THE ARTIST’S RESALE RIGHT….DO THE MATHS
Whatever the moral arguments in favour of this badly drafted directive from Brussels the result will be the closure of many privately run commercial dealerships which have provided an income for many artists. I ran The Bourne Gallery in Surrey for forty years generating Vat, income tax, rates, corporation tax etc. and took the decision to close last year before the Artist’s Resale Right did it for me. In broad terms my turnover averaged £1m per year. My gross profit before expenses averaged 28% (£280,000). After paying salaries ( my own was £45,000 per annum) and all business costs this left around £20,000 for dividend or reinvestment. Half our turnover came from primary sales of work by living artists which does not attract the Resale Right Levy. After Jan 1st. 2012 most of my other business would attract the 4% levy. Bear in mind that I would have to pay this not once but twice. Once on purchase of the picture ( from private or auction source) and again on the resale. On sales of £500,000 that’s £40,000 of lost revenue, not to mention the days and weeks of unpaid administrative work. I don’t think I ran a bad business. I survived through thick and thin for forty years promoting many artists and I do feel guilty about letting them down now but the future just didn’t add up. In response to the suggestion that ‘you’ll just have to put your prices up’.. I wonder if anyone has looked out of the window recently? I invite the Minister for Intellectual Property Rights and DACS ( The Design and Artist’s Copyright Society..a non profit making organisation that reputedly pays it’s Chief Executive emoluments of £150,000 a year) to respond.
JOHN ROBERTSON
L’ARTISTE DROIT DE SUITE …. Faire le calcul
Quelles que soient les arguments moraux en faveur de cette directive mal rédigée de Bruxelles, le résultat sera la fermeture de nombreuses concessions commerciales établissement privé qui ont fourni un revenu pour de nombreux artistes. J’ai couru la Galerie Bourne dans le Surrey, pendant quarante ans générant Vat, impôt sur le revenu, taux, etc impôt sur les sociétés et a pris la décision de fermer l’année dernière avant la revente de l’artiste à droite l’a fait pour moi. En termes généraux, mon chiffre d’affaires en moyenne 1 million de livres par an. Mon bénéfice brut avant frais en moyenne à 28% (£ 280.000). Après avoir payé les salaires (le mien était £ 45,000 par an) et tous les coûts des entreprises de cette gauche autour de £ 20 000 pour les dividendes ou le réinvestissement. La moitié de notre chiffre d’affaires provenait de la vente de travail primaire par des artistes vivants qui n’attire pas l’Levy droit de suite. Après Jan 1st. 2012, la plupart de mes autres affaires attirerait le prélèvement de 4%. Gardez à l’esprit que j’aurais à payer ce n’est pas une mais deux fois. Une fois sur l’achat de la photo (de source privée ou aux enchères) et de nouveau sur la revente. Le chiffre d’affaires de £ 500 000 qui est £ 40,000 de pertes de revenus, sans parler des jours et des semaines de travail administratif non payé. Je ne pense pas que je dirige une entreprise mauvais. J’ai survécu à travers vents et marées, pendant quarante ans la promotion de nombreux artistes et je ne me sens coupable de les laisser tomber maintenant, mais l’avenir n’a tout simplement pas debout. En réponse à la suggestion que “vous aurez juste à mettre votre prix à la hausse ‘.. Je me demande si quelqu’un a regardé par la fenêtre récemment? J’invite le ministre des droits de propriété intellectuelle et DACS (la conception et la Société du droit d’auteur de l’artiste .. un but non lucratif qui paie réputé c’est émoluments de la direction de £ 150,000 par an) pour y répondre.
NYC Dealer
December 18, 2011
As a dealer in the USA I can only sympathise as to the nightmare of this new tax….can anyone explain how it benefits anyone except the collectors of this tax. I can foresee many less expensive artists work becoming even less valuable…why would anyone want to deal in a painters work and try to build a following if every time you buy or sell a piece it costs the dealer more money…let alone how much it will now cost to buy these paintings through a London Auction, 25% buyers premium + VAT at 20 %, + ARR…….!!!!!
John Robertson
December 18, 2011
Apparently the folk at DACS can’t understand why they are not more loved and appreciated by the art trade. Could it be that they only work 9am to 5pm Monday to Friday..that they’ve never stood at a Fair that cost them £10,000 for five days and sold nothing..that they don’t actually have to be friend, priest, and financier on an individual basis to an artist…that they have no idea of how broad our shoulders have to be when an artist is on the ropes and we step in to keep them going …that they never put their own money down as warranty of belief in an artist’s work…that they have no idea of how their self-righteous utterances get up our nose..a non profit making organisation..oh ho!. I am reminded of a letter I received from a bunch of venal lawyers shortly before Droit de Suite was introduced.It stated that “Never again would a genius like Van Gogh have to sell a masterpiece for a night’s lodging and get no recompense.” It struck me that the inn keeper who accepted a daub by an unknown down and out artist showed more humanity than a lawyer could ever understand. They’d have thrown him in the local nick for non payment of his rent.
Yours, John
http://www.bournegallery.com
Chris Ewbank
February 1, 2012
Congratulations on speaking out John.
Chris Ewbank
http://www.ewbankauctions.co.uk
John Robertson
December 18, 2011
I’m so fed up with everyone running scared of DACS. Everyone appears to be afraid about drawing their fire. I’m 65 next year and couldn’t give a damn about putting my head above the parapet. I’m not prepared to be shamed over providing an income for many artists by a bunch of well meaning timeservers who have sat down too heavily on their ivory towers !
Yours John
http://www.bournegallery.com
Ivan
December 19, 2011
THE European Commission Impact Study on the Artist’s Resale Right (ARR) has not been able to establish how far the Right’s introduction is linked to the recent decline in the European art market.
Nor can the report, published last week, establish a clear link “that would indicate systematic trade diversion within the EU away from those Member States which introduced the right for living artists in 2006″.
However, the EC has decided to conduct another impact study in 2014, two years after the extension of the levy to the estates of artists who have been dead for less than 70 years, when it believes the picture should be clearer.
The EC also expresses concern at the administrative and costs burden on smaller dealers of fulfilling their obligations under ARR. It criticises some of the collecting societies involved and says it will establish a system of best practice to minimise costs and red tape for end users in the trade.
The concluding section of EC’s report, also states:
• There are clearly pressures on European art markets, in all price ranges, and for both the auction and dealer sectors, and it is recalled that the scope of the application of the resale right will be significantly expanded following the ending of the derogation for the works of deceased artists on 1 January 2012.
• At the same time, the quality of the administration of the resale right appears to vary considerably across the EU, bringing costs to art market professionals and artists alike. The burden can be particularly high for those at the lower end of the market who are proportionately more deeply affected by the costs of administering the right.
• The Commission recognises, furthermore, that in some Member States inefficient administration of the resale right presents a not insignificant burden on art market professionals and may also lead to unnecessarily high deductions from the royalties due to artists and their successors.
• In light of the economic significance of the sector, the Commission considers that market developments should be kept under review. The Commission will undertake a further reporting exercise and deliver its results in 2014.
• The Commission will also pursue its commitment to persuading other countries to implement the resale right.
• In light of the volume of transactions subject to the resale right, the European Commission also considers that there would be benefit in the exchange of best practice at European level with a view to managing and minimising the administrative costs in all Member States. To this end it intends to establish a Stakeholder Dialogue, tasked with making recommendations for the improvement of the system of resale right collection and distribution in the EU.
• More broadly, the European Commission is concerned that collecting societies should operate to a high standard of governance and transparency with regard to their members and to commercial users, and will bring forward a proposal in this regard during 2012 to apply in equal measure to collecting societies administering the resale right.
British Art Market Federation chairman Anthony Browne welcomed the report. “My initial view is that the Commission has produced a balanced report which is based on fact,” he told ATG.
“There are references throughout the report to the need to improve the management of ARR by collecting societies, a point which we made strongly to the Commission. This is reflected in the last conclusion on page 11, which makes specific reference to ARR in the context of proposals to improve the performance and transparency of collecting societies during the course of 2012.”
And he added: “It is particularly pleasing that the Commission intends to keep market developments under review and that there will be a further reporting exercise to be delivered in 2014.
“All in all, given the lack of any serious political pressure to extend the derogation from Member States Governments, most notably the British Government which has by far the largest art market, the Commission has done a thorough economic analysis.”
“It does address all the points that the European Art Market Coalition made and it leaves the way open for us to make further representations if we can detect firm evidence of a diversion of trade away from the UK in the coming two years, when in the UK in particular the ARR levy extends from 14% to 62% of the fine art market by value.”
By Ivan Macquisten
http://www.antiquestradegazette.com
Stephen Jack
December 19, 2011
Thanks to John Robertson for expressing this so well.
For some years Brussels has seen fit to target the British art market, firstly with the erection of a tariff barrier that is the 5% import tax and now with the merciless extension of Droite de Suite (imported into UK as Artists’ Resale Right)
Thrust upon us as measures of European Harmonisation, I see no way that either ruling could be interpreted as being in our national interest. As John Roberson points out, the benefits of Droite de Suite are dubious. It is neither serving its true purpose nor equitable in its method, having been adopted as a bureaucratic “tick box” exercise rather than as a value added system.
I write this as a modest player in the market, once primarily involved in resale items and now acting mostly as a representative of a group of contemporary artists. I echo his sentiment that these changes are by no means minor. We cannot simply adapt and absorb the costs. It has lead to long established players having to change the face and the scope of their business. It also distorts the market by favouring auctioneers and selling agents and has the effect of suppressing individual dealers as market makers.
Although the Art Market is a significant sector of the UK economy, creating employment and supporting careers of artists, it would seem that we have been allowed to suffer in the course of the horse trading around the table in Brussels. The British Art Market, whilst being surveyed by our European partners on one side as a suitable quarry, has been considered by representatives on our own side to be expendable.
I have no problem with Britain being part of Europe. I support a single market; but I resent being “singled out” for sacrifice.
This latest blow from Europe, the extension of Droite de Suite, comes at a time when David Cameron appears to be signalling that we are willing to say “non!” in Europe. Could we at last have a government willing to take a fresh view and support the UK art market?
http://www.jackfineart.com
Exhibitors
December 19, 2011
Droit de suite bill introduced in US Congress
Legislation would see artists and museums split a royalty fee of 7% for auction resales over $10,000
The legislation was introduced by congressman Jerrold Nadler and senator Herb Kohl
Washington, DC. Federal legislation that would see visual artists receive royalty payments when their works are resold in the US was introduced in the House of Representatives today by congressman Jerrold Nadler (Democrat, New York), the ranking member of the House Judiciary Subcommittee on the Constitution, and in the Senate by senator Herb Kohl (Democrat, Wisconsin). The Equity for Visual Artists Act of 2011, would set aside 7% of the price for works resold for more than $10,000 at major auction houses, such as Christie’s and Sotheby’s, with half the proceeds going to the artists and half to non-profit art museums.
“Visual artists deserve a share in the sales and resales of their creative works,” says Nadler in a statement. “It’s important to ensure that artists are fairly compensated — even more so in difficult economic times, when normal channels of support for artists are less dependable. This legislation would help working artists and provide incentives for the creation of art by providing resale royalty rights and establishing a fund for nonprofit art museums to buy art from those artists.”
The legislation, as it stands, would only apply to the resale of works at public auction houses “with more than $25 million in sales in the prior year”. Auction houses that operate only online would be excluded, as would private galleries.
By Helen Stoilas.
http://www.theartnewspaper.com
Exhibitors
December 30, 2011
EDWARD, PALO ALTO
In what other business does the maker get paid for subsequent sales? How about 7% to the architect each time a house is re-sold or 7% to Tiffany or Maserati each time those luxury items are re-sold? Conversely, shouldn’t artists or their successors reimburse owners who lose money when objects decrease in value?
MARK, HALIFAX
when you stop talking about what they did do and start talking about every thing that they did not do. then it becomes every clear exactly where your place is that you belong in. and you thought you smelt the scent of change in the air.
CAROLE PIGOTT, SANTA FE, NM.
half to the artist and half to museums – you are kidding – don”t the art museums get enough of the art money without taking more away from the artists. Artists need to have lobbyists who are not also lobbying for art associations. Give Artists a Break – half to the museums – i can’t get over that – what crap
SUSAN KRAFT, REDWOOD CITY
I am glad to see some movement to put artists on the financial grade. Residuals & royalties will eventually become seen as the right thing to do, as done in the music & movie business. The historical divide keeping creative visual artists in a lower class standing from the business of art can’t last forever, can it?
JOHN, CANBERRRA
As of next year resale royalties in the UK will be applied to the resale of dead artists artworks. This will give US auction houses a competitive edge over UK auction houses when it comes to attracting the resales of artworks worth more that about $100,000. This proposed legislation seems aimed at protecting the UK’s top auction houses from competition from US auction houses , why would a American vote for it?
JOHN, AUSTRALIA
“The legislation, as it stands, would only apply to the resale of works at public auction houses “with more than $25 million in sales in the prior year”. Auction houses that operate only online would be excluded, as would private galleries. ” are they serious??? would this sort of anti competitive – restriction of trade- tariff- thing be even remotely possible ??
Ian Harris
December 19, 2011
This sounds a bureaucratic nightmare – I had wanted to come back as a picture dealer in another life -but not now! Or at least not in the EU! But then with a bit of luck we’ll be out of it shortly.
http://www.nbloom.com
John Robertson
December 19, 2011
Question. Who is an ‘Art Market Professional”? An auction house–Yes. An Art Dealer.Yes. What about a Picture Researcher? An Art Critic? A Picture Restorer? A Picture Framer? An Assistant to a Picture Dealer? The wife of a Picture dealer? The Mistress of a Picture dealer.The Boy Friend of a Picture Dealer. If a picture is sold by any of the above will DACS be down on them like a ton of bricks? Who is entrusted to legally define an “Art Market Professional”. If the Resale Right is so obviously a “good thing” and ethically correct can someone explain to me.. A) How come someone like Steve Wynn can sell a Monet to a fellow Casino owner in London for several million and not be liable for ARR? B) If so morally correct why the hell is it capped at a maximum of £12,500 per transaction? Believe you me if it wasn’t capped we’d have seen some rather more robust opposition from some quarters of the trade who have been less than supportive in our fight. Some very big players are very afraid of how their opposition would play out in PR terms so they keep quiet and hope the little guys will do the work for them.
