In 2006 the Artists’ Resale Rights Regulations came into force to align creators of art with songwriters, authors, playwrights and screenwriters vis-à-vis ongoing royalties for the exploitation of their works. Prior to those Regulations an artist selling his or her work would receive no residual income on further sales of the work. Whilst there is not a direct parallel with the exploitation of music, literary or dramatic works, since here we are talking about simply the ongoing sale of original art rather than its secondary exploitation, the equitable principle seems just and correct.

Artists are entitled to receive up to 4% of the proceeds wherever one of their works is sold by market professionals for more than €1,000 up to a limit of €12,500. Private sales do not qualify for the resale royalties.

Whilst in some cases the royalties are being properly paid by market professionals, according to one of the collection societies acting for the artists, the Artists’ Collecting Society (ACS) allege that “a large proportion [of dealers] are not acting honourably” and they are intending to commence legal proceedings to rectify the positon.

The Regulations apply only where copyright subsists within art works and the transaction attracting royalties must be a resale subsequent to the initial sale or transfer of ownership by the artist.

The collecting societies (as well as the ACS there is the Design and Artists Copyright Society “DACS”) deduct 15% commission on royalties collected.

The obligation to pay the resale royalty to the relevant collection society, when a “qualifying resale” is made, falls jointly and severally upon the seller and the seller’s agent and the buyer’s agent if there is no seller’s agent and on the buyer if there is no buyer’s agent.

There are exceptions where no resale royalty is payable e.g. where a work is “bought as stock” or purchased directly from the artist and resold within three years for under €10,000.

DACS is recommending that all transactions, whether on first sale or subsequent sales, should expressly indicate whether an exception applies so that it can establish whether or not a royalty is payable.

The Regulations apply to all countries within the European Economic Area; however, the position in other jurisdictions is less clear and there is some complexity vis-à-vis the position of a market professional from outside the EEA travelling to the UK to purchase an art work that would otherwise attract the resale royalties.

There remains in the UK some scepticism about the eroding effect that the Regulations have on the UK’s competitive position in the global art auction market and the inclination of owners of art work to sell outside the catchment area so as to avoid payments under the Regulations.