Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE on the resale right for the benefit of the author of an original work of art
Date: 1996-03-13
Institutions: European Commission
Subjects: approximation of laws, art trade, copyright, profit, work of art

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  13.03.1996 
COM(96) 97  final 

96/085 (COD) 

Proposal  for a 
EUROPEAN PARLIAMENT  AND COUNCIL DIRECTIVE 
on the resale right for the benefit  of the author 
of  an original  work of art 

(presented by the Commission) 

EXPLANATORY MEMORANDUM 

I. 

Introduction 

1.  This Directive  seeks to introduce harmonized  legal  arrangements for  the artist's resale 

right (often  referred  to as "droit de suite"). 

The artist's resale right can be defined  as the right for the author, or after  his death for 
his heirs or other beneficiaries,  to  receive a percentage  of the price of a work - being 
usually  a work in the field  of the graphic and plastic arts - when it is resold by public 
auction or through an agent. 

2.  The artist's resale right seems to have been adopted originally  for  reasons of equity, to 
prevent  a  situation  from  arising  in  which  a  struggling  young  artist  sells  his  works 
cheaply  and  does  not  share,  once  he  has  become  famous,  in  the - sometimes 
substantial  - profits  earned by art dealers. 

3.  This  social  justification  may  seem  out  of  date  in  some  Member  States  of  the 
European  Union given the level  of prices, subsidies  and  social  security  benefits there. 
Nevertheless, the artist's resale right retains its full  legitimacy where it has the effect  of 
redressing  the  balance  between  the  economic  situation  of  the  authors  of  graphic  and 
plastic works and that of other creators who benefit from successive exploitations of their 
works. 

In the musical  and literary  fields,  authors are involved  in the multiple exploitations of 
their works through  reproduction,  performance,  adaptation, etc. 

The authors of original graphic and plastic works, on the other hand, have more limited 
opportunities for exploiting them than do authors of other types of work. In the fine arts 
field,  a work  is  exploited  essentially  by being  sold  and  is no longer under  the artist's 
control once the transaction  is completed. 

4.  Accordingly,  some legislators  have  felt  that,  in  order to  strike  a balance between  the 
various categories of creator, the authors of graphic and plastic works must be allowed 
to receive a share of the sale price each time the work changes hands.  The artist's resale 
right  is therefore a right to remuneration, that is to say an exclusive right in diluted form. 

5.  The artist's resale right is designed  so that the author  shares in the profits to be earned 
from his creation alone -  hence its being a right to remuneration.  Besides being classed 
as a type of copyright,  the right does not fall  within the domain  of taxation  as it does 
not give rise to the collection of any dues for  the benefit  of the exchequer. 

6.  Eleven of the 15 Member  States recognize the artist's resale right in principle, and eight 
already  apply  it  in  practice.  In  each  of  these jurisdictions,  the  artist's  resale right is 
included in the legislation on copyright and is classed as a property right. It is of limited 
duration. 

7.  An  analysis  of  Member  States'  laws  providing  for  the  artist's  resale  right  reveals 
substantial  differences  as regards the works covered by the right, the holders of the right, 
the transactions  giving  rise  to  payment  of  a royalty,  and  other  details  of  payment. 

8.  The  divergences  between  Member  States' laws  on the  artist's  resale  right  do nothing  to 
ensure a harmonious legal environment promoting the smooth functioning  of the market 
in  works  of  contemporary  and  modern  art  in  the  European  Union.  Consequently, 
following  the  publication  in  January  1991  of  its  working  programme  in  the  field  of 
copyright  and  neighbouring  rights  entitled  "Follow-up  to  the  Green  Paper"(1),  in  which 
the question  of the advisability  of  a Community  initiative on the resale right was raised 
in Chapter  8.5, the Commission  carried out a number of consultation  exercises based on 
questionnaires  and  public  hearings  in  July  and  November  1991,  August  1994  and 
February  1995.  In addition, it conducted  studies into the economic  and legal  aspects of 
the matter, taking as a basis a survey of the features  of the art market.  The key  findings 
of  these  studies  are reproduced  below. 

H.  Analysis  of  the  relevant  market 

1.  First of all, it should be pointed  out that, owing to the limited duration  of protection,  the 
art  market  affected  by  the  artist's  resale  right  is,  generally  speaking,  the  market  in 
contemporary  art.  Exceptionally,  the  artist's  resale  right  may  also  affect  works  of 
modern  art  owing to the  longevity  of their  authors. 

2. 

It  is important  to bear in  mind  the various players  on the market  inasmuch  as  different 
people operate on the art market and exert, one after the other and in various capacities, 
an  influence  on  prices.  They  are:  art  dealers,  art  galleries,  auction  houses,  major 
collectors  and  the  State. 

A distinction must also be drawn between the primary market and the secondary  market. 
The  primary  market  is  that  in  which  original  works  are  sold  for  the  first  time.  The 
secondary  market  is  that  in  which  works  are  resold,  and  it  is this  market  alone  that  is 
affected  by  the  artist's  resale  right. 

3.  The  Community  art  market  is  strongly  influenced  by  the world  market.  Artistic  works 
in  the  upper  price  range  attract  an  international  clientele.  This  constitutes  a  floating 
mass  in  search  of  places  offering  the  best  return,  the  clients  (buyers  and  sellers)  being 
internationally  mobile. 

At the international  level, the leading centres for  the sale of works of  art are New  York 
and London,  followed  by  Paris.  Frequently,  neither  the  seller nor  the buyer  is resident 
in the countries  in which  these  centres  are located. 

The  flow  of  imports  and  exports  of  works  of  art  is  therefore  substantial.  Being  very 
fluid,  the  market  can  move  easily  from  one  country  to  another. 

