Artist Resale Rights - ARR

Just noticing the "Dreaded VAT" thread reminded me of something that is going to be more of a pain to me than VAT is and that is the full implementation of the Artists Resale Rights from 1st January 2012.

As someone who deals in studio ceramics I have for several years had to submit a quarterly return, detailing everything by a living potter that I sell for over 1000 euros during that quarter and send 4% of that selling price to the collection agency. This applies to others who deal in art objects, such as glass, as well as fine art.

This has not been too much of a burden to date, as it happens very occasionally, but from the beginning of next year this is going to apply on works by artists, who have died in the last 70 years. Therefore works by Lucie Rie, Bernard Leach, Hans Coper etc. will be subjected to the same criteria.

This will cause more work for me and there will be a cost as well but I also wonder how Ebay will deal with it?
As an example, a crappy bloated bowl by Lucie Rie & Hans Coper sold on Ebay a short while ago for, I think, £1300. If that was repeated next year then legally the seller would need to send £52 to the collection agency. I wonder if it will happen or will dealers like myself, who respect the law (albeit reluctantly), be penalised even more by the failure of others to pay what the law says they should.

ARR how rigorously is it monitored?, should the seller pay rather than the buyer?, i would be interested on the views of members .

I think there was a thread on this. Remember reading that the majority of the money wet to artworld bigwigs like Damien Hirst rather than your Alan Wallworks of this world = failure

Hi Crawford, I wasn't aware of another thread but my question is not where does the money go but how much is actually is monitored by the collection agency, and if ARR is necessary anyway should the buyer or seller pay.

Merged 2 threads. There might be another one but not with resale in the title

Croker sure I read a article on this. Will check. My point being yes its very well monitored for the Damiens but not for the Alan's of this world.

Resales rights kick in from £851

https://www.dacs.org.uk/for-art-market-professionals/arr-royalty-calculator.aspx

It should be equal for all artists as it based on any individuals sales ,what concerns me is how much certain auction rooms pass on as this pushes the buyers premium up another 4%.I have been charged ARR when buying from a studio sale in the past but this was refunded due to the auctioneers lack of understanding of ARR rules, recently i was not charged ARR on a piece when i should have been . I am sure some smaller rooms and dealers don't bother due to the lack of sales over the threshold of 1000 euros ,as mentioned by studio-pots collecting from dealers on Ebay must be almost impossible.

Is it not under Droit de suite

https://www.20thcenturyforum.com/t11088-droit-de-suite?highlight=Droit+de+suit

Sorry Crawford i did not understand your question could you explain. We had adequate time to get rid of this tax as it was only applicable while we were still in the EU but the government in their wisdom decided to keep it and as you say it mainly benefits the richer artists .

As someone that every quarter (3 months) receives emails to ask if I have sold anything on which ARR is applicable, here is what I know: -

(i) Firstly, ARR was nothing to do with the EU, although most of the countries where it is applicable are members. Our government made the decision to join the system, probably because is was one of the major players in the secondary sale of art in Europe, and has continued to remain within the system.

(ii) The "tax" is now applicable on the secondary sale of all art (including ceramics, glass etc) produced by individuals both living and dead, whose nationality was that of one of the member countries. What I mean by that is if I sell a Janet Leach vase for £2000 then I do not have to pay ARR on it, as she remained an American national until her death and the vase being made in the UK is irrelevant.

(iii) ARR is applicable on all sales of 1000 Euros or more made by any business but not by a private individual.

(iv) ARR should be paid by the seller whether he has made a profit or not. For example, if I bought a Lucie Rie vase for £3000 and then sold it for £2000 i.e. making a loss, I would still be liable to paying 4% ARR on the £2000. This £80 is collected by one of the collecting agencies and they would keep £20 for admin and the £60 goes to Lucie's estate in this case.

(v) The buyer is not liable to pay ARR unless they buy from an auction house. Those bastards lobbied the government at the time the charge came in to make a special case for themselves. I, as a gallery/dealer, can't add the charge after a sale has been finalised in the same way.

(vi) The problem with the system, from my point of view, is that it is not "policed" in that no-one checks whether a business is registered as they should be and if they are whether they pay anything or what they should. Basically, someone like myself acts honestly, despite the fact that I didn't agree with the system, whereas I know of numerous dealers within the trade that do not.

Hi studio-pots, I believe Christies have just won the right to charge the seller and not the buyer now if they so wish. I had always understood that we joined the scheme to fall in line with the rest of the EU, . personally i  think the whole of the ARR system is flawed and should be discontinued , i have no idea how much that  i have paid over the years has been passed on, smaller auction rooms rarely give a receipt to indicate that ARR has been paid they just add it  in to the total charges .