John Robertson
http://www.bournegallery.com
EL
December 19, 2011
I am not an Art Dealer, more a silver an objects dealer. I had no idea that the ARR hits small to medium sized businesses the hardest. What genius thought of that !
John Robertson
December 20, 2011
Excellent news from Amsterdam ( You can always trust the God fearing Dutch). The Dutch are a law abiding, sober nation..like the Brits. They don’t like breaking the law. The European Employment laws mean that there are strict limits as to how many hours a week they are allowed to work.When they’ve worked the maximum hours per week allowed they make sure they leave for home on the dot. Should a dealer bump into a client on the street corner after work he is no longer allowed to act in his professional capacity.( he’d be breaking the law for working too many hours). There’s nothing to stop him acting ‘unprofessionally’ in a private capacity when he might pursue his hobbies like collecting fine art and exchanging pieces with fellow devotees. Apparently the Flea market does a roaring trade in worn Serbian black leather jackets so that ‘art market professionals’ can look the part of being ‘highly unprofessional”. Fascinating! we are all going to have to learn to be European! Apply to the ATG now for your new scheme stock books. Standard Scheme. Margin Scheme. Serbian Scheme.
http://www.bournegallery.com
EL
December 20, 2011
Hey John, I’ve always thought of the Dutch as ‘straight’ as well. They say it like it is in my experience. As for Serbian black leather jackets, perhaps the ATG can start offering a selection in
their classified section along with the scheme stock books (which by the way are really useful). Perhaps the ‘Art Professional’ couture market, is an under-developed sector in the UK ?
Who did think up the ARR?
John Robertson
December 20, 2011
Good Morning! Anyone awake out there? The answer to my question about a hypothetical ‘Monet’ sold to a hypothetical Casino owner by a hypothetical individual in London being exempt from the Resale Right is that as Monet died in 1926 it wouldn’t qualify anyway. Smarten up there at the back! Replace ‘Monet’ with ‘Picasso’ and the question is still relevant.
http://www.bournegallery.com
Clarke
December 20, 2011
In view of your comment above, does the ARR directive, only affect sales on Art that is up to 70 years old? Do Auction Houses have to pay the levy as well?
John Robertson
December 20, 2011
It is not the age of the individual work of art that is relevant. It is the date of the artist’s death. An artist who died in 1945 aged 90 could well have been painting in 1880, when he would have been in his mid twenties. Because he will have been dead for only 67 years on Jan 1st 2012 all the work he produced throughout his life will attract the 4% levy.
The more I read the press reports about the EU Commissioners Review on how ARR is working the more I despair. Does anyone else feel it’s like wading through treacle blindfolded!
We are told that it’s a very fair, even handed report and that they are going to look at the situation again in two years time. TWO YEARS TIME! For crying out loud there won’t be any small art galleries dealing in old pictures left. John Mortimer famously said that Governments ignore the interests of minorities at their peril…they end up operating outside the law. The working of this damned silly directive is entirely dependent on the good nature of the dealers who have to implement it ( unpaid and at considerable cost in time spent). As no one in Government appears to be the least interested in our plight I beg to suggest it’s time we took
Churchills advice and told Westminster..in his words ..”that this is something up with which we will not put.!” Is there anyone else out there prepared to join me?
http://www.bournegallery.com
EL
December 20, 2011
ARR is only payable when an art market professional, i.e. dealer or auction house, is involved, whether as buyer or seller or acting as agent in the sale. Sales between private individuals (where an art market professional is not involved as buyer, seller or agent) do not attract ARR. The UK legislation concerning ARR is silent as to where the right applies but it is assumed (unless the courts decide otherwise in the future) that UK ARR only applies if the sale takes place in the UK. If the sale takes place in another EEA country, that country’s legislation concerning ARR will apply. If the sale takes place outside the EEA, ARR will not apply (unless the country where the sale takes place requires this as a matter of its own national law).
John Robertson
December 20, 2011
Thank you EL for mentioning ‘unless the courts decide otherwise’. This bloody directive is a lawyers dream come true. When VAT was introduced the whole scheme was laid out in the equivalent of two lever arch files. Today there are whole libraries devoted to court rulings about ‘jaffa cakes’ and at what temperature food can be served without attracting the tax. Boy-oh-Boy the lawyers are rubbing their hands with glee. What a Christmas present..deciding
if a stuffed mattress found in a skip is part of a multiple by Damien or a one off by a chum he failed to acknowledge who now claims intellectual ownership and the dealer who bought it doesn’t know if he is jointly or severally liable to pay the 4% with the refuse man who found it who also has a stall at Bermondsy Market but claims he’s not a ‘professional’. ( Am I taking this whole thing too seriously?..should I be seeking medical help? Am I the only one throwing a tantrum in the playground?…..
http://www.bournegallery.com
Francesca Fiumano
December 20, 2011
ARR is quagmire of legislation and taxation hiding behind ‘fairness’. Fortunately my business will not be too badly effected by the extension but i object to it wholeheartedly. The perception that small and medium sized art businesses are rolling in spare money founded on the smoke and mirrors of the art world. The figures just don’t add up!
http://www.fiumanofineart.com
Elliot Lee
December 20, 2011
John, I think you might find that a lot of readers agree and sympathise. You do what ever feels right. 40 years in the business and paying taxes, you’re entitled to rant ! If I was an Art Dealer, I’d be doing exactly the same thing. Would Gerald Benny, a revered silversmith from the 1960′s- 1970′s, be classified as an artist or a designer? Is that a grey area in this directive?
Elliot Lee
http://www.graysantiques.com
John Robertson
December 20, 2011
Sorry to tell you this Elliot but if Gerald Benny designed and produced ‘one off’ pieces made by his own hand then he and his estate have intellectual property rights over the pieces and are likely to want their 4%. The Lawyers will have you served up for breakfast ! They will categorise the pieces under ‘plastic art and/or sculpture’. They have already specifically included one off pieces of glass so I can’t see how ‘one off pieces’ in other ‘plastic media’ can be excluded. I’m told that designers of Dust Jackets already have lawyers looking at claims on sales of First Editions..after all it’s the first editions with their original dust jackets that make the money. Seems very fair to me!!!!!
http://www.bournegallery.com
Elliot Lee
December 20, 2011
Uh-oh, wait until the silver dealers hear that !
http://www.graysantiques.com
Derek Newman
December 20, 2011
John Robertson (who as a fellow art dealer is well known to me) couldn’t have been more open in portrayal of his financial affairs, the amount of time devoted to the nurturing of contemporary artists over the past 40 years and the effect the ARR has had on his business, being one factor in the recent closure of his gallery.
John’s frustration is palpable – both with DACS’s ‘self righteousness’, the EU Commissioners and also with dealers who unlike him have made little effort to have their voices heard.
As a dealer whose specialisation is essentially in 18th & 19th Century watercolours, I have to date been unaffected by application of the ARR. However, the extension on 1st January to artist’s ‘heirs & descendants’ of the past 70 years will impact on those 20th Century works that I do buy and sell.
In last week’s ATG (issue 2020), Gilane Tawadros, Chief Executive of DACS wrote a letter ‘chastising’ dealers over their implied ‘meanness’ in the collection of the ARR on behalf of ‘the thousands of British artists for whom the ARR is so vital’. So how exactly does the extension to heirs and beneficiaries benefit those thousands of artists? Gilane Tawadros does not explain or recognise the contradiction in her argument.
For my part the potential additional cost will mean I may well simply retract to my core area where the ARR doesn’t apply. While I can accept in principle the application of ARR to further the development of living artists, it takes no account of the hard work dealer’s such as John have undertaken on behalf of his artists which has already gone far beyond the imposition of such a ‘royalty tax’ and the administering bureaucrats are too desk bound and narrow minded to recognise it.
In 2 years time when the situation is ‘reviewed’ I predict there will be far fewer small dealers operating in the ARR area, the tax take will in result diminish and ultimately those ‘thousands of deserving artists’ will have given up through lack of dealer’s sponsorship – all down to yet another flawed and badly considered piece of EU legislation.
http://www.newmanfineart.co.uk
Joe
March 23, 2012
I see it being like how the city of NY complains that they now have less tobacco sales inside the city and thus the raised revenues on cigarettes that they expected haven’t appeared. They’ll soon create a tax that effects your reduced business. A lot of people are tempted to just move out of the country but how do you do that when many countries have ‘exit taxes’ that effectively punish you for being fed up?
John Robertson
December 20, 2011
Thank you Steve and Derek for your understanding and support. I can only request that you spread the word about this blog and help get a wider debate going about the issues. The smaller dealers have been badly let down by BAMF( British Art Market Federation) which it is now clear has been principally concerned about trade drifting away from the UK , not about the impact on local, domestic business. Sotheby’s and Christie’s really aren’t interested in the little guys. They are multinational organisations who ultimately will be completely unaffected by this directive so far as their owners are concerned. They’ll express their sadness about moving away from their roots and then simply move their auctions to the most favorable continent. The interests of UK dealers and auction houses was intimately linked for many decades but the internet changed that mutual dependency. Think about it. They are only hit once by the 4% and they pass it on to the buyer anyway. They make their money on multi-million pound collections which only attract a capped levy of e12,500 per item.( What’s that for heavens sake on a Picasso at £50 million!) We have sat back in the foolish belief that BAMF would confront this issue with the same fire in it’s belly that we have fighting for our very survival.. rather than deciding which continent to move to if we loose.
http://www.bournegallery.com
Exhibitors
December 21, 2011
EU art tax criticised by dealers
By Shaun Ley
http://www.bbc.co.uk/news/entertainment-arts-16237117
Art dealers have criticised the government for failing to oppose a change to an EU art tax, which comes into force in January.
“Droit de suite” provides artists – or their heirs within 70 years of their death – with a percentage of the re-sale price of their work.
The 70-year limit was introduced in 2006, but the UK delayed it till 2012.
Dealers complain that it has created a competitive disadvantage as countries such as China and the US do not pay it.
Research conducted by arts consultancy Arts Economics suggests that the proportion of the fine art market affected will grow from 13% to 60%.
Britain is the second largest market, after the US, with 18%, although five years ago it conducted a quarter of all sales. The art market in Britain will be the most affected within the EU.
British Art Market Federation, which represents auction houses, dealers and galleries, said it was surprised the government had not lobbied in Brussels, given the impact on the UK market.
“I am very surprised the government didn’t recognise that and do more to try and press the case in Brussels,” federation chairman Anthony Browne told BBC Radio 4′s The World This Weekend.
Chinese growth
He said attempts to get a further delay had failed because “there really was not enough pressure, particularly from our own government, on the European Commission.”
In a report last week, the European Commission acknowledged concerns about its effect, and promised to carry out research in two years time to see how far droit de suite was responsible for the decline in Britain’s share of the art market, or if other factors, such as the growing importance of China, were driving it.
One of the final auctions to be conducted before the rules change was the sale of 20th Century Art at Christies in London last Thursday.
It included the work of living artists, who already receive droit de suite, and dead artists whose heirs will benefit from future sales.
Christopher Foley, who runs Lane Fine Art, said he stopped dealing in the work of living artists when the payment was first introduced in 2006.
He fears the extension to heirs will destroy the British market for selling the most expensive pictures. “They will be moved off shore to sensible places like Switzerland and America and they’ll be sold there.”
Robert Scott is one of those heirs who will benefit when the rules change. Prices paid for the work of his father William, who died in 1989, have risen significantly. A painting the artist sold for £60 in 1950 fetched £1 million at a sale three years ago.
Transport costs
Mr Scott told the BBC that the extension of re-sale payments will allow artists’ families to benefit in the same way the heirs of writers and composers do. He rejects the suggestion that sales will be driven away from the UK.
“That sounds like a load of nonsense to me,” he told the programme, pointing out that his father’s work is often exported from the US to be sold in Britain because prices are higher.
Even after next month, when his father’s work will become eligible, he says sales are unlikely to shift abroad because the cost of shipping a painting to New York or Hong Kong is likely to cost more than the payment of droit de suite.
There is a sliding scale of payments from 4% of the sale price of cheaper items to 0.25% of the most expensive.
The maximum payment for the sale of one item is capped at 12,500 euros (£10,500).
By Shaun Ley
http://www.bbc.co.uk/news/entertainment-arts-16237117
John Robertson
December 21, 2011
Congratulations to the BBC for that great quote from Robert Scott (See above) about the value of his father’s work. Didn’t it occur to him that as in 1950 the average wage was around £5 a week the artist was actually being very well rewarded,.. getting £38 after commission and framing costs. Instead a slur was cast over the Gallery that managed to extract such riches from one of the very few patrons in those times of austerity. His father’s work appreciated in value for two reasons. A) The originality of his ideas B) Dealers and critics were allowed to operate in a market free of regulation and restrictions. When I started my business in 1970 I could bid £100 at auction and that’s what it cost. No Vat, no buyer’s premium and no Artist’s Resale Right. It’s not just about the money it’s also about the administration involved which is slowly strangling the market.
http://www.bournegallery.com
Derek Newman
December 21, 2011
Yes, Robert Scott will henceforth benefit by €12,500 when one of his late father’s works is sold at the €2m level – and if puchased by a dealer at auction, by a further €12,500 if sold on again .. and again .. every time the item changes hands in fact – so rather a ‘nice little earner’ on the back of his father’s undoubted talent!
Of course, ‘the market’ will have to sustain the inclusion of ARR in the continuing rise in price of his father’s work, but even if it drops, he will still obtain a fee on any subsequent re-sale – which of course is one of the flaws in the scheme from a dealer’s perspective as the ARR will still be payable on a loss as well as a profit!