( i)  COM(90)  584 final,  17.1.1991. 

It  is  very  difficult  to  gauge  precisely  the  scale  of  the  world  art  market  in  view  of  the 
almost  total  lack  of  statistics  on  transactions,  save  in  the  case  of  auction  sales  and 
external trade.  Consequently, the market can be evaluated  only on the basis of estimates 
of the total  number  of  transactions  worldwide. 

These estimates, which are arrived  at by applying a coefficient  to the price of works sold 
by  auction,  lay  in  1989,  according  to  the  various  coefficients  used,  somewhere  in  the 
ECU  25-60 billion  range(2). 

That  same  year,  the  origin  of  the  chief  buyers  on  the  world  market  could  be  broken 
down  as  follows: 

United  States: 50% 
Japan: 25% 
Europe: 20%. 

It  is  apparent  from  OECD  statistics  on  data  concerning  imports/exports  of  paintings, 
drawings, engravings and sculptures for  1992 that works of art originating in the Belgian, 
the 
French,  German  and  Spanish  markets  are  sold  mainly 
United  Kingdom  and  the  United  States(3) (Table  1). 

in  Switzerland, 

Table  1:  Volume  of  t r a de  in  paintings,  drawings,  engravings  and  sculptures 
($  '000)  (main  markets  in  O E CD  Member  States) 
E 
F 
14.915 
42.494 
7.061 
/ 
3.116 
8.443 
20.065 
11.120 

CH 
186.600 
126.203 
15.323 
11.652 

B/L 
16.507 
15.876 
1.941 
20.294 

UK 
97.019 
53.134 
4.296 
37.345 

D 
/ 
23.211 
11.572 
12.839 

I 
10.628 
6.282 
/ 
1.519 

6.136 
8.773 
3.505 
105.068 
105.565 

18.017 
206.781 
13.247 
136.222 
59.074 

781 
35.035 
197 
11.827 
13.299 

/ 
29.813 
785 
6.539 
8.620 

79.707 
/ 
14.821 
125.942 
126.851 

3.085 
64.406 
/ 
26.495 
24.007 

16.098 
407.439 
8.206 
/ 
161.779 

NL 
23.351 
4.780 
1.002 
/ 
14.698 
151.321 
2.559 
27.238 
28.727 

US 
72.307 
104.445 
11.424 
19.164 

8.229 
585.567 
3.896 
252.359 
/ 

D 
F 
I 
NL 
B/L 
UK 
E 
CH 
US 

6.  Public  auction  sales  of  works  of  art  reached  their  height  worldwide  in  1989/90.  The 
economic recession, which hit modern and contemporary  paintings hardest, brought them 
down  to  a much  lower  level  in  1991/92.  Since then,  there  has  been  a recovery  in  both 
economic  activity  and  art  sales  (Table 2). 

(2)  Observatoire  des mouvements  internationaux  d'oeuvres  d'art, Paris,  1993. 
(3)  Study  entitled  "Le  droit  de  suite  dans  l'Union  européenne,  Analyse  juridique, 
Elements  économiques", Brussels  1995, p.  112 (Study  carried  out by  the  Commission). 

4 

Table 2: Fluctuations  in the world market for works of art (public  sales)(4) 
on the basis of turnover in £ 
1990/91  -  1989/90 
69.8  % 

1991/92  -  1990/91 
21.3  % 

1989/90  -  1988/89 
+  57.5  % 

1992/93  -  1991/92 
+  23.4  % 

Years 
Annual  variations 

At  the  international  level,  public  sales  are  dominated  by  the  leading  auction  houses, 
such  as  Sotheby's  and  Christie's.  A breakdown  by  country  reveals  the  preponderance 
of  the United  States  and  the  United  Kingdom. 

7. 

Of  public  sales by  Sotheby's  in  1994,  50% took  place in North  America,  32% in  the 
United  Kingdom  and  14%  in  continental  Europe.  Of  this  volume  of  sales,  6% 
concerned  works by  contemporary  artists  and  14% impressionist  works  and  works  of 
modern  art  (Table  3)(5). 

Table  3: Public  sales  by  Sotheby's  in  1994 
Geographical breakdown 

Continental Europe 
($177.9 million) 
14% 

Asia 
($55,4 million) 
4% 

United Kingdom 
($430.4 million) 
32% 

North America 
($666.3 million) 
50% 

(4)  Source:  Art  Sales  Index;  study  by 

the 

ifo  Institut  fur  Wirtschaftsforschung, 

Das  Folgerecht  der  bildenden Kiinstler,  1994,  p. 79. 

(5)  Source:  Sotheby's,  1995. 

Breakdown by category 

other pictures and 
works art 
26% 

impressionists 
modern art 
14% 

contemporary art 
6% 

books, etc 
6% 

other decorative arts 
24% 

jewellery 
14% 

furnitures 
10% 

8.  As  can  be  seen  below  (Table  4)(6),  Christie's turnover  breaks  down  in  the  same way  as 
Sotheby's.  It  is  clear  from 
the  statistical  data  that  the  combined  share  of  the 
United  Kingdom  and the United  States alone  accounts  for  more than  80% of the  firm's 
public  sales. 

