Resale Royalties in France

Fellow appraiser Pat Graham sent me an interesting article on a recent French Supreme Court ruling allowing auctions houses can 'ask" buyers of art to pay the resale royalties (droit de suite) so long as it is properly disclosed. Dealers and buyers have fought the fees, and lower courts agreed with them. The high court has now overturned the lower court rulings. Please read the articles for the fee structure and additioanl info on how other countries are dealing with resale royalties.

Hyperallergic reports on the French court decision

Shifting Precedent, Buyers of Art Will Now Pay Resale Royalties in France

After several appeals, the country’s highest court agreed that auction houses may ask buyers to pay a levy — a decision critics say will “disrupt competition” and damage the art market.

After six years of legal battles and lobbying tactics, auction houses scored a major win in France that will shift the burden of droit de suite, or resale royalties, onto art buyers in the secondary market.

Unlike in the United States where courts recently blocked artists from receiving remuneration for their work being sold at auction, the European Union has comprehensive legislation ensuring that the artists who live in the EU receive royalties. In the European Economic Area (the EU, Iceland, Lichtenstein, and Norway), droit de suite lasts for the artist’s lifetime and 70 years thereafter. In 2007, the policy was extended from auction houses to encompass sales made through dealers and galleries, too. The current sliding-scale rate is 4% for values up to €50,000 (~$44,100) and 0.25% for works costing more than €500,000 (~$441,000).

By comparison, the UK’s artist resale rights were introduced by European legislation in 2006, and extended to artists’ heirs in 2012. The British version of the mandate deems an artwork’s buyer and seller mutually liable for the payment of royalties, according to the UK nonprofit Design and Artists Copyright Society (DACS), which collects and distributes royalties to visual artists and their estates in the country.

Controversy over who shoulders the costs of droit de suite in France originated in 2009 when Christie’s requested that buyers foot the royalty costs of its Yves Saint Laurent and Pierre Bergé collection sale. An association for French antiques dealers, Syndicat National des Antiquaires (SNA), subsequently sued the auction house saying that the levy amounted to unfair competition. In December 2012, a court in Paris ruled in the SNA’s favor, and the decision was maintained in a March 2017 appeal.

Overturning the lower courts’ decisions, France’s supreme court (called the Cour de Cassation) agreed with the argument made by Christie’s. The court granted auction houses the right to request money from buyers to pay the levy, so long as sales contracts explicitly included such language.

Art dealers and gallerists, who have long opposed the measure, believe that the new guidelines will injure the art market and their own business operations. French gallerist Franck Prazan told The Art Newspaper said that the ruling will “disrupt competition.” He clarified that the court decision may hinder the negotiating process for dealers who feel the extra fees are too expense to pass on to clients. “When we buy at auction,” he added, “this means we will have to pay twice — upon buying and upon resale.”

“I support droit de suite,” Prazan said. “It is a resource for families to keep promoting the artist. It makes sense as long as the levy goes towards compiling catalogues raisonnés, for instance.” In 2018, he paid over €200,000 (~$227,000) in droit de suite fees to the French collecting body La Société des Auteurs dans les Arts Graphiques et Plastiques (ADAGP).

Customers, however, may find additional fees immaterial when compared to the high prices some artworks command at auction. According to EU legislation, resale royalties cannot exceed more than €12,500 (~$14,200). A buyer would therefore have to purchase something for €5 million (~$5.7 million) to hit that levy cap.

Source: Hyperallergic 

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