This example is clearly at the high value end, but way down the scale, I could purchase a watercolour for say £1,100 at auction by an artist who died in 1943 which might well have been executed in the 19th Century … (ARR £44 – the auctioneer of course ensures the buyer pays) and sell for £1,650 (ARR £66) and so provide the heir with £110 – less of course the 15% ‘admin fee’ of the collecting society, so £93.50. Is it worth it, once I have filled in the paperwork, paid the VAT, framing, conservation, stand cost of exhibiting at a Fair, etc etc? The answer has to be no!
Up to now, DACS has concentrated on the merits of the scheme to “the passionate support of thousands of British artists for whom the ARR is so vital” (Gilane Tawardos, DACS) but I fail to see why this should apply to the heirs as of 1st January 2012 – this is of no ‘support to living artists’ .
Robert Scott won’t have to worry, but many of those ‘thousands of artists’ surely will. John Robertson is right, dealers have been way too slow to wake up to the situation and the BAMF have concentrated much more on the ‘high end’ loss of sales overseas, rather than the detrimental effect to the middle market occupied by small, authoritive, specilaist dealers – who will undoubtedly diminish in result.
http://www.newmanfineart.co.uk
Joe
March 23, 2012
Cheap reproductions in the 100-pound range will make a lot more financial sense now, to sellers. Why pay millions in taxes that can be avoided by simply staying below the ‘collectable’ line? This has to be a sick joke for the artists!
Derek Newman
December 22, 2011
Ah, here it is, the explanation from DACS as to why ARR is to be extended to heirs & beneficiaries:
“The financial support from the Right will be enormously helpful in recognising the work that heirs and beneficiaries do through conserving artists’ estates including the costs of storage, conservation, cataloguing, research, restoration, assessment of provenance, and the identification of fakes”
So they’re ‘having a larf’ right? Does anyone seriously believe that artist’s work from the 1940′s & 50′s is still largely in the hands of heirs? No, the majority will already be on the secondary market, appear at auction, be purchased (by a dealer) who will ‘add value’ by undertaking all of the above ascribed to the heirs by DACS in order to resell! Does anyone else sense the irony here?
Never mind, incurring ARR on both purchase and sale will compensate the heir to carry on with their onerous tasks!
… and of course they can always dust off their relative’s works once in a while and sell it on. But what’s this, as a first sale it won’t be liable to the ARR! Oh Dear, they will ‘suffer’ auctioneer’s/dealer’s commission… Welcome to the ‘real world’ of the ‘Art Market Professional’!
Oh, but it’s OK as on subsequent re-sale they will obtain the ARR – so great, there’s the invaluable funding to carry on with all that archiving and conservation – or to spend on that foreign holiday …
Get Real. The majority of ‘heirs and beneficiaries’ of up to 70 years ago may well have no idea their relative’s work ever existed and will certainly have long lost track of it – until that ARR cheque lands on the doorstep that is!
http://www.newmanfineart.co.uk
Elliot Lee
December 23, 2011
Hey Derek, time to check if my Grandfather daubed a few canvases ! Could be in the money !
http://www.graysantiques.com
Derek Newman
December 23, 2011
You’ll just have to hope it sells – again & again & again ….! (keep up with all that ‘archiving, conservation & storage’ – not in a damp shed please!)
http://www.newmanfineart.co.uk
John Robertson
December 22, 2011
Had this funny dream the other night… dreamt I was at the Conservative Party Conference and this chap called Dave stood up and made a speech. With square jaw, steady eye and determined expression he said.”We need jobs-and we won’t get jobs by growing government, we need to grow our businesses. So here’s our growth plan: doing everything we can to help businesses start, grow, thrive, succeed. Where that means backing off, cutting regulation- we’ll back off, cut regulation. Where that means intervention, investment, -we’ll intervene, invest. Whatever it takes to help our businesses take on the world”
I never thought for a minute he actually meat it but it turns out he wasn’t kidding. By allowing the Artist’s Resale Right to be extended to heirs and estates for 70 years after death he will increase the revenue stream to the Collecting Agencies by 400% …thereby allowing them to employ dozens of new staff and inspectors. It’s one of the best job creation schemes he’s come up with since saving the Financial Services Industry and deciding to sort out the Somalian pirates. What a guy! By the time the next election comes around no one will remember the 10,000 odd jobs that have mysteriously withered away. Galleries support skilled framers and restorers, picture researchers and catalogue authors. Their revenue streams create jobs in advertising, design and publishing. Collectors and visitors from around the world fill West End Hotels….but hell what does that matter provided Damien and Tracey are in the ‘big tent’ and one or two super rich artists can relax in the knowledge that their grandchildren need never do a stroke of work for the next 70 years. ( Sorry! That’s so unworthy of me. Of course I accept that half a dozen artists and their heirs might truly have their lives transformed.. but has no one in this government actually studied basic economics and know about ‘opportunity cost’?..go look it up!
http://www.bournegallery.com
Exhibitors
December 22, 2011
Where was the support for you guys when this concept was introduced?
I have seen collection agencies popping up. It’s not their fault, just capitalising on the situation.It appears that this bill will cut off some of the hands that feed talent. Will artists have to take work elsewhere or worst case scenario, stop being creative? A good friend in the primary contemporary market, has suggested that even some Artists are not keen on this bill. Apparently, most just want their works out there (exposure) and being sold.
Who stands to benefit if Galleries / Dealers choose not to represent Artists that are caught in this directive? Will the collection agencies become the agents? Is that possible?
Derek Newman
December 23, 2011
Glad somebody’s paying attention at the back out there and can see where this is leading!
I think that’s a brilliant idea – DACS (which of course stands for Dead Artists Collecting Scam) can take over the biggest premises on Bond Street or environs (might soon be many vacant & available) and establish their own gallery!
Why should there be any need for any ‘Art Market Professionals’ to intervene? It could be a ‘one stop shop’ – just hope the premises is large enough to accomodate all those DACS employees!
Cynical moi? Must be too many mince pies & mulled wine at this time of year …
http://www.newmanfineart.co.uk
Exhibitors
December 23, 2011
Oooh, you are cheeky Derek, Cynical? No, refreshingly honest. Perhaps if DACS had known Mallett Antiques were on the move, a Bond Street head office might have been on the cards already?
John Robertson
December 25, 2011
Yes, Collecting Agencies will soon be popping up all over the place once the money boys catch on that the revenue stream is increasing fourfold! Remember there is no restriction under the Directive as to how many Agencies there can be. Of course this will make life a lot easier for Galleries. Instead of just the three Agencies already set up there could be another dozen. Dealers will have to find out which agency is acting on behalf of which artist and artist’s estate and then respond to all the other agencies telling them that the levy has been paid to one of their competitors. DACS.. now please don’t forget it’s a non-profit making organisation that just happens to remunerate it’s staff exceptionally well.. already sends out reminders to dealers asking them to confirm that they HAVEN”T sold anything that attracts the levy. They carry on sending reminders until you do behave like a good little child.
http://www.bournegallery.com
Derek Newman
December 23, 2011
..Only if they can buy up the premises between Mallett’s & the Fine Art Society, then they’d have enough room for all the back office staff ..
More seriously, my personal ‘beef ‘is not so much the ARR collecting on behalf of living artist’s which (in principal) I can see the sense of, but in the extension to ‘heirs & beneficaries’ of any artist that has died since 1942.
DACS ‘justification’ (see previous posts) is so patently ridiculous as to be only treated as a joke.
Why should I pay a ‘levy tax’ to the heir of an artist of a work they painted in the 19th Century and who died in 1942? The artist may well be ‘obscure’, the heir untraceable and the sum raised sitting in DACS coffers (earning interest) and paying for what exactly? Certainly not all the ‘archiving & conservation etc’ that the heir has supposedly undertaken … and which I have!
http://www.newmanfineart.co.uk
Exhibitors
December 23, 2011
I think most readers would agree with you entirely Derek. What would be the sollution in terms of heirs & beneficaries? Its not only the ‘levy tax’, but the time you will have to spend on this during the course of a week? Beurocratic nightmare as Ian Harris suggests ! Pleased to be an objects dealer based on all the above !
John Robertson
December 23, 2011
Has anyone else noticed the delicious irony implicit in Mary ( Queen of Shops ) Portas’s report to the Prime Minister on how to save our high streets? She exhorts retailers to provide personal, high expertise services not generally available in Shopping Malls. She exhorts borough councils to consider ways of reducing business costs for small family concerns. Proprietors need to go the extra mile to attract customers with fair prices and a cheery smile. She’s going to ‘talk passionately’ to our Dave about it. Ho-hum…maybe words have different meaning in Westminster…..
http://www.bournegallery.com
Exhibitors
December 23, 2011
The world appears to be moving on. I fear that the days of high streets might unfortunately be numbered for some John. What would you prefer to manage, a high steet store with all the complications and expenses that go with it, or a trusted web-site offering delivery F.O.C.? When Sir Phillip Green anounces the possible closure of up to 260 stores accross the UK, one might take this as an indication that, not only is business tough, moreover, online business is accounting for a growing revenue percentage for the high street. Figures just out for Next and John Lewis, further suggest this increasing trend. The recent sale of Elizabeth Taylor’s estate, which was an auction conducted purely online by one of the main figurehead auctioneers, is of huge relevance to our sector. This auction was very much in keeping with the increasing high street trend.
I suppose one of the upsides could be that high street rents may decrease over time, and that you might be tempted back into a shop at cheaper rent?
In percentage terms, how much business arrives through your own web-site when compared to the ‘shop front’ you had in Surrey?
John Robertson
December 24, 2011
In my experience picture buyers only buy on the internet those artists that they are already familiar with. In other words they have actually seen the work with dealers at Fairs or been to Exhibitions at Galleries. These are the seed beds from which great reputations grow. The work has to be physically seen somewhere and be seen to be in demand before people start trying to buy it cheaper on the internet or start paying over the odds at auction. For most artists it’s incredibly difficult to achieve lift off on their own. You wouldn’t believe the number of painters who approach me saying they have their own website but aren’t having any success or that they can’t afford to exhibit at Fairs.To pour a good dose of time consuming weed killer on these seed beds seems an excellent way of reducing many artist’s income whilst enhancing that of a few already successful ones. Dealers buy, buy back, sell and part-exchange the work of artist’s they promote thereby building the artist’s reputations to the artist’s benefit. They are now to be penalised for offering this invaluable service. Nobody loves dealers and yet it’s in their premises ..usually located in expensive locations near good restaurants for the convenience of journalists and critics, that patrons actually meet for the first time the great names of the future. The arts are about personal communication and nothing can do that so well as the intimacy of a gallery space. Nobody needs to buy a painting. It’s a bloody stupid thing to do with your hard earned money. It’s a love affair and love needs careful nurturing which takes time and patience. The good folk at DACS simply haven’t a clue how difficult this is to achieve.
http://www.bournegallery.com
Elliot
December 25, 2011
”Collecting societies acting on behalf of artists, have the right to question dealers about sales which they believe may qualify for ARR to enable them to ascertain the amount of royalty due and (where the dealer does not pay the royalty) the name and address of any other person (eg. the seller) liable to pay it. A request for such information may be made at any time within three years of the date of sale, and the recipient of the request must do everything in their power to supply the information within 90 days of the receipt of the request. If the information is not forthcoming, it can be pursued by a court order.”
Complete madness !
http://www.graysantiques.com
Derek Newman
December 26, 2011
‘The law is an ass’ – but nevertheless the law! Sooner or later I’m sure there will be a court case over this issue, not least to expose the folly for all to see (hopefully supported by BADA, LAPADA etc).
Unless an artist is ‘mandated’ by a collecting society, it is currently unclear as to if the ARR is payable. Technically following the letter of the law it would be, but if (in the case of deceased artists) there is no record of the relevant heir it shouldn’t be. DACS etc need to be far more transparent as to which artists are recorded on their database.
Bonhams (Oxford) have an auction on 4th January, containing 235 lots of pictures. A quick look reveals that there are many potential works that ‘could’ be liable to ARR for artists who have died since 1942. OK, it is a minor sale and many of these works will realise less than the equivalent of 1,000 Euros and so not be liable (although they might be on any subsequent re-sale)
But Bonhams will be obliged to pass any relevant ARR to DACS for distribution to heirs – which will keep them busy trying to establish who these ‘worthy’ individuals are! As John Robertson remarks, it is no wonder they require so many staff …!
http://www.newmanfineart.co.uk
I will be anticipating a large increase in my mail volume come 2012!
Derek Newman
December 26, 2011
…Here’s an example from that Bonhams Oxford auction on 4th January to explain how the implication of the ARR on desceased artists will alter how I operate my business:
Lot 54, by Philip Wilson Steer 1860-1942, Estimate £400-600. This is a minor watercolour by a major artist of the 20th Century. For the sake of arguement, lets say I purchased for a mid estimate £500 on which no ARR will be payable – although the actual cost to me will be £650 (including BP + VAT)
So, unless I sell on for no more than @£825 I will incurr the ARR on resale – once I have taken into account any further costs such as conservation, framing, cataloguing etc – not to mention any (modest) profit …
This is why it will simply no longer be practical to even consider purchasing such an item, so henceforth I will be very discriminating on the basis of an artist’s date of death!
http://www.newmanfineart.co.uk
John Robertson
December 26, 2011
BIRTHS, DEATHS AND MARRIAGES.
BIRTHS.
We are delighted to report the birth of triplets to Mr. and Mrs. Stassi of Filey ( Recently relocated from East Germany). The bonny bouncing babies are to be christened tomorrow at the Church of the Holy Treasury in Whitehall. Their names are “What’s it Worth?” Whose Got it?” and “Where is it Then?” They are to be educated privately at the exclusive BROWN BALLS SCHOOL OF ECONOMICS and should graduate just in time to serve under Vince Cable when he forms the next Coalition Government with Labour and introduces his Wealth Tax.