Table  4:  Geographical  breakdown  of  Christie's  turnover  -  (public  sales) 

United  Kingdom 
United  States 
Switzerland 
Netherlands 
Hong-Kong 
Italy 
Monaco 
Australia 
Others 

1992 
%  for  each  country 
37.8 
44.7 
6.9 
2.3 
2.3 
1.5 
2 
2 
-
100 

£  million 

240.2 
284.3 
44.1 
15.2 
15.2 
10.8 
13 
13 
-
635.6 

1993 
%  for  each  country 
37.5 
42.7 
8.3 
2.2 
2.7 
0.8 
3.7 
3.7 
0.8 
100 

£  million 

273.4 
311.6 
61.3 
19,9 
19.9 
6.6 
27.7 
27.7 
6.4 
728.3 

Between  1989  and  1993,  contemporary  art  accounted  for  between  5.6%  and  9%  of 
Christie's total turnover. In  1989 and  1990, a record-breaking period, the share accounted 
for  by  impressionist  works  and  works  of  modern  art  came  to  39.4  and  35.3% 
respectively,  whereas  in  subsequent  years it  fell  back  to between  13%  and  19%(7). 

(6) 

(7) 

Source:  Christie's,  1994;  study  carried  out  for  the  Commission,  1995. 
Ibid. 

9.  The constraints that have had an impact  on the financial  conditions obtaining  on the art 
market include  - besides the artist's resale  right  -  social  security  contributions for  artists 
(which  exist only in  some Member  States),  sales commission,  the tax  on the increase in 
value  as part  of  income tax,  and  VAT. 

III.  The legal  position 

A.  The  Berne  Convention 

The wide  legislative  diversity  that  reigns  in the field  of the  artist's resale  right  is due  among 
other things to the flexibility of the provisions  of the Berne Convention  for  the Protection  of 
Literary  and  Artistic  Works  (as revised  by  the  1971 Paris  Act),  pursuant  to which  countries 
of the Berne Union are free to decide whether or not to introduce the right into their  domestic 
law.  Article  14ter of the Convention  provides  as  follows: 

"1.  The  author,  or  after  his  death  the  persons  or  institutions  authorized  by  national 
legislation,  shall,  with  respect  to  original  works  of  art  and  original  manuscripts  of 
writers and composers, enjoy the inalienable right to an interest in any sale of the work 
subsequent  to  the first  transfer by the author  of  the work. 

2. 

The protection provided  by the preceding paragraph  may be claimed in a country of the 
Union only  if  legislation  in  the country  to which  the author  belongs so permits,  and  to 
the extent permitted  by  the country where  this protection  is  claimed. 

3. 

The procedure for  collection  and  the  amounts  shall  be  matters for  determination  by 
national  legislation. " 

B.  Application  of  the  artist's  resale  right  in  the  Member  States 

As  indicated  above,  there  are  numerous  differences  between  the  domestic  laws  of  the 
Member  States  of  the  European  Union,  and  some  countries  have  not  made  use  of  their 
discretionary  power to introduce the artist's resale right into their national  legal system.  Some 
laws have remained  a dead  letter,  whereas  others  are highly  detailed.  Broadly  speaking,  the 
position  is this: 

1. 

France 

The  artist's  resale  right  was  recognized  for  the  first  time  in  France  by  an  Act  of  1920, 
supplemented  by  a decree  and various  orders.  But it was not until  a  1957  Act that  the right 
was  enshrined  in  the  law  on  copyright.  The  Act  currently  in  force  (1992  codification)  no 
longer limits the artist's resale right to auctions, but instead  extends it to include private  sales 
through a dealer.  The extension  has, however, remained without practical  effect  owing to the 
absence of an administrative implementing regulation.  Such a regulation is also lacking in the 
case  of  sales  by  public  auction,  but  the  right  is  nevertheless  exercised  in  accordance  with 
established  practice. 

2.  Belgium 

In Belgium  the artist's  resale  right was  adopted,  almost  at the  same time as it was  enshrined 
in law in France, by a  1921 Act introducing  a right to remuneration  in respect  of public  sales 
of works of art.  Unlike the French law, the text was not inserted in the old Belgian  Copyright 
Act of  1886.  Notwithstanding  this, the artist's resale right has been  effectively  enforced  ever 
since it was legally  recognized. 

In  1994 the Belgian  Parliament  adopted  a new Act  on copyright  and related  rights.  The Act 
contains  fresh  provisions  on  the  artist's  resale  right.  It  repeals  the  1921  Act but  makes  this 
repeal  subject  to  the  application  of  certain  articles  the  entry  into  force  of  which  is  in  turn 
dependent on the  -  still  awaited  - adoption  of  a royal  decree. 

3. 

Italy 

The existence  of the artist's resale right was also confirmed  in Italy.  However,  the  1941 Act 
lays down  such complex  and  sophisticated  rules that the right has never been  enforced.  It is 
interesting to note that the rules also cover private sales and that the amount payable is based 
on the increase in value.  The amendments made by a  1979 decree have done little if anything 
to  improve  matters.  The legal  provisions  therefore  have  a purely  formal  value. 

4.  Germany 

Although it was not until  1965, when it  adopted the  Act on copyright  and related  rights,  that 
the German  Parliament  introduced  the  artist's  resale  right, the  system  that  has been  set up  is 
highly  effective.  Following  a  reform  dating  from  1972,  the  statutory  rate  of  remuneration, 
which is applied  to  a maximum  number  of  transactions with  the  exception  of those  between 
individuals,  has  been  increased  considerably.  To  a  large  extent,  the  artist's  resale  right  is 
managed  in  accordance  with  a  1980  inter-branch  agreement  between  the  relevant  collecting 
society  and  the  association  of  art-market  professionals. 

right  and  as  a  contribution 

Members of the "Ausgleichsvereinigung Kunst" pay  a standard royalty  by virtue of the artist's 
resale 
scheme 
towards 
(Kiinstlersozialabgabe). Outside the framework  of the inter-branch  agreement,  non-members 
of  the Ausgleichsvereinigung  are liable to  make payment  as provided  for  by  law. 

the  artists'  social 

security 

5. 

