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27 February 2012
The resale right conferred on artists has been established in Ireland since 2006. (1) However, Ireland opted not to pass this right on to artists' heirs until the obligatory January 1 2012 deadline set by the European Union.
New regulations which became effective on January 1 2012 (2) extend the resale right to heirs for a period of 70 years after the artist's death, in respect of sales of original works of art whose contract date is on or after January 1 2012. The resale right does not apply only to paintings. 'Original works of art' are defined to include works of graphic or plastic art, such as pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs. Limited copies of art made by the artist, usually signed and numbered, also fall within the definition of original works.
Royalties accrue where the sale price is over €3,000 and are calculated on a sliding scale, with a royalty rate of 4% on works sold for up to €50,000 and decreasing to 0.25% where the sale price exceeds €500,000. The maximum amount of resale royalty may not exceed €12,500. For the purposes of calculating the royalties, the sale price is the auction or transfer price (net tax).
For the artist or his or her heirs to be entitled to the resale right, he or she must be a national of:
The EU Resale Right Directive (2001/84/EC) provides that any member state may treat artists who are not nationals of a member state but who have their habitual residence in that member state in the same way as its own nationals for the purpose of resale right protection. The Irish implementing legislation makes no reference to this provision and it will be interesting to see whether Ireland chooses to allow such artists to avail of these rights.
The resale right accrues when the buyer and seller are "acting in the course of a business of dealing in works of art". This means that it is only sales involving an 'art market professional' (ie, an auctioneer, gallery owner or dealer) which gives rise to the resale right. Ireland chose to limit the obligation to pay the resale royalties to the seller. This can be contrasted with the United Kingdom, where both the seller and the dealer are liable. In practice, however, art market professionals often amend their contracts with sellers to provide for the collection and distribution of the royalties from the bidding price. This system would appear prudent in a market where sellers often prefer to remain anonymous.
Where the art market professional does not administer the resale rights, he or she is still required to provide any information needed by the entitled person to secure the resale payment. This information must be provided within 90 days and the person entitled to the resale royalty may apply to the High Court for an order requiring that the information is provided. The entitled person has three years from the date of sale to seek this information.
Ireland chose not to provide for compulsory collective management. Instead, the artists' collecting agency, the Irish Visual Artists Rights Organisation, acts on behalf of artists and their heirs, monitoring sales and collecting due royalties.
The purpose of the artists' resale right is to ensure that artists receive the benefit of the increasing value of their work, recognising that artists often sell their work cheaply at the beginning of their careers. Critics have argued that the real beneficiaries of the legislation are not older struggling artists or their heirs, but rather the already wealthy estates of successful artists, such as those for Picasso and Matisse. The British Art Market Federation has vehemently opposed the extension of the resale right to artists' heirs, fearing that British dealers and auction houses will be at a competitive disadvantage against rival markets (eg, New York and Moscow) where there is no artists' resale right.
It is difficult to see what, if any, major impact the extension of the rights will have on the Irish art market. The cost of transporting works and administrating sales in countries which do not have the resale right legislation could potentially far outweigh the maximum royalty payable of €12,500.
For further information on this topic please contact Aoife Murphy or Robin Hayes at WhitneyMoore by telephone (+353 1 611 0000), fax (+353 1 611 0090) or email (email@example.com or firstname.lastname@example.org).
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