(NOTE: It’s rumoured that DACS wanted to ask dealers to supply the names and addresses of all buyers on their quarterly returns. Perhaps they were thinking ahead to when they open their first Gallery? But what about the Data Protection Act I hear you ask? Forget it… just think Wikileaks and one venal lawyer who’ll plead insanity due to pressure of work or personal problems about sexual identity.)
MARRIAGES
We are pleased to announce the forthcoming marriage of young Master FISCAL DRAG of Westminster to Miss SHORTSIGHTED, the charming niece of Lord PATENTLY OBDURATE, also of Westminster. The blessed union of this delightful couple guarantees that within a few years of inflation every faded, foggy old polaroid snap of Tracey stuffing her fanny with cash ( YES, the National Treasure really has got it all now!) will attract the levy. Congratulations and Doubles all round!
DEATHS
It is with sadness that we report the passing of the greatly respected Government Adviser Professor Sir COMMON SENSE. He was widely read, had a zest for life and a wonderful imagination. His knowledge of the arts was legendary and he was blessed with an iron constitution. All this changed when he was unexpectedly selected to become a Euro MP and prolonged contact in Brussels with the MISGUIDED PARTY OF GOOD INTENTIONS proved fatal. His death is all the more regrettable in that it could so easily have been prevented with an injection of the readily available generic drug ‘PRAGMATISM’. Unfortunately this was denied him by a box ticking Westminster Official who insisted that the treatment be cleared by a European Commissioner. The two year delay was unforgivable and has left lasting anger amongst his many friends.
http://www.bournegallery.com
Derek Newman
December 26, 2011
Quite so!
But what’s this ..”NOTE: It’s rumoured that DACS wanted to ask dealers to supply the names and addresses of all buyers on their quarterly returns”
I’m rolling around amongst the wrapping paper and mince pies – best joke I’ve heard so far over Chrissy!
Here’s a ‘test case’ scenario: Sell a picture by an (obscure) artist who died in the early 1940′s for a sum that just incurrs the ARR – say £900. But withold the 4% levy due – until DACS can provide proof that they have certain knowledge of an heir who will benefit. (They’ve got 3 years and plenty of staff so should be able to do it!)
If not – let’s hope that there are ‘supporters’ out there who will fund the defence …
http://www.newmanfineart.co.uk
Elliot Lee
December 27, 2011
Dear all
Do you think that the Art Dealing community in the UK, are fully prepared for the extended ARR and the effect it will have on their businesses? Has there been enough awareness in the market of the impact it will have? Does the extension of ARR have the capacity to devastate small to medium sized Art Dealerships in the UK?
http://www.graysantiques.com
Niall Fairhead
December 28, 2011
28th December 2011
I have to say that I am consumed with worry and apprehension about this terrible blow of the extension to the ARR on the 1st January 2012. I find myself in a position similar to that of John Robertson but, unlike him , most of my turnover comes from sales of works by dead artists. When ARR started on living artists works I was so appalled by the implications and so opposed to the principals involved that I stopped buying and selling works by living artists – probably not the result the perpetrators of the legislation wanted. Now that this extension is coming on the 1st January I find myself in the firing line for this pernicious, vicious and unfair procedure.
We have been in business for 25 years. We are a husband and wife team and turn over something like Half a Million Pounds a year. We specialise in works by Picasso, Matisse, Dali and their fellow members of the School of Paris. Our business depends on Trade sales to Galleries. We buy a lot of works which we then provide to clients in complete shows. Our margins are slim – something in the order of 20% on turnover – but because we have a volume of sales we have enjoyed a successful business for many years.
I applaud the comments above about how organisations such as DACS will wax rich and successful on the undoubted poverty which their diabolical scheme will thrust upon us. It is said, maybe “Tongue in Cheek” that they might have new Centrally Heated premises in Bond Street where their staff, working “easy hours” from 9 to 5 will extort large sums from the likes of us who have always worked very hard and for little reward. Yes – I can sympathise with the tone of such comments !
As John Robertson says the mathematics of it all are painfully real:
Net Profit 20%
Loss on purchase 4%
Loss on sale 4% 8%
Reduced gross margin 12%
Because we make slender profits we have survived and even thrived in our chosen business. We work on average, like many in our position, 6 day weeks and often 12 hour days. We are industrious, hard working and serious people whose commitment to the profession is 100%. We are threatened with closure by this damnable new assault on our livelihood.
Apologists for the system will come up with two suggestions, no doubt, as to what we should do:
Increase prices to pay the 8% lost .
………..Unfortunately we live in times of recession and to maintain the current pricing structure is challenging.
Absorb the 8% lost
……….. and live on just 12% !!!!
My feelings about the justice of this new extension are also quite puzzled. Its fine for the sons of successful artists to wait expectantly for huge bonanzas coming their way but is it fine for those coerced into paying these sums? Mention has been made above to the comments made by Robert Scott about resales of works by his illustrious father. In my case may payments will be going to:
The heirs of Picasso
The heirs of Matisse
The heirs of Dali
The heirs of Miro
The heirs of other artists (Who are already as rich as Croesus)
I do not really see why we, with our moderately successful business , should beggar ourselves to benefit such people. I can see nothing but great injustice in this.
I am sorry to say that the fact that this pernicious legislation never touched our sovereign Parliament in Westminster too sticks in my gullet. Legislation such as this from Brussels shows the great wisdom of Euorscepticism! What a shame that out well respected Premier cannot exercise his veto on our behalf to protect us against this monstrous undemocratic blight on the First of January. I have to applaud the unequal struggle on the part of Anthony Browne of the British Art Market Federation who has done his best although the odds have been so heavily stacked against him. A chance meeting, some while ago, allowed me to shake his hand and tell him so.
And where does this theory take us? Maybe a few example on the subject of “Collectables” could be considered?
I gather that some sorts of vintage cars are worth more then they were a few years ago. Maybe the likes of Rolls Royce should charge ARR? The company, of course should benefit and the 70 year rule is thus cleverly set aside.
Jewelry too has gone up in value in recent times: should ARR be charged on this?
The writers of rare “First Edition” books too might do well with a spot of ARR. Recent works about a certain Mr Harry Potter might attract an even greater fortune for their illustrious author?
I could develop this theme and, indeed, would enjoy doing so – but what is the point? For me it is obvious that the concept of Intellectual Property could be extended many fold. If it is fair for ALL Intellectual Property concepts to receive ARR then it is unfair for just SOME to do so. The concept of this, no doubt, would be music to the ears of the people of DACS but perhaps not to those who are trading in secondary marketplaces for certain goods ! Many who sleep soundly now may not be doing so once the likes of DACS consider how much greater to make their fortunes be.
I could continue on this theme but really I have said my piece. I am so totally opposed to this whole concept and believe it has every chance of making me close my business of 25 years standing in the years 2012.
http://www.images-art.co.uk
Elliot Lee
December 28, 2011
Niall, this is outrageous !
”NOTE: It’s rumoured that DACS wanted to ask dealers to supply the names and addresses of all buyers on their quarterly returns”
John, is there any evidence to substantiate this rumour?
Does anyone have any idea of who owns and runs the likes of DACS? Or indeed who are the backers of these collection agencies, and who are they linked to?
”The Design and Artists Copyright Society is a Company Limited by Guarantee. Reg office as above. Reg England No. 1780482”
DACS is a business not a charity.
http://www.graysantiques.com
DACS announces new Chair
DACS (the Design and Artists Copyright Society) is delighted to announce the appointment of Mark Stephens CBE as the new Chair of the Board of Directors, replacing Andrew Potter who steps down in December 2011.
Mark is also extremely active in many other areas having been appointed by the Foreign Secretary to the FCO Free Expression advisory board and the Lord Chancellor to be a Champion for the Community Legal Service.
Niall Fairhead
December 28, 2011
28th December 2011
I have to say that I am consumed with worry and apprehension about this terrible blow of the extension to the ARR on the 1st January 2012. I find myself in a position similar to that of John Robertson but, unlike him , most of my turnover comes from sales of works by dead artists. When ARR started on living artists works I was so appalled by the implications and so opposed to the principals involved that I stopped buying and selling works by living artists – probably not the result the perpetrators of the legislation wanted. Now that this extension is coming on the 1st January I find myself in the firing line for this pernicious, vicious and unfair procedure.
We have been in business for 25 years. We are a husband and wife team and turn over something like Half a Million Pounds a year. We specialise in works by Picasso, Matisse, Dali and their fellow members of the School of Paris. Our business depends on Trade sales to Galleries. We buy a lot of works which we then provide to clients in complete shows. Our margins are slim – something in the order of 20% on turnover – but because we have a volume of sales we have enjoyed a successful business for many years.
I applaud the comments above about how organisations such as DACS will wax rich and successful on the undoubted poverty which their diabolical scheme will thrust upon us. It is said, maybe “Tongue in Cheek” that they might have new Centrally Heated premises in Bond Street where their staff, working “easy hours” from 9 to 5 will extort large sums from the likes of us who have always worked very hard and for little reward. Yes – I can sympathise with the tone of such comments !
As John Robertson says the mathematics of it all are painfully real:
Net Profit 20%
Loss on purchase 4%
Loss on sale 4% 8%
Reduced gross margin 12%
Because we make slender profits we have survived and even thrived in our chosen business. We work on average, like many in our position, 6 day weeks and often 12 hour days. We are industrious, hard working and serious people whose commitment to the profession is 100%. We are threatened with closure by this damnable new assault on our livelihood.
Apologists for the system will come up with two suggestions, no doubt, as to what we should do:
Increase prices to pay the 8% lost .
………..Unfortunately we live in times of recession and to maintain the current pricing structure is challenging.
Absorb the 8% lost
……….. and live on just 12% !!!!
My feelings about the justice of this new extension are also quite puzzled. Its fine for the sons of successful artists to wait expectantly for huge bonanzas coming their way but is it fine for those coerced into paying these sums? Mention has been made above to the comments made by Robert Scott about resales of works by his illustrious father. In my case may payments will be going to:
The heirs of Picasso
The heirs of Matisse
The heirs of Dali
The heirs of Miro
The heirs of other artists (Who are already as rich as Croesus)
I do not really see why we, with our moderately successful business , should beggar ourselves to benefit such people. I can see nothing but great injustice in this.
I am sorry to say that the fact that this pernicious legislation never touched our sovereign Parliament in Westminster too sticks in my gullet. Legislation such as this from Brussels shows the great wisdom of Euorscepticism! What a shame that out well respected Premier cannot exercise his veto on our behalf to protect us against this monstrous undemocratic blight on the First of January. I have to applaud the unequal struggle on the part of Anthony Browne of the British Art Market Federation who has done his best although the odds have been so heavily stacked against him. A chance meeting, some while ago, allowed me to shake his hand and tell him so.
And where does this theory take us? Maybe a few example on the subject of “Collectables” could be considered?
I gather that some sorts of vintage cars are worth more then they were a few years ago. Maybe the likes of Rolls Royce should charge ARR? The company, of course should benefit and the 70 year rule is thus cleverly set aside.
Jewelry too has gone up in value in recent times: should ARR be charged on this?
The writers of rare “First Edition” books too might do well with a spot of ARR. Recent works about a certain Mr Harry Potter might attract an even greater fortune for their illustrious author?
I could develop this theme and, indeed, would enjoy doing so – but what is the point? For me it is obvious that the concept of Intellectual Property could be extended many fold. If it is fair for ALL Intellectual Property concepts to receive ARR then it is unfair for just SOME to do so. The concept of this, no doubt, would be music to the ears of the people of DACS but perhaps not to those who are trading in secondary marketplaces for certain goods ! Many who sleep soundly now may not be doing so once the likes of DACS consider how much greater to make their fortunes be.
I could continue on this theme but really I have said my piece. I am so totally opposed to this whole concept and believe it has every chance of making me close my business of 25 years standing in the years 2012.
http://www.images-art.co.uk
Derek Newman
December 28, 2011
Gilane Tawadros, Chief Executive of DACS says: “We are delighted that artists’ families and beneficiaries will now benefit from this important Right. In addition, the Government’s decision to rectify a MISTAKE in the original legislation brings the UK into line with the rest of Europe meaning that many more heirs and beneficiaries can benefit.”
Since the implication of the ARR in 2006, all the correspondance I have seen from DACS (mainly in the ATG) has been self-righteous and patronising towards ‘Art Market Professionals’
Niall Fairhead’s account graphically illustrates how extending the ARR to ‘heirs & beneficiaries’ will seriously impact on his (long established) business in the secondary market. Not that DACS will care – just so long as he somehow manages to contribute a percentage to those clearly impoverished heirs, who lest we forget are ‘deserving’ according to DACS as:
“The financial support from the Right will be enormously helpful in recognising the work that heirs and beneficiaries do through conserving artists’ estates including the costs of storage, conservation, cataloguing, research, restoration, assessment of provenance, and the identification of fakes”
http://www.newmanfineart.co.uk
I cannot think of a better summary to describe exactly what the ‘AMP’ actually does – and DACS attributes it to the heirs! They have no recognition of the Dealer’s role as the many previous posts explain (above) – our only function appears to be to provide a Royalty without any consideration as to how it is actually achieved … or at what cost.
Exhibitors
December 29, 2011
”There is a cap on ARR of euro12,500, i.e. a work of art selling for €2,000,000 is liable to pay €12,500 ARR and so is a work of art selling for any sum in excess of this. ”
For those readers selling higher priced works, how long do you think the afore-mentioned cap will remain @ e12,500!
Jeremy Green
December 29, 2011
I am sure we would get much more support from the auctioneers with Droit de suite if they felt it was going to harm their business. If they had to include the the droit de suite fees in their buyers and sellers premium and not just add it on. Maybe all dealers should refuse to pay droit de suite until the auctioneers have to include it within their premiums!
http://www.thecanongallery.co.uk
Derek Newman
December 30, 2011
…And pigs might fly!