Portugal 

In Portugal  the artist's resale right  was introduced  by  a  1966 Act.  The new  Copyright  Act of 
1985 bolstered  it by  extending  the  categories  of  objects  covered  to  include  manuscripts. 

6. 

Luxembourg 

A  1972  Act  provides  that  a resale  royalty  is  payable  on  sales  by  public  auction  or  through 
dealers. However, the necessary  implementing  regulation  has not been adopted,  so the  artist's 
resale right has  never  been  of  any  practical  effectiveness  in this Member  State. 

7. 

Spain 

In  Spain the artist's resale right was recognized  for  the first  time by  an Act adopted  in  1987. 
The  domestic  rules  cover  any  resale  by  public  auction,  through  art  galleries  or  privately 
through  a dealer.  Works  of  applied  art  are  excluded.  Under  a  1992 Act,  heirs may  receive 
royalties. 

8.  Denmark 

In  Denmark,  a  reform  of  the  Copyright  Act  in  1989  made  possible  the  introduction  of  the 
artist's resale  right  as from  1990.  Royalties  are  collected  by  the  "Billedkunst" section  of  the 
"Copy-Dan"  collecting  society. 

9.  Greece 

The  1993 Greek Copyright  Act establishes an artist's resale right that is applicable to sales by 
public  auction  and  to  any  resale.  Following  the  Act's amendment  later that  year,  the  person 
liable for  payment  of a royalty  may  instead  make a donation.  Under this rule, the  provisions 
on collection  of the royalty  do not apply where those liable for  its payment  "make a  donation 
of an amount at least equal  to that part  of  their remuneration which  comes from  the reseller 
on condition that: (a) the legislation in force provides  in respect of the donation for  exemption 
from  the  tax on donations;  (b) the sum  involved is deposited  in an  account  opened  specially 
for  that purpose  by the donor  with  the Deposits  and Loans  Office  or with  a  bank  operating 
lawfully in Greece; and (c) the document evidencing the deposit contains (aa) data concerning 
the  donor  and  donee,  (bb)  the  amount  of  the  donation,  (cc)  the  date  of  the  deposit,  and 
(dd) the signature  of  the donor  or of his  legal  representative". 

10.  Finland 

In  Finland  the  artist's  resale  right  was  introduced  as  part  of  a law  reform  exercise  in  1995. 
Under  the Finnish  rules,  a  royalty  is  payable  in  respect  of  any  professional  or  public  resale 
of  a  work  of  art  with  the  exception  of  architectural  and  photographic  works,  handicraft 
products  and  products  mass-produced  to  an  industrial  design.  The  right  is  managed  by  the 
Kuvasto  collecting  society.  The provisions  on the artist's resale right apply uniformly  to any 
national  or any resident of another Member  State or of a Contracting  Party to the Agreement 
on  the European  Economic  Area. 

11.  Sweden 

In  Sweden  an  Act  of  7 December  1995  introduced,  with  effect  from  1 January  1996, 
arrangements  for  the establishment  of the artist's resale right.  The provisions in  question  are 
similar to the rules in force in the other Nordic Member  States.  This holds true, in  particular, 
for  the categories  of work  and the transactions  concerned,  the rate,  and  the manner  in which 
the  right  is  administered. 

12.  Overview 

The  legislative  disparities  that  exist  in  relation  to  the  artist's  resale  right  within  the 
Community,  to  the  extent  that  the  right  is  recognized,  are  described  synoptically  below 
(Tables  5 and  6). 

Table  5:  Legal  provisions  applicable;  categories  of  works  and  transactions 
covered  by  the  artist's  resale  right 

Categories  of  works 

Transactions 

Works  of the  graphic  and 
plastic  arts 
Works  of  the  plastic  arts 

Public  sales  or  sales by  a 
dealer' 
Sales by  public  auction 

Member 
State 

France 

Belgium 

Acts 

1920, 
1957,  1992 
1921,  1994 

Italy 

1941 

Entry 
into 
force 
1920 

(1921) 
1996?2 

3 

Germany 

1965,  1972 

1965 

Portugal 

1966,  1985 

1966 

Luxembourg 

1972 

2.3. 

Spain 

1987,  1992 

1987 

Pictures, paintings,  sculptures, 
drawings, engravings  and 
manuscripts 
Works of  the  plastic arts1* 

Original  works  of  art, 
manuscripts 
Works  of  the  graphic  and 
plastic  arts 
Works of  the  plastic  arts5 

Public  and  private  sales' 

Sales by  public  auction  or 
through  a  dealer 
Any  resale 

Public  sales  and  sales by  a 
dealer 
Public  sales  and  sales  via  a 
commercial  establishment  or 
through  a dealer  or 
commercial  agent 
Any  commercial  resale 
(auctions, by  shops,  or any 
other  way) 
Sales by  public  auction  and 
any  resale  through  a  dealer 
Public  and  professional  sales 

Denmark 

1989 

1990 

Originals  and  copies  of  works 
of  art,  works  of  applied  art6 

Greece 

Finland 

Sweden 

1993 

1995 

1995 

19937 

1995 

1996 

Original  works 

Works of  the  fine  art* 

Works of  the  fine  arts9 

Any  commercial  resale 

In practice, no  amount  is collected  on  sales by  a  dealer. 
The  implementing  order has not  yet  been  adopted. 
Not  applicable  in  practice. 
Subsequent  to  the first sale. 
With  the exception  of  works  of  applied  art  and  architectural  works. 
Excluding  mass  production. 
Not  applicable  in the  event  of  a  donation. 
With  the  exception  of  architectural  and  photographic  works,  works  of  applied  art  and  products  produced  in  series  to 
industrial  designs. 
With  the  exception  of  architectural  works  and  works  of  applied  art produced  in  series. 