Here is a good summary of the history and Europe

https://itsartlaw.org/2019/07/01/its-not-that-easy-artist-resale-royalty-rights-and-the-art-act/

Thanks for that Crawford, i believe the case for ARR in the US has now been rejected . The point i was trying to make is that it has not always been adhered to in an honest fashion and to some it has been another supplement to their buyers premium. As studio pots says it relies heavily on the sellers honesty and is very hard to police effectively.

croker wrote:Hi studio-pots, I believe Christies have just won the right to charge the seller and not the buyer now if they so wish. I had always understood that we joined the scheme to fall in line with the rest of the EU, . personally i  think the whole of the ARR system is flawed and should be discontinued , i have no idea how much that  i have paid over the years has been passed on, smaller auction rooms rarely give a receipt to indicate that ARR has been paid they just add it  in to the total charges .

Christies may have won the right to do that but it is my belief that Christies should pay it from their profit, as I do.

You are correct that we did it to fall in line with the rest of the EU but I remember when it came in, that our government did not have to do it but chose to.

I am certain that most auction houses would be known to the collecting agencies and would be limited companies, with audited accounts, and so are more than likely to pay. However, I am sure that there are some that don't. To my mind it's dealers that are more of a problem. In all areas of dealing their are people that declare nothing and pretend that they are not dealers and don't pay taxes let alone ARR.

I agree, croker, that it is a flawed system and another aspect of auction house practise that I abhor is that they appear quite happy to sell things that any reasonable person with knowledge would know to be fake. In the past, artists might well complain that a work sold was a fake but if they are getting a "sweetener" in the form of ARR then they are more likely to say nothing.

I heard this from the partner of an artist, who had received considerable sums in this way.

philpot wrote:                I see in Ireland it is the seller who pays the ARR. I wonder how strong  the two collection in the two ARR UK collecting societies are on collecting it? I see they seem to charge  basic 15%.
           Some auctioneers seem much hotter on the subject than others. That is curious.
            Equally, what is the position on the  the Internet? Ebay being the obvious place. I cannot see much information on ARR being charged by the dealers there. Equally sites like Etsy.
            Then there is the burgeoning Digital market. Do the same rules apply?

All dealers/businesses in the countries where ARR is in force, wherever they sell, are liable and responsible for paying ARR on all sales of 1000 euros or over at an initial level of 4%. The % goes down at a certain figure but it's way above my trading level so I don't have that figure to hand. Therefore if I sold something on eBay for over 1000 euros (at this moment £855) then I would have to pay 4% to the collecting agency at the end of the quarter. If you did the same, as a private individual that was only selling the occasional item that you had bought over the years for yourself and were downsizing or getting rid of something thaat you no longer wanted, you would not have to pay.

So here in the UK the seller has to pay and not the buyer - it is the auction houses that asked and got the government to change the rules for them when the system came in. Something that makes people like myself very annoyed and should make buyers at auction houses very annoyed too. The reality is that I would not be allowed, after selling you a pot for £1000, to ask you to give me an extra £40 for ARR. Why should auction houses be allowed to do that? What Christies seemed to have got the government to agree to, according to croker, is for them (the seller) to charge the vendor. Something that is fairer for buyers at auction houses, if they do it, but it still means that the auction houses don't pay like galleries and dealers have to when they sell.

The other problem is that the system is not policed and it relies on honest traders to pay up.

The are two collecting agencies in the UK that contact me but I am certain that they don't have or could afford the staff to chase up businesses, including sole traders. Even if they did, I am not sure if they have powers to force people to pay, without going through a long difficult process and so it is not in their interests to chase people. As I stated, they take 25% of the money collected (at least at the starting level), with the other 75% going to the artists or the artist's estate. In reality that isn't a great deal for the costs the agencies will have.

The problem with eBay/Etsy from the beginning is that there are a vast number of people trading and running businesses on these sites that are not registered as businesses and do not paying tax on any of the profits that they make, let alone ARR. I suppose many of these people just regard dealing as a pastime/ a bit of fun and can't see any reason why they should have to pay tax on what is a business and aren't going to tell the Inland Revenue or the ARR Collecting agencies in any case.

Hi, studio-pots , I must apologise,  i seem to have misunderstood the action that Christies had  taken in the French courts ,it appears that they  now have the option  to charge the buyer in France whereas before it had to be the seller that paid.

Whatever, it still gives auction houses an unfair advantage over other sellers of art in the secondary market but they also have the advantage of never having to buy stock and take any kind of risk in that respect too. However, as their charges to vendors increase it makes perfect sense for private sellers to sell directly to galleries/dealers, as I have found in recent years.

https://artistscollectingsociety.org/join-acs/ should I join?,,, can't imagine getting any moneydistant ancestors perhaps?