Can’t recall any opposition to the (ever increasing) Auctioneers Buyers Premium being effective from the trade … and you’d still have to pay ARR on subsequent resale. Unless of course you (openly) charge it to the buyer as a % add on (likely to go down well …)
But as Niall Fairhead has comprehensively explained, in current market conditions that is going to squeeze his profit margin to the point where his business is unviable.
I have previously explained that operating at the lower end of the impact where ARR ‘kicks in’ I will simply stop purchasing such items at auction as it is simply not worth the loss of 4% and the accompanying admin – and if enough people do that, then the auctioneers might, just might realise that their current model of charging ARR to the buyer isn’t resulting in sales and so also complain about the application of ARR on deceased artists since 1942.
At the ‘top end’ auctioneers will surely lose consignments overseas – particularly to the USA where ARR isn’t relevant. The result, whichever way you look at it is an acceleration of the decline of the UK art market for all the reasons John Robertson states in his original instigation of this post …. Do the Maths!
http://www.newmanfineart.com
Joe
March 23, 2012
I wonder how many paintings are going to be stuck in NYC galleries for the next 40 years?
JackM
December 29, 2011
What about starting “renting” or leasing the art to the “buyer” with $10 and consideration as a payment and additional terms in separate agreement? (less expensive works)
World developed already some techniques to hide assets and how to sell them without a tax.
For example by creation of separate legal body = company (INC or LLC) owning the asset. When sale of such Company is completed there is no Tax due since nothing of great value is changing hands / was transferred in the selling agreement. There is not a message that the Company controls this and that. Wealthy and expensive works of art sooner or later will find a way to avoid this senseless tax.
This is done already everyday. Just the world is becoming more and more crooked.
info@paperbee.net
Elliot Lee
December 29, 2011
Jack, Whilst I appreciate that there may well be ways of eleviating certain financial burdens, this really is not what this debate has been centred around. This unfair ARR extension appears to be a threat to many Dealerships ( and those cottage industries reliant upon those dealers) some of which have been established for decades. Niall’s account of the effect of extended ARR on his business is quite moving;-
”I have to say that I am consumed with worry and apprehension about this terrible blow of the extension to the ARR on the 1st January 2012. ”.
In short a long standing respected member of the Art Dealing community might have to close his business next year thanks to this directive.
The powers that be should to take notice of these comments. I am certain that dealers do not want to run their businesses working out how to eleviate tax burdens. My friends in the business just want to continue running their businesses and earn a modest profit for their hard work which is difficult enought to do in this climate.
http://www.graysantiques.com
”If not – let’s hope that there are ‘supporters’ out there who will fund the defence …”
John Robertson
December 29, 2011
Apologies. I am in error! It was foolish of me to suggest that Her Majesty’s Government has acted without pragmatism in it’s approach to Droit de Suite. In fact the reverse is true. It’s just that I never expected the British Art Trade to be served up as an hors d’oeuvre quite so frequently at banquets in Brussels. In retrospect it’s obvious that we were the perfect pawn to be sacrificed in late night negotiations over everything from fish quotas to persuading the French to eat our splendid British beef ( think Mad Cow Disease) during the Blair/Brown years. The administration that banned Fox Hunting on class grounds wouldn’t have blinked at shafting the interests of toffs in Bond Street. Thousands of votes gained from left leaning artists and a few hundred forfeited form chaps in sharp suits who’d never have voted Labour any way. No brainer!
http://www.bournegallery.com
Derek
December 30, 2011
Derek Newman says:
December 30, 2011 at 9:54 am (Edit)
…And pigs might fly!
Can’t recall any opposition to the (ever increasing) Auctioneers Buyers Premium being effective from the trade … and you’d still have to pay ARR on subsequent resale. Unless of course you (openly) charge it to the buyer as a % add on (likely to go down well …)
But as Niall Fairhead has comprehensively explained, in current market conditions that is going to squeeze his profit margin to the point where his business is unviable.
I have previously explained that operating at the lower end of the impact where ARR ‘kicks in’ I will simply stop purchasing such items at auction as it is simply not worth the loss of 4% and the accompanying admin – and if enough people do that, then the auctioneers might, just might realise that their current model of charging ARR to the buyer isn’t resulting in sales and so also complain about the application of ARR on deceased artists since 1942.
At the ‘top end’ auctioneers will surely lose consignments overseas – particularly to the USA where ARR isn’t relevant. The result, whichever way you look at it is an acceleration of the decline of the UK art market for all the reasons John Robertson states in his original instigation of this post …. Do the Maths!
http://www.newmanfineart.co.uk
Niall Fairhead
December 30, 2011
30th December 2011
The ARR overseas ……
One of the benefits of our business is that we travel a great deal and that travel is devoted to the buying and selling of art. Our most frequent destination is France but we are frequently in other European countries and we usually do at least one trip to America in the course of our year. In the last few years we have been seeking out new markets in the Far East and our current show, which opens in January is with a prominent Gallery in Singapore which we visited in the summer. Readers of this blogg may not be aware of the International reactions to the ARR and perhaps I am in a better position then most to make a comment relating to my own experiences since I travel so much.
Hong Kong:
I was in Hong Kong at a dinner and happened to sit next to a charming lady about to take up an important Hong Kong government post. In the course of a long conversation I remarked upon the terrible self inflicted blow about to fall on the UK Art Market – the extension of ARR to the Estates of Dead artists. The lady in question was most interested in what I had to say and asked me to meet senior colleagues of hers on my return to London. On my return home I told them all they wanted to know about ”The Folly” about to take place on the 1st January 2012 when the ARR is extended to the Estates of dead artists..
The Hong Kongers explained to me that their state policy is to expand their arts industry and “The Folly” of 2012 might well enable them to “capture” a lot of the business which London would certainly be losing. They would be taking strident steps to capitalise on this situation lead by senior governmental figures. They courteously thanked me for my kind assistance.
Hong Kong has zero tax on imported works of art. They have no ARR. This taxation policy allows them a competitive advantage in storing and selling Works of Art as a hub for many markets which do not have such an advantage. A 13% advantage is very helpful to them. The 5% VAT imposed on imports to the EEC PLUS the 4% ARR on the purchase and 4% on the sale means that investment art will be held in their warehouses and not ours. Naturally they will be planning to build more such warehouses. Similarly they will be inviting discussions with major Art Dealers who will be moving large parts of their businesses away from uncompetitive market places and doing all they can to promote international dealing based from Hong Kong. They will be having discussions with auction houses to encourage them to hold their more important sales away from London and in Hong Kong. Be sure that what I am telling you is true : Hong Kong will take a large slice of the business lost to us due to “The Folly”.
Geneva:
I do a certain amount of business with Swiss dealers who are very courteous and easy to work with. Last year I concluded a deal with one and over lunch told him about “The Folly”. He could not believe his ears! However he did give me a lot of sympathy for the colossal losses this would heap upon Dealers such as us but , no doubt, was glad to hear of the bonanza coming to his country as a result of this. Switzerland, as we know, is outside the EEC. The warehouses in that country hold some of the greatest works of art imaginable in a Duty Free Store. No doubt the Swiss will build more such warehouses to house the works which will pore in from Europeans seeking to avoid “The Folly”. The Swiss will doubtless benefit greatly from ARR avoidance and ARR evasion. Many will seek to illegally evade ARR.
Paris:
Of course I know Paris very well and make several trips every year to the auctions and to visit the dealers. I have had many conversations with French Art Professionals about the ARR. A generally held belief in the profession is that ARR on Dead Artists Estates is a levy which will only effect the Auction Houses and that Dealers and Galleries have not paid it and will not pay it. There seems to be little or nothing done by way of enforcement and they will, naturally, not make payments on a voluntary basis. When I asked if this course of action was dangerous or not they would generally laugh out loud. No one I know has heard of a successful investigation or prosecution of any sort. I was told that this simply did not happen in France. The payment of ARR on Dead artists Estates seems to be the law but not the practice of the French Art Professional. Evasion on a massive, if not nearly universal scale, seems to be what is happening. When I explained that Her Majesty’s Government, in their great wisdom , would take a very different tone in our land and that doubtless enforcement procedures will be introduced and enforced my French friends were genuine and universal in their sympathy for the plight of their fellow professionals in the United Kingdom.
We do deal in Quality Art Photography and I had an interesting conversation with the owner of a prominent Photography gallery with whom we do a lot of business. He explained that he mainly dealt in Secondary Market photographs but that fortunately most of these were “outside the scope” of the ARR. I purchased a group of works by the prominent Andre Villers who is a living and very noted photographer whose work I admire very much. Recently in Mouguins in the South of France “The Andre Villers Museum of Photography” has opened and I was privileged to visit it. My friend, at my instigation, looked up to see if ARR should be paid on sales of works by this important photographer. “Non Monsieur – his name is not on the list”. I am not sure which list he referred to but it seems that the French have a list which explains which artists have to have ARR paid for their secondary sales – and Villers was not on that list ! Some work, my valued friends and colleagues, on this subject needs to be done. My understanding is that such a loophole does not exist in the UK – but it seems to in France. Can anyone throw light on this anomaly? Can we find a legal reason in the UK to avoid ARR at least on some if not all artists ? If not why do the French have this right and we do not in a Common Market with a seemingly universal law on this aspect of the art trade. Does some hope lie in such research?
Milan:
Occasionally I visit Italy in search of interesting items to buy and recently I was in Milan on such a quest. The Milanese are a jolly bunch and I do enjoy my visits – although some of them constantly try to sell me very well made and dangerous forgeries which is a source of some annoyance. The Milanese laughed out loud at the idea of paying ARR on the estates of dead artists until 70 years after their death! For them it was a source of merriment! As in France I explained the situation in the UK and they had an entirely sympathetic and comradely sympathy to the plight of those threatened by “The Folly”. The law in Italy is evidently very frequently not followed.
Summary:
I have made a few points and pointers here. The law is very frequently NOT followed or enforced in Euroland. Doubtless it will be enforced and followed here. Is this justice? Of possible equal importance is the existence of potential legal loopholes which need to be investigated and examined. We, as dealers and sufferers are “all in this together” and must seek to ameliorate the impact of “The Folly” in any way we can. We must help each other with ideas, plans, schemes and concepts. All such thoughts are welcome to resist the great curse of ARR about to descend upon us.
Niall Fairhead
Fairhead Fine Art Limited ta Images
http://www.images-art.co.uk
Derek Newman
December 30, 2011
Niall – this is most interesting and informative.
I understand that there is likely to be ‘pressure’ put on collecting agencies such as DACS to declare which artists are ‘mandated’ – ie held on their database as being eligible to receive any ARR raised.
As many desceased artists of as far back as 70 years ago will not have any clearly traceable heir to recieve the benefit, I see no reason for it to be paid. If it is (and as previously mentioned) then there will be accumulating funds in DACS coffers not serving the ‘purpose’ for which it was designed.
As John R remarks, this is complicated by differing collecting agencies, with different ‘mandated’ artists. There needs to be much greater transparency from all agencies as to who is mandated – particularly with the extension liable to all artists who have died since 1942.
At best, my feeling is that if no heir is found within 3 years, then money set aside should not required to be paid. Apart from the complete ridiculousness of DACS statement as to WHY heirs & beneficiaries should benefit, many such people will have no idea of the works their relative undertook – and will have long lost track of it.
As for the different ‘interpretations’ our continental friends have given you, well I don’t expect there will be many Greek heirs expecting to recieve any ARR any time soon …!
http://www.newmanfineart.co.uk
Niall Fairhead
December 30, 2011
Hi Derek
Your comment is of great interest. However it is not just this question of tracing the heirs. In the instance I quoted (unsubstantiated although it might be) there was no legal obligation for a French photography dealer to apply ARR to the living Monsieur Andre Villers, a famous and respected photographer. If this is correct it possibly closes many doors for DACS & Co.
John R’s comments are also of great interest. Do we have a proper list of the collecting agencies and their webbsites? If anyone has got this I would personally like to receive one.
Your comments on “Greek heirs” are well made. Her Majesty’s Government ought to be made aware, however, that the practice in Europe is to avoid and evade the law to the prejudice of the UK Art professional. Often Continental Dealers might compete with me for a sale. If I have to pay ARR and they do not am I helped in winning the business? I think not!
Niall Fairhead
Fairhead Fine Art Limied t/a Images
http://www.images-art.co.uk
Niall Fairhead
December 30, 2011
Online petition – 30/12/2011
I have been spending my morning working on the subject of the ARR and would encourage all Art Dealers and Galleries to do a similar research project. The DACS webbsite is the first port of call and immediately I saw that an online petition was quoted. This petition was billed as follows:
“The online petition supporting the final implementation of the Artist’s Resale Right has almost 2,000 signatures from artists and those with an interest in the art trade. For more information, visit http://www.ipetitions.com/petition/arr “
This is the wording of their petition:
“ Petition for Artist’s Resale Right
We, the undersigned, welcome the full implementation of the Artist’s Resale Right from 1 January 2012. We call on the UK Government and European Commission to recognise the importance of this Right in supporting artists, their families and beneficiaries.
The royalties from the Right will provide desperately needed funding for artists’ families and beneficiaries, who inherit the burden of managing an artist’s estate, including the costs of storage, conservation, cataloguing, research and restoration as well as identifying works.”
On this ipetitions webbsite it is a simple matter to set up a petition. In my view it should also be a relatively simple matter to obtain MORE THEN 2000 signatures from those who have been afflicted by the curse of the ARR on our own petition and I suggest we make one accordingly. This new petition could then be used as part of the propaganda war against the scourge of full implementation of the ARR.
I for one would put a link to this petition to my webbsite. I would then e-mail my entire client list and dealer network both in the UK and overseas requesting signatures. Would my fellow travelers on this webbsite do the same?
The wording of this petition is of great importance and I suggest that we discuss this as a forum and try to get a measure of agreement before placing it online. Once this is done I suggest we do all we possibly can to:
Get signatures on the petition.
Use this in any away we can to fight the curse.
