UK set for defeat over uniform royalties on art sales

Date: 18/02/1999

By Renée Cordes

DEALERS in London's prestigious auction houses fear an exodus of business to New York, Geneva and Hong Kong if royalty payments to artists are harmonised across the EU.

Internal market ministers look set to overcome British-led opposition to the move next Thursday (25 February) by voting to require royalties of between 1% and 4% to be paid to artists or their heirs for up to 70 years after their death. The German presidency is confident that a majority of member states will accept the plan, which is designed to ensure 'fair competition' between art dealers across the EU, and out-vote the UK, the Netherlands, Ireland and Luxembourg.

These are the only four countries in the Union which currently do not require royalty payments to be made to artists on the sale of their works.

The highest contemporary art sales - €15 million for Andy Warhol's Orange Marilyn and €18 million for Willem de Kooning's Interchange - were conducted through Sotheby's auction house in London, and no royalties were levied.

Bild-Kunst, the German art collection agency which has been lobbying hard for harmonised sales royalty payments, known as droit de suite, says the move would not only benefit artists and their heirs but also charitable art-subsidising foundations.

But while supporters argue that harmonisation is needed to help art dealers in Germany compete with those in the UK, critics contend that the Union will lose out as the art trade shifts to royalty-free art capitals.

This would mean that Germany's attempts to wrestle market share from Christie's and Sotheby's auction houses could be in vain, according to analysts.

"Art can be sold pretty much anywhere in the world so would it not just force the property to go to lower areas of tax?," said Mark Miller, who analyses Sotheby's stock for investment bank Merrill Lynch in New York. "The property is still going to have to come to market."

Anthony Browne, head of the British Art Market Federation, agrees. "If you create a European playing field as if the rest of the world does not exist, all you will do is lose a significant market for Europe as a whole," he insisted, adding that droit de suite would "essentially destroy the 20th-century art market in London".

A study conducted for the UK government found that introducing royalties could lead to the loss of 5,000 jobs in the London art business, which directly employs 39,400 people in more than 10,000 firms.

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