arts fund (eg Norway). Most base the royalty on the resale price; the Italian scheme (apparently not implemented) provides for a royalty from 2% to 10% of the difference between the prices of initial sale and first resale.

Germany's copyright legislation stipulates the right of artists to 5% of the resale price where an original work is resold by an art dealer or auctioneer, with artists having a right to information (through the visual arts copyright collecting society) about works resold by an art dealer or auctioneer as intermediary during the previous calendar year.

Those provisions complement the separate Künstlersozialversicherungsgesetz - arts social insurance law - that requires buyers to contribute 5-7% of overall payments to the federal government for a French-style arts welfare fund.

The BildKunst copyright collecting society thus notes

almost every financial transaction involving an original artistic work places a financial obligation on the dealer: if he buys directly from a living artist, he is obliged to pay the contribution according to the social security law; if he resells a work by an artist protected by the copyright law he has to pay a remuneration for the resale right.

Perspectives are offered in Liliane de Pierredon-Fawcett's 1991 The Droit de suite in Literary and Artistic Property and Rita Hauser's 'The French Droit de suite: The Problem of Protection for the Underprivileged Artist under the Copyright Law' in Copyright Law Symposium Number Eleven (1962).

In the UK collection of droit de suite was initially monopolised by the Design & Artists' Copyright Society (DACS), the counterpart of Australia's Viscopy. During the first year of the regime some 412 artists received royalties of £709,000 in 2006, in amounts ranging from £13 to £27,358. Around 75% of the resales were at auction houses. DACS initially charged a 25% commission, reduced to 15% after the Bridgeman Art Library, a commercial organisation perhaps best known for the Bridgeman v Corel case, launched the Artists' Collecting Society.

In 2008 DACS was criticised in a report by Toby Froschauer sponsored by Antiques Trade Gazette, based on interviews with dealers and auction houses, arguing that there were "practical problems" and "needless costs" in implementing the droit, which "singularly fails to benefit the very people it was set up to help". DACS questioned the validity of the report, which was supposedly based on 35 interviews.

The report claims that the cost per transaction is between £23.30 and £53.60 ("sometimes more than the sum owing to the artist"). The figures were inconsistent with a 2007 survey for DACS by Maven Research, which claimed that "87% of art market professionals say that the resale right has not damaged their business" and "over 60% of art market professionals surveyed" say that the droit takes them less than five minutes and costs them less than £10 per quarter in administration.

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