My draft follows. I ask for constructive thoughts and suggestions on this subject:
“ Petition against the full implementation of the Artist’s Resale Right
We, the undersigned, deplore the full implementation of the Artist’s Resale Right from 1 January 2012. We call on the UK Government and European Commission to understand the devastating effect this will have on the Important Art Industry in the UK. The extension of the Right to the Estates of Dead Artists for 70 years will not serve the UK well.
The Royalties from the Right will mainly be paid to the estates of successful artists who are already rich.
The Right will be a hammer blow to those Dealers and Galleries involved in Secondary Market trading who will be obliged to pay a large levy on both their purchases and sales . They will have difficulty in these hard economic times in financially supporting such payments. Many such organisations will be forced into liquidation or closure and many jobs lost.
The UK Art Industry, one of the greatest and most successful in the world, will be severely damaged by much business leaving the UK to countries not supporting The Right such as The United States, Hong Kong and Switzerland.
UK Art Professionals provide management of many Artists Estates, storage, conservation, cataloguing, research and restoration services. The full implementation of the Right will prejudice such activities.
Artists need a strong professional body of hardworking Galleries and Dealers whose full time occupation is to sell their work. The full implementation of the Right will very adversely affect this service “
Please take time to read this and comment. I would appreciate your comments online or to me personally at nfairhead@images-art.co.uk. Let us not take this attack on our livelihood lying down !
Niall Fairhead
Fairhead Fine Art Limited ta Images
http://www.images-art.co.uk
Exhibitors
December 30, 2011
Dear Niall
You are welcome to post a petition on the front page of the AAD blog.
All that readers would need to do is leave their name and web-site as a supporter of the petition. Easily counted. Comments also welcome of course.
I think one might have to have an indication of how many international dealers are also affected by this directive. Is the UK the only country affected to the extent that you
describe?
Also, as you can see above, America is soon to have a similar bill enter congress ( I hope that’s correctly put). How keen are our USA colleages on this bill? It doesn’t sound as harmful as the version of ARR implemented over here, but as we know, things can change along the way.
How solid is the 12,500 e cap for example? Forever or just for now?
Derek Newman
December 30, 2011
Niall – here’s a ltttle bit of history:
“First proposed in the 1860s, the droit was established in France in the 1920s to assist the widows of artists killed in the 1914-18 War. It supplemented a special tax on the overall turnover of art dealers that has been used for a special arts social welfare fund.
Droit de suite provisions were subsequently incorporated into the copyright legislation of most nations in what is now the European Union and reflected in the Berne Convention for the Protection of Literary & Artistic Works, The EU Resale Royalty Directive harmonises legislation in the various EU states, including the UK” (Source: caslon.com.au/droitprofile – more to be found there)
As far as I’m aware, there are (currently) 2 UK copyright collecting agencies (for the visual arts) Artists’ Collecting Society (ACS) & Design and Artists Copyright Society (DACS) Check it out on Wikipedia – the French it would seem have rather more …
I am not familiar enough with the directive to know for sure if living French photographer’s work is laible for the ARR – does anyone else care to comment?
There is no doubt the legislation will be and is, subject to differing interpretation (and implication) across the EU – loopholes, avoidance etc. But as you state, we unfortunately will be subject to UK administration – to our disadvantage maybe in comparison to our Continental neighbours who as you previously mentioned are rolling around laughing that we are taking it seriously!
Currently, I’m sure many dealers are snoozing their way through the ‘Xmas doldrums’ and are not even aware of the significant impact of the extension as of 1st January. They’ll soon wake up ….
http://www.newmanfineart.co.uk
John Robertson
December 30, 2011
Hi Niall, Your observations on how our European competitors operate the scheme confirm what many of us suspected or already knew. I had a long business relationship with a very well respected Dutch gallery. When I expressed my fears about the introduction of ‘droit de suite’ some years ago I was told ‘Oh, that’s just for the auction houses..we don’t bother with that’. I thought how odd..how can you just ignore it ? I began asking the question whenever I fell into conversation with every European dealer I met. The answer came back the same; ‘Oh, That’s just for the auction rooms’. European dealers have known for decades that the system discriminates against fair minded, legitimate, high profile dealers who want to operate within the law. British dealers now have a choice to make. Step onto the scaffold, place the noose around your neck and ask the nice man from DACS to pull the lever..or tell the nice Government Ministers in no uncertain terms that as the scheme is unworkable and unenforceable and that as any successful implementation in any form is entirely dependent on the good nature of compliant dealers they had better listen…otherwise we are all going to be smelling of garlic and eating too much cheese. This country is not in the habit of passing laws that discriminate against fair minded people. Droit de suite is the thin end of a wedge. When good people start to disrespect the law on one issue they quickly start to disrespect it on others…particularly where tax is concerned. Greece here we come!
http://www.bournegallery.com
Francesca Fiumano
December 30, 2011
Just a quick thank you to all those who have commented so far on the ARR question. I predominantly deal with living artists on an SOR basis (ie very few secondary sales). Because of this my knowledge of the complicated question of ARR was basic to say the least. Thanks to your knowledge and insight i for one feel that should i find myself in the position of having to pay ARR i will now at least be armed with the facts. I hope that the snoozing dealers wake up soon and read this blog.
A question – as with any new legislation there is always what i like to think of as wiggle room – is ARR water tight or is there any space for a bit of a wiggle? ie directing sales through non EU or if working with artists/estates directly requesting they sign a waiver in return for the invaluable services provided by yourselves? I know this would not work at auction but may be better than nothing.
Wishing every one a very happy new year
Francesca
About
December 31, 2011
Art, Antiques and Luxury Design Blog
This blog has been established so as Exhibitors and members of the Art, Antiques, Design and Luxury Markets are presented with a Forum in which positive comments, ideas and suggestions that may benefit and enhance these Markets, can be exhanged and debated. We hope that this blog becomes a positive collaborative force in the market and that it might assist the artistic and creative industries to which we are all affiliated, to ultimately flourish and grow.
Sarah Percy-Davis
December 30, 2011
LAPADA The Association of Art & Antiques Dealers, since its inception in 1974, has grown to become the largest association of professional dealers not only in the UK but also in Europe. Although the majority of its membership is UK based, LAPADA also currently has 55 members in 16 countries worldwide, of which 26 are located within the EU. Membership is only open to those who meet the Association’s requirements as toexperience, quality of stock and knowledge of their subject. Between them, members cover virtually every discipline from antiquities to contemporary fine art and must abide by the Association’s strict code of practice.
Two years ago the Association established LAPADA Modern, this arm of the organisation was formed to support galleries dealing in modern and contemporary art and design. LAPADA has 583 members in total, 63 of whom are represented by LAPADA Modern and this group of dealers are currently most affected by the Resale Right as one would expect. However there are a surprising number of dealers in the core organisation, who will be selling qualifying works if the right is extended to the work of deceased artists for 70 years after their death. According to our most recent annual membership survey (December m2010), Droit de Suite currently affects 8.5% of our members but if the right were extended to sales of deceased artists in 2012, the total number affected would rise to 30.5% which represents 177 members. Half the membership has a turnover of between £100,000 and £500,000 (approx €120,000-€ 580,000), with 14% having a turnover of below £100,000 and 16% over £1 million (approx€ 1,165,000).
Our members are all small businesses, 41% are sole traders or work in partnership with just one other person, the remaining percentage employ an average of 2 full-time members of staff and one part time, therefore all additional administrative burdens affect them disproportionately compared with larger companies. Our members are already struggling in the current economic climate and those who would be affected if the resale right is extended greatly fear the extra expense and consumption of their time as they certainly could not afford to take on extra staff to cope with the work required to administer the right. Currently, a number of our fine art dealing members have stopped dealing in secondary sales of works by living artists because they cannot justify the costs and time involved in doing so. They are also reluctant to buy works directly from artists as it is more economical for them to sell on behalf of the artist on a sale or return basis to avoid secondary sale status. This is obviously not advantageous for the artist. If the right is extended to cover the work of deceased artists within the 70 year period of copyright those who deal in this sector are seriously thinking of changing direction to the benefit of no-one, least of all the heirs of the relevant artists.
For a British dealer, there is an added disincentive to buy at auction, where the levy is passed on to the buyer, then when the dealer re-sells the work in the UK he has to pay the levy a second time. On works below €50,000 this means that the dealer must consider an 8% margin for Droit de Suite. The European Parliament originally wanted droit de suite to be related to the increased value, but the proposal was opposed by the EC on the grounds that the system would be unworkable. This seems to us inherently unfair and could be addressed if the liability of droit de suite related to the resale profit as it should. As suggested by BAMF we hope that the Government will research the possibility of applying a similar system as the VAT margin scheme, which enables VAT registered dealers to offset their input VAT against their output tax, so that the same amount is not taxed twice.
There are well over 10,000 small businesses engaged in the British art market and the Artist’s Resale Right involves unwelcome bureaucracy and costs in both money and time for such businesses. Should the levy be extended in 2012, the increased volume of paperwork and time needed to deal with it could be the last straw for some.
The British art market has for many years been the second largest art market globally, second only to the US and it is still by far the largest in Europe.
However the UK is under pressure from international competitionespecially with the growth of new economies such as China. Our global market share in 2010 for living artists has decreased from 2009, the year of economic crisis, despite the fact that the market has made some recovery. This is significant if compared to what is happening in the market for deceased artists, a sector in the UK currently protected by the derogation; from 2009 to 2010 the UK’s global share for deceased artists in fact recovered by 3%. There are of course multiple economic factors at play however higher transaction charges and administrative burdens will undoubtedly make the UK and Europe a less attractive place to sell art and buy art.
The market for living artists currently represents by value 14% and the market by value for deceased artists is 48%, thus if the derogation is lost 62% of the British Art Market as a whole would be affected. In other words when the right is extended there will be a fourfold increase in the number of sales eligible. This will constitute an unprecedented threat to the UK’s future global competitiveness given that our principal overseas art market competitors, the USA and China, have not introduced Droit de Suite and do not look likely to do so. The strength of the competition is exemplified by the recent rapid growth of China. It is our belief that the extension of the ARR will not only threaten the UK’s competitiveness but also some of our members’ livelihoods. The auction of works by top modern artists such as Picasso and Matisse would certainly be driven to New York since the network of international salerooms would facilitate the transport of artworks globally and cost effectively in relation to the €12,500 capped levy for works over €50,000. The knock-on effect for the UK art market and for the smaller dealers and auction houses would be very serious.It is also worth noting that all segments of the art market are intrinsically linked. The dealers and auction houses have a symbiotic relationship and if the major auctions of contemporary and 20th century art move from London to New York for example, then this would have a detrimental knock-on effect for the British dealer and the art market in general. In addition, British dealers are likely to take more works of art to the many suitable fairs that already take place in countries such as the USA and Switzerland rather than sell them in the UK.
Best wishes
Sarah
Sarah Percy-Davis
Chief Executive
LAPADA The Association of Art & Antiques Dealers
535 Kings Road
London
SW10 0SZ
Derek Newman
December 31, 2011
Sarah – this is very comprehensive and you clearly have a thorough grasp of the situation – as I’m sure does Mark Dodgson, Secretary General of BADA (of which I am a member)
The question is, who are you approaching to highlight this issue with any authority to change the current position? The BAMF, UK Government, the EU?
Regarding the proposal of an online petition that Niall has given a lot of thought to, I would support it 100% – but again it is important to consider who it is aimed at and with what outcome.
My only reservation is that it doesn’t want to be seen as an ‘us against them’ scenario, for as Sarah says, we are all in a symbiotic relationship in that dealers need artists and vice versa, with the auction houses in the mix there too!
A quick perusal of the petition linked to the DACS website (in justification of the ARR) is signed by people who I would presume to be artists & their friends. Robert Scott is a signatory, in a plea for funding to archive and catalogue his late father’s work, but he won’t have to wait long (so long as it is continued to be sold in the UK) but I’m sure a vast majority of these contemporary artists haven’t thought through exactly what is required of their dealer’s efforts to raise their profile to attract ARR in the first place, as has been highlighted by John Robertson from the outset of this blog.
So yes, a petition against the impact of the ARR – particluarly in regard to its extension (as of tomorrow) is a good idea to highlight the position, but I would hope that it will result in greater education rather than just harden opinion – not that DACS have helped their cause by (so far) being so patronising and ignorant towards the Art Market Professional who is to provide a large source of their revenue – which will swiftly decline for the many reasons posted on this blog and as Sarah PD has explained …
Elliot
December 31, 2011
Minister for Culture, Communications and Creative Industries
From Wikipedia, the free encyclopedia
In the United Kingdom government, the Minister for the Arts is a ministerial post, usually a low to middle-ranking minister to the much senior Secretary of State, who runs the entire department and is ultimately responsibility for the department’s brief.
The post has been in a variety of ministries, but after 1997 it has been a Minister of State position in the Department for Culture, Media and Sport. From 1992 to 1997, the post was combined with the office of Secretary of State for National Heritage. The title of the post was changed to Minister for Culture in 2005, and to Minister for Culture, Creative Industries and Tourism in 2007. Under that last title, the office was held by Barbara Follett MP, who was appointed on 5 October 2008, until 22 September 2009.
The new Prime Minister, David Cameron appointed Ed Vaizey to the position as Minister for Culture, Communications and Creative Industries at Parliamentary Under-Secretary of State level, a post Vaizey splits between the Department for Culture, Media and Sport (DCMS) and the Department for Business, Innovation and Skills (BIS).
Would this be the correct Minister to deliver a petition to?
Exhibitors
December 30, 2011
Could you be a bit more detailed with your comments in the future please Sarah.
Elliot Lee
December 31, 2011
Petition against the full implementation of the Artist’s Resale Right
We call on the UK Government and European Commission to understand the devastating effect this will have on the Important Art Industry in the UK. Many would agree that Artists are entitled to a royalty upon re-sale of works, however, the extension of the Right to the Estates of Dead Artists for 70 years, will be a crushing blow for the UK’s Art Market.