10 

Table  6:  Rates,  application  thresholds  and  collection  of  royalties 

Member  State 
France 

Statutory  rate 
3% 

Application  threshold 
> FF  1001 

Collection 
By  collecting  society  or 
individually 

Belgium 

4% 

BFR  50  000 

i 

Italy 

Germany 

Portugal 

Luxembourg 

First  public  sale:  1-5%  of 
the  sale price;  successive 
sales:  2-10% of  the 
increase  in value;  private 
sales:  5-10%  of  the 
increase  in  value 

5% of  the  sale  priceJ 

6% of  the  remuneration  for 
the  transaction5 
Maximum  rate: 3% 

Public  sales: 
>/=  LIT  1 000/5  000/10  000 
according  to  category  of 
work; 
non-public  sales: 
>/=LIT  4 000/30  000  /40  000 
according  to  category  of 
work2 
DM  100 

Recourse  to  collecting 
society  compulsory 

Recourse  to  collecting 
society  not  compulsory4 

Spain 

3% 

>/=PTA  300  000 

Denmark 

5% of  the  sale  price0 

>/=DKR  2 000 

Greece 

Finland 

5% of  the  sale  price 

5% of  the  sale  price" 

F1M  100 

Sweden 

5% of  the  sale  price6 

l/20th  of  the  basic  amount 
provided  for  by  the  General 
Insurance  Act 

Recourse  to  collecting 
society  compulsory 
Recourse  to  collecting 
society  not  compulsory 
Recourse  to  collecting 
society  compulsory 
Recourse  to  collecting 
society  compulsory 

For want  of  an  implementing  order,  the  earlier  legislation  is  still  applied  in  practice. 
Provided  the  sale  price  exceeds  the  price  of  the  first  sales  operation  multiplied  by  five. 
Cf. inter-branch  agreement. 
The right to  information  about  transactions  giving  rise  to payment  of the amount  in question  may  he  exercised  only 
by  the  competent  collecting  society. 
Taking  the  inflation  index  mto  account. 
Including  commission  but  excluding  VAT. 
Not  provided  for  by  law.  fixed  by  the  competent  collecting  society. 

11 

C.  The  situation  in  the  other  Member  States 

In the other Member  States  - Austria,  Ireland, the Netherlands and the United  Kingdom  - the 
artist's  resale  right  is currently  not  recognized. 

In  Austria,  Parliament  has  provisionally  rejected  proposals  - based  on  the  German 
rules  - aimed  at recognizing the right's existence, in the light of the judgment  of the Court of 
Justice  of  20  October  1993  in  the  Phil  Collins  case(8). 

The  Court  held  here  that  requirements  of  reciprocity  cannot  be  upheld  in  the  Community 
context.  Consequently,  authors  who  are  nationals  of Member  States  which  do  not  recognize 
the artist's  resale  right  qualify,  under  Article  6 of the  Treaty,  for  national  treatment  and  may 
invoke  the  right  when  their  works  are  resold  in  the  territory  of  a Member  State  which  does 
recognize  it. 

The Austrian  legislator  considered,  when  the  1994 Copyright  Act was being reformed(9),  that 
it  was  unacceptable  that  the  artist's  resale  right  should  be  conferred  on  nationals  of 
Member  States,  e.g.  the  United  Kingdom,  which  did  not  apply  the  right,  and  preferred  to 
postpone  its introduction  until  such  time  as it  was  harmonized  within  the European  Union. 

In the  United  Kingdom,  political  and  legal  objections  have  stood  in  the  way  of  the  artist's 
resale right being  inserted  in the  UK  Copyright  Act  1988.  The Whitford  Committee,  which 
was  set up  by  Parliament  to  consider  this  matter  among  others,  had  refused  to  endorse  it  in 
its  1977 report. 

It was stated in this connection  that the effectiveness  of the  artist's resale right depended  first 
and  foremost  on the  inalienable  nature of the  right,  but that the  concept  of  inalienability  was 
contrary  to  British  practice  in  the  copyright  field  Moreover,  the  so-called  impossibility  of 
monitoring  private sales, coupled with the desire not to discriminate against  public  sales, was 
a further  obstacle to introducing the  right.  Lastly, the Committee considered that the practical 
effect  of the artist's resale right was minimal compared with the  -  sometimes exorbitant  -  costs 
of  collection  and  management.  It  accordingly  came  to the  conclusion  that  the  artist's  resale 
right  was neither  equitable,  logical  nor  practicable. 

Ireland, which also adheres to the copyright tradition,  has adopted a somewhat hesitant stance 
regarding  the  possible  incorporation  of  an  artist's  resale  right  in  its  domestic  law. 

D.  The  situation  in  certain  third  countries 

1.  Western  Europe  outside the  Community 

During  the  1993  law  reform  drive  in  Switzerland,  the  National  Council  voted  by  a  narrow 
majority  against  introducing  the  artist's  resale  right.  The  decision  was  based  inter  alia  on 
economic  considerations,  including  the  wish  to  prompte  Switzerland  as  a  place  for  selling 
works  of  modern  and  contemporary  art. 

(8) 
(9) 

Joined  Cases  C-92/92  and  C-326/92. 
1563  of  the  Annexes  to  the  shorthand  minutes  of  the  National  Council,  15.4.1994, 
pp.  9-10. 

12 

In  Norway,  a  1948 Act,  which  was reformed  in  1989, provides  for  a  system  whereby  every 
commercial  sale of  a work  of art gives rise to payment  of an amount  equal to  3% of the  sale 
price  into  a  solidarity  fund  for  the benefit  of those working  in the  plastic arts. 

Iceland  has had  a  similar  set  of  rules  since  1987. 