The Right will affect those Dealers and Galleries involved in Secondary Market trading who will be obliged to pay a large levy on both their purchases and sales . They will have tremendous difficulty in these hard economic times financially supporting such payments. Many such organisations will be forced into liquidation or closure and many jobs lost within the industry. The UK’s Art Market, one of the greatest and most successful in the world, will be severely damaged.
UK Art Professionals provide management of many Artists Estates, storage, conservation, cataloguing, research and restoration services. The full implementation of the Right will prejudice such activities.
Artists need a strong professional body of hardworking Galleries and Dealers whose full time occupation is to sell their work. The full implementation of the Right will adversely affect this service.
http://www.graysantiques.com
We, the undersigned, deplore the full implementation of the Artist’s Resale Right from 1 January 2012.
Stephen Jack
December 31, 2011
Employer: DESIGN AND ARTISTS COPYRIGHT SOCIETY Posted: 08 December 2011 Location: Farringdon Industry: Design , General , Arts & heritage – Artist agency & management , Charities – Arts & culture Level: Experienced (non manager) Contract: Permanent Hours: Full Time Salary: £24,338 per annum Visit website
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Further information
Established by artists for artists 25 years ago, Design and Artists Copyright Society (DACS) is a not-for-profit visual arts rights management organisation.
Set up to ensure that artists’ rights are protected and that those rights are recognised both financially and morally, DACS collects and distributes royalties to visual artists through three rights management services: Payback, Artist’s Resale Right and Copyright Licensing.
Our turnover has increased by over 500% in this period.
We are now looking for an Artist’s Resale Right Executive to work with our Artist’s Resale Right Team, with excellent research skills and communication skills.
For your information pack please go to: http://www.ResaleRightExecutive.dacs.org.uk
Closing date: 9th January 2012
- Found this on the Guardian website. 500%!!!Nice to know someone in the artworld is thriving ,. SJ
Derek
December 31, 2011
”Regarding the proposal of an online petition that Niall has given a lot of thought to, I would support it 100% – but again it is important to consider who it is aimed at and with what outcome.
My only reservation is that it doesn’t want to be seen as an ‘us against them’ scenario, for as Sarah says, we are all in a symbiotic relationship in that dealers need artists and vice versa, with the auction houses in the mix there too!”
Elliot
December 31, 2011
Perhaps Mark might kindly assist with the wording as well Derek? You will need all the help you can get and Mark is very good with the pen.
Derek Newman
December 31, 2011
Yes, I think if Mark at BADA and Sarah at LAPADA fronted, or at least were seen to back any petition, that would give it more weight. Perhaps members of both associations that feel strongly about this should contact them accordingly?
Elliot
December 31, 2011
Not forgetting SLAD (Society of London Art Dealers).
Big thanks to John @ http://www.bournegallery.com for posting his letter.
John James
January 1, 2012
This could, theoretically, apply to some painting by a minor Victorian artist who painted a picture in 1880 and died in 1950. Why the artist’s great great nephew should benefit from this is beyond belief. It’s ludicrous.The sooner the UK gets out of Europe the better. The impact on art dealers e.g. increased costs will be to further reduce their numbers. The UK government has badly let the industry down.
http://www.signaturefineart.co.uk
Exhibitors
January 1, 2012
Hi John, perhaps you might agree that this directive was in place way before the current administration came to power?
Niall Fairhead
January 1, 2012
Online Petition – 1/1/2012
The piece by Sarah Percy David I found very much to the point and very informative. It raised some issues I had not considered before. Thankyou Sarah David.
The comments by Derek, Elliot and Stephen about my suggested petition are very kind and useful. I am quite happy to go with a majority view on this issue but would suggest:
- The wording is so important and our friends Sarah at LAPADA, Mark at BADA and Anthony of BAMF ought really to be involved in this in taking the crucial decisions. I would consider their position , as representatives of our trade, fundamental to our cause. Can we also enlist support from the ATG? That too would be helpful.
– What we seek to do with this petition once completed is also of importance. The idea of presenting it to the Government Ministers does appeal. Also the idea of a good headline in the ATG would be useful to publicise the petition. What other art/related journals could we enlist to write about this? Who do we know we could rely upon for support?
- The comments that we should not be too adversarial against DACS are also of importance. Like it or not they are here to stay and we must live with them as well as we can whatever the outcome to this question. My feeling is that the “venue” of our petition ought not to be on this blogg site but on the neutral site of http://www.ipetitions.com/petition/arr . After all their petition was there and so might ours be also. It is a neutral space after all.
My suggestion: We arrange a meeting at an early stage in January at which interested parties might attend. We request Sarah, Mark and Anthony to join us and to Direct and chair this meeting. The agenda for the meeting should be the setting up and marketing of the petition. I for one would be happy to attend and to publicise “The cause” with an e-mailshot to all my contacts and I would advertise it on my 2 webbsites and . We would ask all present and affiliated members to make a similar commitment.
Niall Fairhead
Fairhead Fine Art Limied t/a Images
http://www.images-art.co.uk
Elliot
January 1, 2012
Niall
Thank you for your kind words on our comments.
What about SLAD? As far as I am aware, this is an association established strictly for Art Dealers.
I am sure they will also have concerns for their members.
Lets invite Mark and Mr Browne to this discussion as well. They may be able to shed more light on the way forward with the petition idea, and, offer an insight into the work they have carried out to date, for and on behalf of British Art Dealers in view of the ARR extension.
What do you think?
Elliot
John Robertson
January 2, 2012
I’m delighted that others are now running with the ball. I’m all in favor of getting a petition going. A couple of points if I may.
BAMF is an umbrella organisation which was formed over 10 years odd years ago when the Government of the day informed us that they would only listen to a body representing the whole trade. I’m afraid I and several other dealers have felt for some time that there is an inherent problem in that Sotheby’s and Christie’s assume that our interests are the same as theirs.( There seems to be collective amnesia over dealer’s fury with the Buyer’s Premium). Bada, Lapada and Slad represent dealers and in my opinion it’s the dealers at the middle and lower end of the spectrum who are going to be worst affected. The massive premiums, the recent increase in Vat and now Droit de suite make life impossible.
I suggest that the petition be specifically made for the attention of the relevant Ministers in Westminster. Hell will freeze over before the Commissioners in Brussels lift a finger. I can assure you that Westminster will just pass the buck if we give them half a chance. We also need to be pragmatic in our demands. There is no chance of getting this damned thing revoked but we can demand very forcefully that our Government examine with utmost urgency the implementation..not wait two years for the next Commissioner’s Review.
For instance the 1000Euro threshold is absurd. Even the Directive allows for a threshold of 3000Euros. Petitions need to be kept simple but this is a complex issue made worse by how the pubic and artists perceive us. We need to gather as many examples as possible of how the present regulations discriminate against legitimate business and get them up on this blog. This was my original hope.
John
http://www.bournegallery.com
John Robertson
January 3, 2012
Now here’s a funny thing…..
Just when I think I’ve taken this whole bloody business too seriously and my anger is misplaced and puerile,something happens to set me off again. After 40 years in the business I have a reference library of over five hundred art books. I was researching something the other day when, standing in front of my bookcase, I suddenly realised just how many Dictionaries, Biographies, slim monographs, Essays, and Magazine articles have been written by scholarly, passionate dealers obsessed with their subject. I started counting and quickly reached over a hundred. Now here’s the funny bit….I started looking for similar works written by artist’s descendants. I could hardly find any. Odd that! The clever folk at DACS are obviously right to believe that you can motivate anyone into becoming a manic archivist by telling them there’s money in it. The truth is that I doubt if any of the books I have made a profit for their authors. They were labours of love financed through dealing..which every artist, collector, critic, and curator knows is a thoroughly wicked and evil activity which must be taxed and regulated . “Any sign of life Dr. Watson? Is the patient still breathing ? Quick..more red tape!
Exhibitors
January 3, 2012
One might also refer to Dr Clare McAndrew’s detailed study entitled ‘The Role of Art & Antique Dealers: An Added Value’ which can be downloaded from the CINOA website.
http://www.cinoa.org/page/2862
John Robertson
January 3, 2012
Excellent article in this month’s GALLERIES Magazine by Sarah Drury, “SUITEART DEAL”
Good to know that some dispassionate observers are scratching their heads over the implementation of the Directive. Recommend you get hold of a copy.
Exhibitors
January 3, 2012
Shaun Ley of the BBC has reported on this issue as well.
http://www.bbc.co.uk/news/entertainment-arts-16237117
John Davies
January 5, 2012
This is the first time I have contributed to this valuable Blog on the ARR. In addition I value the time John Robertson has put into contributing so much already, and also it’s good to see others I know commenting on this nonsensical directive. I have been dealing in art since 1971 and have run The John Davies Gallery since 1977. I moved to new premises in 2007 and although the same retirement age as John, I have young children and need to remain active for many years to come. Also there are other parallels between John’s old business and mine, in that we have done similar levels of business, both live pretty modestly, we are are both entrepreneurial for contemporary artists, and both buy and sell period art.Thus for me, the extension of ARR to include artists that have died in the last 70 years in a serious issue.
To me the principle of ARR does not hold water anyway. I wholly support the artist’s right to copyright for reproduction of their images, just as a musician receives income from performing rights. But I do not agree with the principle that an artist should receive on-going income from a work that they sold for an agreed price, representing the time and materials that they invested in that work at the time – is right. Why should a cabinet maker not benefit similarly? On top of that there are many other injustices within the potential working of the levy. Firstly, why should a dealer who takes pride in the proper conservation and presentation of a work of art that has cost him or her £750 to say £2,000 or more in framing and cleaning have to pay 4% of the set-up figure. I don’t yet know exactly how the rules work, but if the 4% is payable on the gross price that a work is sold for, why should I spend any time deducting such costs to pay 4% on the value net of presentation costs, and anyway, why can I not put a reasonable margin on those costs?
The whole thing is pie in the sky. Another point is that, as I understand it, ‘we’ as dealers are supposed to label any qualifying works at the asking price plus ARR. It seems to me that those who have conceived of this ridiculous scheme have simply not thought this through and simply do not live in the real world – the world in which probably 50% of buyers negotiate the asking price. I truly think that they believe that buyers will be glad, even happy to pay an extra 4% for a painting that they are contemplating. I think virtually any seasoned dealer will agree with me when I say that no such client is likely to exist, and that the far more likely scenario is that most dealers will have to absorb the 4%. Therefore it is not so much a levy, but a tax. In addition this might be 4% on top of 4% already paid if the work of art concerned has been purchased at auction.
Are yes – auction – this is a very different scenario. Auction houses can afford to be law abiding in this regard because it is no skin off their nose. They have an assembled audience competing in the room, on-line or on the phone to purchase what is on offer. We dealers only sell one to one the price can only go down. On the hammer price at auction, the price can only go up.
In France, I understand that Droit de Suite is charged at auction, but not charged or paid by dealers. Clarification on this issue will be interesting and valuable.
There are still many other issues that are unjust. What if a dealer who buys a painting at auction, but a few years later having failed to sell it, returns that work to auction and sells it at a loss. Surely he or she should be able to reclaim the original 4% Or if he or she sells it at a loss to another dealer or private client, not have to pay 4% if the price is lower than his or her original purchase price.
Another stupidity. What if no descendent of a qualifying artist can be found by a collecting body? Why should a dealer’s money go elsewhere, or remain with the collecting body?
And where does the revenue come from for the dealer to administer all this extra accounting and paperwork?
To my mind, ARR extended to artists who have died in the last 70 years is an injust, unworkable nonsense. I strongly feel that all like-minded dealers should revolt. Roll on Lapada Seminar January 11th.
Kind regards to like minded thinkers..
John Davies
http://www.johndaviesgallery.com
Francesca Fiumano
January 5, 2012
John, This is an excellent post, thank you. Like you, i am not completely familiar with the complexities with the ARR. From the reading i have done on the subject – much on this blog thank you everyone who has made a valuable contribution – it is a mess that is going to have a major impact on not just secondary market dealers. I represent living artists and work mostly on an SOR basis – occasionally a client will ask me to sell something from their collection to make way for new pieces – how does ARR come into play on this? Basically a client is asking me to do something for them (that could be beneficial for me it is true) – do i charge them 4% or broker the deal on their behalf (private to private no ARR). Who has the time for this added paperwork?!?
I will not be able to attend on the 11th Jan as am not a Lapada member but hope to be enlightened via the blog!
Thanks again to all who have contributed
Francesca Fiumano
http://www.fiumanofineart.com
John Davies
January 6, 2012
Francesca, I assume that you would have to collect the 4% ARR from your buyer in the event of a sale and pass it on to one of the collecting agencies. But another anomaly of the ARR is that, as I undertsand it, private buyers and sellers are not required to charge ARR – so again, the whole thing is a mess. You will have to check out the detail – it may be that a one-off sale on behalf of a private buyer may be exempt, I don’t know. Best of luck! John
http://www.johndaviesgallery.com
Exhibitors
January 6, 2012
John, Thank you very much for your recognition of time spent by all contributors on this discussion.
Derek Newman
January 5, 2012
In response to John Davies, DACS are not the slightest concerned with dealer’s overheads, profit/loss etc. They are only concerned with obtaining the relevant ARR. It doesn’t matter to them how little this might be (£40 on a £1,000 picture) – or that the cost of collection and administration might well be more than the sum obtained (they retain 15% anyway)
As with the auction Buyers Premium, the dealer will have to absorb the cost of applicable ARR. Adding it on as an ‘additional charge’ would not go down well with a prospective client as you say.
Our margins are (once again) squeezed accordingly – which is why the ‘small specialist dealer’ is seriously at risk of closure – a fact that DACS can’t/won’t recognise.
Auctioneers of course charge the buyer the ARR, so no problem for them (so long as they continue to find buyers for such items – particularly at the lower end) but even then, ARR is charged on the hammer price. Once WE have paid the BP + the VAT – then that is your starting point for ARR again – ie on a lot purchased for £1,000, you will pay (via the auctioneer) £40, but it has actually cost you £1,300 (thank you for that recent network wide BP increase to 25% Bonhams) so even if you didn’t incur further expenses in conservation, framing etc and sold it at the actual purchase cost of £1,300 you would hand over another £52. Don’t even think about making a profit.
Of course DACS doesn’t see that you have done anything to ‘add value’ (how else is a profit obtained?) stating the heirs of desceased artists since 1942 are the ones doing all the ‘archiving & conservation’ (what absolute rubbish!) And if you do sell at a loss, well never mind, so long as that picture is over €1,000 then you’ll pay ARR on the loss too! Not I suppose if you sell at auction as the buyer will pay – and so off we go again ….
The directive is EU wide – same rules for all as far as I can establish – and that includes the French however they might like to interpret it !
Do DACS know who the ‘heirs and beneficiaries’ are of many long dead artists who are apparently so worthy of receipt of the ARR? No, of course not. Which is why to refer to the DACS advert that Stephen Jack brought our attention to in his post of 31 December, any applicant to their Agency will need ‘excellent research and communication skills’. Yes, they’re going to need a great deal of both…
http://www.newmanfineart.co.uk
John Davies
January 6, 2012
Derek, there may be a large hole in how this ARR is applied and policed. Auctioneers are in a unique position to charge it and collect it from a competing audience. The perpetrators administrators of ARR might not have thought the matter of collection through. If it is down to the buyer to pay the ARR because it is illustrated on a label, but that client refuses to do so, how can the vendor (dealer) be held responsible. It is a levy, not a tax, and therefore does not have the power of the Inland Revenue behind it. A whole can of worms! Good to be in touch. John
http://www.johndaviesgallery.com
Derek Newman
January 6, 2012
Hi John. According to the Guidance on ARR (Courtesy of BADA/LAPADA/SLAD): “Dealers (and other art market professionals such as auction houses) are responsible, along with sellers, for paying ARR on all qualifying sales”
Of course the auctioneers sidestep the issue by getting the buyer to pay, which is why it impacts on the dealer twice if purchasing from that source ….!
I don’t think you as a dealer can itemise the ARR on the purchase price and ask your client to pay (if they are so minded) because the onus is on you as an Art Market Professional’ to comply with the Directive ‘on qualifying sales’.
As indicated in previous posts (see above) it has been rumoured that DACS would like all dealers to reveal their purchasing client details – ie hand over their database … It won’t be long until we are entirely superfluous!
http://www.newmanfineart.co.uk
Francesca Fiumano
January 6, 2012
Read a very interesting but quite biased web page on AAR – one thing that stood out – the following quote:
In December 2008, Secretary of State for Innovation, Universities and Skills John Denham wrote accordingly, stating: ‘The current economic downturn could only but affect the UK market’s ability to cope with the application of the artist’s resale right to the works of deceased artists.’ Denham’s letter thereby automatically triggered the UK’s continuing Derogation until 31 December 2011.
What do the government think now, does the culture secretary have anything to say?
http://www.fiumanofineart.com
Niall Fairhead
January 5, 2012
Research by the Families of Dead Artists:
One interesting research project might be looking at the estates of certain dead artists and ascertaining how much research and work has been done by their families. I myself propose to do this work on some of the artists I deal in and other Dealers might care to do the same for their artists. My feeling is that my work will amply demonstrate that most of this work will have been done by Art Dealers and Gallerists. However the principal of ARR extension until 70 years after an artists death is for the relatives to have funding (like Robert Scott, mentioned in this forum previously, the son of the renowned William Scott) to attend to the memories of their family. Should this be the case? Does history support this view?
I shall be looking at some of the following and publishing the results on this Blogg:
Pablo Picasso
Marc Chagall
Henri Matisse
Joan Miro
Alberto Giacometti
George Braque
Jean Cocteau
Salvador Dali
Fernand Leger
It should be considered that being related to a deceased artists may have great benefits. These great benefits, of course, are now greatly enhanced courtesy of Mr DACS.
Many original works are unsellable without an “Experts Certificate”. This document has to be written by “The Voice of God” – ie a person who is considered to be a leading authority on the work and therefore qualified to make the appropriate judgment. Under French law the family acquires this right on the demise of their artist relative. This is, however, just a legal right and might have nothing whatsoever to do with expertise or scholarship.
The families of well known deceased artists can have already received huge inheritance benefits from their late relatives and arguably they should be well satisfied with just that rather then asking for an additional 4% handout. My study will perhaps highlight this argument.
The publishing of expensive catalogues is often a “Labour of Love” with little profit attending to it. How many Catalogue Raisonees are on the “Best Seller” list? My research will probably show that such work is very often carried out by a Dealer or Gallery and infrequently by a family member.
Comments, suggestions and ideas on this would be welcome. How many readers believe that Dead Artists families generally will deserve the great fortunes coming to them supposedly for work of this nature?
Niall Fairhead
Fairhead Fine Art Limited t/a Images
http://www.images-art.co.uk
Derek Newman
January 5, 2012
What has become apparent from postings on this blog (and from conversations I’ve had with others who haven’t posted but have viewed with interest) is just how many dealers in all facets of the art market are now effected by the extension of ARR to all artists who have died since 1942 (so long as their work sells for over 1,000 Euros).
Niall has been very open and frank as to the operation and workings of his business, but unfortunately all the artists he has listed above are ‘household names’. As such it would not be difficult for DACS (and associated foreign agencies) to establish who the ‘heirs and beneficiaries’ actually are. Whether they are ‘worthy’ of receiving any ARR due is of course debatable, but as Niall suggests, many won’t have ‘earned it’ in accordance with DACS assertions.
I operate in a very different area of the market. Essentially 19th Century watercolours, but it is surprising just how many works painted in the late 19th Century and traditionally considered ‘Victorian’ are by artists who have actually died since 1942.
In my Autumn exhibition, I sold a watercolour by Arthur Gordon 1883-1944 for £1,000 (sorry DACS). Type the artist’s name into Google and you will find auction records, but no biography … in fact I have been able to find out very little info about this artist, but the subject was of Worcester from the River Severn. I had already sold it to a resident of that city, when another client phoned me up in great excitement because as a canal enthusiast he told me not only the type of the canal barge depicted, but the specific name of an accompanying steam tug boat.
Unfortunately, this person was upset that it had already been sold, but my point is this: If I had sold it now instead of then, I would be due to pay £44 to DACS for the ‘beneficary’ of this artist, when no apparent record exists of this painter, let alone his heir. The person who provided me the detailed information about the subject was definitely a worthy receipient of that sum … perhaps I should provide his name to DACS?
http://www.newmanfineart.co.uk
Niall Fairhead
January 5, 2012
Charity Art Auctions
An area in which I am much involved is the organisation of selling works of art through Charity auctions. This practise has increased a great deal in recent years and benefited very many good causes. Generally I provide a body of suitable saleable work to the Charity who then sell it making a profit on the “Trade Prices” which I have provided them with.
The question arises as to what will be the status of such events in the new regime. Are the auctioneers “Art Professionals” and is each and every sale at auction subject to ARR?
If that should prove to be the case how upset will be Charities who might depend on a good result from efforts to produce revenues for very good causes who will be losing a whopping 4% of turnover. Since the Charity does not receive 100% of the sale price their loss will be appreciably higher then 4% of the net sales of the auction. They will pay 4% on the sale price but perhaps make 50% profit or less. In the case of a 50% profit a huge 8% of their revenue has been taken away and given to the family of a dead artist whose cause may be much less rewarding.This is money they can ill afford to lose – and it will be substantial.
Is the sale of works of art through Charity Auctions about to be greatly diminished ?
Comments and thoughts on this question from other members of the Forum would be appreciated.
Niall Fairhead
Fairhead Fine Art Limited t/a Images
http://www.images-art.co.uk
Francesca Fiumano
January 5, 2012
Niall, what a salient point you make and one that i am sure many of us would not have thought of. I would hope that charities would be exempt from this directive but unfortunately i doubt it very much. Perhaps someone from DACS would care to clarify, if they are not too busy …
http://www.fiumanofineart.com
Niall Fairhead
January 5, 2012
Hello Francesca
Another question, perhaps, for the LAPADA/BADA/SLAD seminar to answer?
I am at a Charities fundraising discussion group tomorrow afternoon. Maybe they will have some answers?
Niall Fairhead
Fairhead Fine Art Limited t/a Images
http://www.images-art.co.uk
Elliot
January 6, 2012
I would imagine they might have more questions than answers Niall. Perhaps they might consider backing a petition to raise the level?
http://www.graysantiques.com
Niall Fairhead
January 6, 2012
Hi Elliot
Right ON!
http://www.images-art.co.uk
David Brooker
January 12, 2012
I couldn’t make it to the meetiing yesterday. Would anybody who attended be able to answer the below?IF I buy a painting for £800 under the ARR level, restore it re-frame it and improve the value then sell it for £2000, can I reduce the value of the ARR by the cost of the restoration and frame….? most dealers are saying they are going to include the ARR in the retail price….how does that work with the VAT. If I buy a piece for £1000 and then sell it for £2000 with ARR, Im not making £1000 profit as I have to pay ARR of £80…so do I pay the vat on the £920..???
What a mess this business is.
best
David Brooker
http://www.davidbrooker.com
Elliot
January 12, 2012
Hello David
I didn’t quite understand the answer to the question when it was put to the panel by the lady sitting next to me at the meeting. I think there was talk of listing the cost of framing etc. and listing margin scheme vat indiviually on an invoice?
Elliot Lee
http://www.grayantiques.com
John Robertson
January 12, 2012
Hi David, Interesting question. If you were to ask DACS they would tell you that you cannot deduct framing and restoration costs before calculating the 4%ARR..let alone the cost of marketing , photography and delivery to the Outer Hebrides on a Friday before 12noon. After yesterday’s meeting it is now clear that nothing is clear or written in stone as there is no case law established in this country that gives legal weight to many of Dacs’s claims to being the fount of all knowledge.The results of legal cases brought in other European countries are not binding here. So my advice is to put on a blindfold, turn to the left three times, turn to the right six times, throw a pinch of salt over your shoulder and step out into a busy road. If hit by a bus you got it right and if missed you got it terribly wrong. Hope that helps.
http://www.bournegallery.com
Exhibitors
January 13, 2012
Derek Newman
January 13, 2012
Now just remember everyone, that as of 1st January 2012, all pictures you have in stock by all artists deceased since 1942 priced at over €1K have been devalued by 4%…
What’s more, henceforth you will only ever own 96% of each item, even though you paid 100% for it – and don’t forget to mention to subsequent purchaser that they too will only own 96% of the 100% cost they have paid you for it. Bound to go down well …..
http://www.newmanfineart.com
Niall Fairhead
January 20, 2012
The new Petition
Earlier this afternoon we launched a new online petition deigned to protest at the extension of the Artists Resale Right to the estates of dead artists until 70 years after their death.
In an ideal world we would abolish this new extension immediately. Unfortunately this option is not open to us and so we must do what we can to ameliorate the terrible blow which has just befallen our industry. The Petition is worded as follows:
“Damage to small businesses from the Artist’s Resale Right”
http://www.ipetitions.com/petition/damage-to-small-businesses-from-the-artists/?utm_medium=email&utm_source=system&utm_campaign=Send%2Bto%2BFriend
“ We, the undersigned, object to the extension of the Artist’s Resale Right in the United Kingdom to the estates of dead artists, with effect from 1st January 2012.
We also deplore the debilitating effect this will have on the majority of art businesses in the UK. Unlike international auction houses, these are often small family-run enterprises of the type recognised by the Government as key to growth at a time of economic uncertainty.
Far from helping struggling new artists, the lion’s share of the royalties from the extended Right will be paid to the heirs of deceased artists, such as the Picasso estate, which are already financially well-off.
Living artists embarking on their careers and wanting to promote their art can usually only do so with the help of experienced art dealers. These dealers can also help manage deceased artists’ estates by offering storage, conservation, cataloguing, research and restoration services. Artists need a strong, efficient and professional body of financially-solvent galleries, run by dealers devoting all their energies and resources towards the sale of their art works. The full implementation of the Right will hinder this by considerably reducing dealers’ margins and by increasing fourfold the bureaucracy they deal with. Running a small business is becoming increasingly costly and the cumulative effect of 4% ARR on purchases plus 4% on sales will make it difficult for small art dealers to meet their overheads.
We call upon the Government:
(a) to recognise this impact on small businesses by increasing from €1,000 to €3,000 the threshold above which the Right is collected in the UK, as allowed under the European Artist’s Resale Right Directive; and
to exert pressure on the European Commission to change the Directive so that it is less damaging to the art market, particularly the market in works by deceased artists. “
Ends
In 2014 there will be an enquiry to see if the extension has damaged the UK Art Industry. Obviously if that enquiry should prove that it has done there is a chance that something might be done at governmental level to cancel or curtail it. Realistically this is the best course for the campaign to attack now since we have failed to stop implementation on 1st January 2012.
What can be done to assist this cause:
Activists should consider the following steps to promote the online petition. Our objective is 20,000 signatures. This might seem rather ambitious but such is the threat to the industry that everyone potentially involved really ought to get involved. Maybe there are 5000 Dealers/Galleries, large or small, within the UK. If each Gallery got 4 “Fellow Travelers” to sign our petition then we would have our 20,000. You should all tell your collectors who buy from you that one effect of the ARR is that the value of their art will decrease immediately by 4%. This will cause large numbers of collectors to join the cause.
I myself will be printing leaflets to hand to clients/well-wishers with a link to the petition. Others will consider doing the same.
An e-mail is going out very soon to all the stand holders currently selling at the Art Fair in islington. This will make them aware of the petition and ask for their support.
We ourselves have an address list of some 2000 e-mail addresses. We will be sending each and every one a request to sign the petition.
Family. friends, associates and well wishers to the industry should be galvanized into making their own protests on behalf of our great industry to prevent the terrible threat which faces us all.
There is a widget which can be posted on your webbsites linking to the petition. We have done this already. We encourage others to do the same.
If we unite, stand together and fight we can stop this menace. It starts with the e-petition. Please can I count on your support?