2.  Central  and  eastern  Europe 

Since  they  reformed  their  copyright  laws  in  1993  and  1994,  most  countries  of  central  and 
eastern Europe now recognize the artist's resale  right.  Currently, Bulgaria, Estonia,  Hungary, 
Latvia,  Lithuania,  Poland  and  Slovenia recognize the  right.  Romania,  where  a bill  has been 
presented  to Parliament  on the  subject,  is  contemplating  introducing  it. 

3. 

The United  States 

In the United  States, public hearings were held in  1992 to consider whether the artist's resale 
right  should  be  introduced  at  federal  level  in  accordance  with  the  Visual  Artists  Rights  Act, 
1990.  The exercise was based  among other things on the experience  of California,  which has 
had rules on the  subject  since  1977, and  on that of France,  Germany  and Belgium  in  relation 
to the practical effect  of collecting royalties.  The Copyright Office  produced a report in which 
it  concluded  that,  at  that  stage,  there  were  insufficient  economic  and  political  grounds  for 
establishing  the  artist's  resale  right  in  the  USA.  However,  still  according  to  the  report, 
Congress might have to reconsider  introducing  the resale right in the event  of  harmonization 
within  the European  Community(10). 

To cater for that eventuality, the Copyright  Office  has prepared  a model  designed to  facilitate 
implementation  of a set  of arrangements  making  it possible to attain  the objective  of  helping 
artists more,  without  significantly  harming the  interests  of the  art  market. 

4.  Rest  of the  world 

As far  as the rest of the world is concerned,  Algeria, Brazil, Burkina Faso, Ivory Coast, Chile, 
Congo, Costa Rica, Equador, the Russian Federation, Guinea, Madagascar, Morocco, Peru, the 
Philippines,  Senegal,  Tunisia,  Turkey  and  Uruguay  recognize  the  artist's  resale  right  in 
principle. 

* 

In  the  vast  majority  of  cases,  royalties  are  not  actually  collected,  either  because  of  the 
weakness  of the  markets  or because  of the  inefficiency  of the  collection  arrangements. 

IV.  The  need  for  action 

In  order  to  determine  whether  it  is  appropriate  to  harmonize  the  artist's  resale  right  at 
European Union level, an analysis of the economic impact of the legislative disparities relating 
to the right is indispensable.  What is more, the importance  of the subsidiarity  principle  must 
be  taken  into  account  and  the  appropriate  legal  basis  must  be  chosen. 

(10)  Droit  de  suite:  The  Artist's  Resale  Royalty,  a  report  of  the  Register  of  Copyrights, 

December  1992, pp.  149 et  seq. 

13 

A.  The  economic  impact  of  the  disparities,  distortion  of  competition 

1.  First  of  all,  the  Commission  is  bound,  in  the  exercise  of  its  power  of  initiative  in  the 
copyright  field,  to  safeguard  the  objectives  set  out  in  Article  7a  of  the  Treaty,  namely 
the  functioning  of the  internal  market. 

The second  paragraph of Article  7a of the Treaty  defines the internal market as "an area 
without  internal  frontiers  in  which  the  free  movement  of  goods,  persons,  services  and 
capital  is ensured  in  accordance  with  the provisions  of  this  Treaty". 

2. 

In relation to the free  movement  of goods and distortions  of competition,  it is clear that 
the  substantial  differences  between  the  various  laws  of  the  Member  States  and  the 
uncertainty  about  the  application  of the  artist's  resale  right  in the  various  provisions  of 
the Member  States may have a harmful  effect  on the functioning  of the internal  market 
in works  of  art. 

3.  Contemporary  or  modern  works  of  art  in  the  upper  price  range  tend  to  be  resold  in 
countries where transaction  fees  are on the whole  lower.  Clearly,  the non-collection  of 
a royalty  which  in  some  cases may  be  as high  as  5-6%  of  the  sale price  favours  places 
where the artist's resale right is not recognized. At Community  level, there is a noticeable 
shifting  of  sales  of  works  of  art  towards  countries  where  no  royalties  are  collected  or 
where taxes  are  lower. 

4.  The data  on  public  sales reveal  that  sales of  high-priced  works by  contemporary  artists 
with  a worldwide  reputation  take  place  more  often  than  not  in  London  or  New  York. 
"Minor" works by the same artists sold in their country  of origin usually fetch  only  small 
amounts. 

5.  The  attractiveness  of  low-tax  countries  where  the  artist's  resale  right  is  not  applied  is 
understandable  in  the  case  of  such  valuable  works.  A  substantial  saving  can  be  made 
in this  way. 

6.  As  can  readily  be  seen,  the  turnover  of  the  leading  auction  houses  is  divided  between 
those  countries  where the  artist's  resale  right  is non-existent  and  those where  royalties, 
though  provided  for  by law,  are not collected  (see II., points 6,  8 and  9).  The  available 
data  show  that  works  of  art  coming  from  the  Belgian,  French,  German  and  Spanish 
markets  are  sold  primarily  in  the  United  Kingdom,  the United  States  and  Switzerland. 

7.  The non-existence of the artist's resale right in some Member  States is, of course, not the 
only  factor  influencing  the  choice  of  place  of  sale.  However,  the  disparities  in  the 
collection of royalties induce operators to seek ways of circumventing the payment rules. 
Thus,  for  example, three works  by  the  contemporary  German  artist  Joseph Beuys  were 
sold  by  auction  in  London  in  1988 for  £462  000  (DM  1 418  340).  The  seller  and  the 
buyer were both  German  collectors.  Owing to the territoriality  of the artist's resale right 
and  the  resulting  impossibility  of  collecting  the  royalties  abroad,  the  saving  made  was 
oftheorderofDM71  000°1}. 

(ID  BGH, judgment  of  16 June  1991  -1  ZR  24/92,  GRUR  1994,  p. 798. 

14 

8.  Although they  are present  in all  the Member  States, the leading  auction houses do most 
of  their  selling  in  three  countries  where  the  artist's  resale  right  is  not  recognized. 
It 
would  appear that they  gather  together  works  of  art whose  resale  in the territory  of the 
country  of origin would  give rise to payment  of a royalty  with  a view to  selling them  in 
London  or New  York. 

9.  According  to  some  art  dealers,  the  act  of  introducing  the  artist's  resale  right  in  those 
Member  States which currently  do not recognize it would affect  the competitive position 
of the domestic art market,  in particular vis-à-vis the United  States and  Switzerland,  the 
reason  being  that the  countries  concerned  compete  more  with  third  countries  which  do 
not  recognize  the  right  than  with  other  Member  States. 

This  is  borne  out  by  the  fact  that,  in  the  import  and  export  statistics  of  the  said 
Member  States  (see  Table  1),  the  United  States  is  the  main  trading  partner,  followed 
by  Switzerland. 

10.  The  same  interests  maintain  that,  since  the  artist's  resale  right  creates  distortions  of 
competition,  its harmonization  within the European  Union would  cause a contraction  of 
the  art  market  in  those  countries  which  do  not  recognize  the  right.  The  supply  of 
modern  and  contemporary  art  would  switch  from  the  markets  of  those  Member  States 
where the right  did  not  previously  exist,  more to  the United  States  and  Switzerland. 

11. 

In  advancing  such  an  argument,  however,  these  interests  are  implicitly  acknowledging 
the  real  -  though  admittedly  not  exclusive  - impact  of  the  artist's  resale  right  on  the 
art  market. 

12.  As to the actual risk of sellers switching to the markets of certain third countries,  account 
must be taken  of a number  of factors  which have the effect  of increasing the costs borne 
by  the  vendor  in  the  event  of  a work  being  exported  from  the  Community.  It  would 
appear,  therefore,  that  the  problem  boils  down  in  reality  to  what  the  detailed  rules  of 
application  are,  and  in  particular  the  level  at which  royalties  are  set. 

15 

13.  The  costs  incurred  in  the  event  of  a work  originating  in  France  being  exported  to  and 

auctioned  in  Switzerland  are  as follows  (Table  7): 

Table  7:  Auction  in  Switzerland  of  a  modern  painting  measuring  150  x  100  cm  not  subject 
to  a  cultural  object  certificate  (being  less  than  50  years  old) 

Price  of  the 
work 

FF  500  000 

FF  1 000  000 

FF  1 500  000 

Costs borne by  seller1 

Costs borne by  buyer' 

Private  seller 

VAT-registered  seller 

Increase  in value 
Sale  costs 
Miscellaneous3 
Transport 
Insurance 
Total 
Increase  in value 
Sale  costs 
Miscellaneous3 
Transport 
Insurance 
Total 

Increase  in value 
Sale  costs 
Miscellaneous3 
Transport 
Insurance 
Total 

7.00% 
10.00% 
5.00% 
2.00% 
0.30% 
24.30% 
7.00% 
10.00% 
5.00% 
1.00% 
0.30% 
23.30% 

7.00% 
10.00% 
5.00% 
0.65% 
0.30% 
22.95% 

Sale  costs 
Miscellaneous3 
Transport 
Insurance 
Total 

Sale  costs 
Miscellaneous3 

Transport 
Insurance 
Total 

10.00% 
5.00% 
2.00% 
0.30% 
17.30% 

10.00% 
5.00% 
1.00% 
0.30% 
16.3% 

Buyer's  costs 
Swiss  VAT/total 
sale  price 

Total 
Buyer's  costs 
Swiss  VAT/total 
sale  price 

Total 

10.00% 

7.15% 

17.15% 
10.00% 

7.15% 

17.15% 

Sale  costs 
Miscellaneous3 
Transport 
Insurance 
Total 

10.00% 
5.00% 
0.65% 
0.30% 
15.95% 

— r~ 

Buyer's  costs 
Swiss  VAT/total 
sale  price 

10.00% 

7.15% 

Total 

17.15% 

Source: Chambre nationale des commissaires-priseurs,  1995. 

1 
2 
3 

French seller supposed to bear the cost of transport (approximately  FF  10 000). 
Swiss buyer pays Swiss VAT at a rate of 6.5% (unless exempted). 
Assuming that the miscellaneous sale costs (advertising, catalogue, carriage, etc.) come to approximately 5%. 

16 

14.  The  costs  relating  to  the  auctioning  in  France  of  an  identical  work  are  as  follows 

(Table  8): 

Table  8:  Auction  in  France  of  a  modern  painting  measuring  150  x  100  cm  not  subject  to  a 
cultural  object  certificate  (being  less  than  50  years  old) 

Price  of  the 
work 

FF  500  000 

FF  1 000  000 

FF  1 500  000 

Costs borne by  seller1 

Costs borne  by  buyer1 

Private  seller 

VAT-registered  seller4 

Increase  in value 
Sale  costs 
Miscellaneous3 

4.50% 
11.86% 
5.93% 

Total 
Increase  in value 
Sale  costs 
Miscellaneous3 

Total 
Increase  in value 
Sale  costs 
Miscellaneous3 

22.29% 
4.50% 
11.86% 
5.93% 

22.29% 
4.50% 
11.86% 
5.93% 

Sale  costs 
Miscellaneous3 

11.86% 
5.93% 

Total 

17.79% 

Sale  costs 
Miscellaneous3 

11.86% 
5.93% 

Total5 

17.79% 

Sale  costs 
Miscellaneous3 

11.86% 
5.93% 

Total 

22.29% 

Total5 

17.79% 

Legal  expenses 
net of  tax 
VAT  on  legal 
expenses4 
Total 
Legal  expenses 
net  of  tax 
VAT on  legal 
expenses4 
Total 
Legal  expenses 
net  of  tax 
VAT  on  legal 
expenses4 
Total 

9.00% 

1.85% 

10.85% 
9.00% 

1.85% 

10.85% 
9.00% 

1.85% 

10.85% 

Source: Chambre nationale des commissaires-priseurs, 1995. 

1 
2 
3 
4 

5 

French  seller  supposed  to  bear  transport  costs  (approximately  FF  10 000) 
Swiss buyer pays  Swiss  VAT  at a  rate  of 6.5% (unless  exempted). 
Assuming that the miscellaneous sale costs (advertising, catalogue, transport, etc.) come to approximately  5%. 
Assuming  that the  sale  is taxed  on  the margin  at a  rate  of  18.6% (excluding  the case  of taxation  of the  total 
sale price). 
The  VAT-registered  seller will  have to  repay  the  VAT  on  the  sale. 

17 

15.  It is clear from  this comparison that auctions in  Switzerland  are not always  financially 
more favourable than in France.  This is borne out by comparable figures for  sending a 
work originating in Germany to Switzerland or the United  States with a view to its being 
auctioned in Basel, Geneva or New York (Tables 9 and 10). 

Table  9: Auction  of  a modern  painting  measuring  100 x  120 cm, 
value  DM  100 000 
Transport  from  Cologne  to Basel  or  Geneva  (temporary  importation) 

Cost of collection: 
Cost of wrapping: 
German  customs: 
Cost  of transport  to  Basel: 
Cost of transport to  Geneva: 
Fixed  costs  DE*: 
Swiss  customs. 
Commission: 
Fixed  costs  CH**: 

**  Documents, telecommunications costs 

Guarantees, handling 

DM165 
DM  42 
DM  195 
DM  480 
DM  680 
DM  35 
SF  175 
38 
SF 
1.95%o 

Table  10: Auction  of  a modern  painting  measuring  100 x  120 cm, 
value  DM  100 000 
Transport  by  air from  Cologne  to  New  York 

Cost of collection : 
Cost of wrapping: 
German  customs: 
Container  120 x 20 x  140 cm: 
Transport  to the  airport: 
Handling: 
Cost of air transport  56 kg: 
AWB costs: 
Commission  transfer  charge: 
Fixed  costs  DE* 
Administration: 
US customs**: 
Custom  bond: 
Custom  user  fee: 

DM  165.00 
DM  42.00 
DM  195.00 
DM  340.00 
DM  115.00 
DM  78.00 
DM  271.04 
DM  45.50 
DM  75.00 
DM  38.50 
DM  65.00 
480.00 
$ 
263.25 
$ 
170.10 
$ 

** 

Documents, telecommunications costs 
Including reception and unpacking 

Source:  Arbeitskreis  deutscher  Kunsthandelsverbànde,  1995. 

18 

16.  To  conclude,  the  artist's  resale  right  has  an  impact  on  competition  both  at  Community 
level  and internationally.  Like any fiscal  or  parafiscal  charge,  it is one of the factors  to 
be taken  into account  by  a person  wishing to  sell  a work  of  art.  In  a number  of cases, 
it  is  most  certainly  one  of  the  factors  contributing  to  a  distortion  of  competition  and  a 
shifting  of  sales within  the European  Union. 

17.  It  is  interesting  to  note  that  recently  the  Council,  taking  the  view  that  the  disparities 
between  the  tax  arrangements  applicable  inter  alia  in  the  art  field  cause  distortions  of 
competition 
adopted 
trade 
Directive  94/5/EC(12)  supplementing  the  common  system  of  value  added  tax  and 
amending  Directive  77/388/EEC.  The  Council  has thus  decided  to put  an  end  to  these 
divergences  while  enabling  legislation  to be  gradually  adapted. 

between  Member  States, 

deflections 

and 

of 

18.  From  the point  of view of  establishing  an internal  market,  measures confined  to the tax 
field  are insufficient  for  the purpose of guaranteeing  free  movement  of artistic works in 
Europe.  Once the tax obstacles have been removed,  the major  distortion  of  competition 
that remains is that  caused by  the lack  of harmonization  of the artist's resale  right.  The 
disparities between national  copyright laws will continue to distort competition  in the art 
market. Consequently, the objective of the harmonious functioning  of the internal  market 
in works of art cannot be attained  without  simultaneously  harmonizing the artist's resale 
right.  The  need  for  this  is  even  greater  since the Phil  Collins judgment. 

B.  Subsidiarity  and  political  desirability 

1.  There  is  reason  to  believe  that  the  Phil  Collins  judgment,  with  its  application  of  the 
principle of non-discrimination  on grounds of nationality,  has a significant  impact in the 
European  Union  when  coupled  with  the  prohibition  on  applying  the  principle  of 
reciprocity. 

2.  Henceforth,  private or public art dealers will have to pay royalties on works by  nationals 
of  certain  Member  States  even  if  the  countries  concerned  do  not  recognize  the  artist's 
resale  right. 

laws 

their 

introducing 

3.  Member  States  can  eliminate  this  inequality  at  national  level  only  if  they  are  prepared 
to  repeal 
the  hearing  on 
24 February  1995 a majority  of Member  States were far from  ready to contemplate this, 
being .of the  opinion  that  a generalized  application  of  the  artist's  resale  right  would  put 
an  end 
to  the  inequality  of  treatment  of  contemporary  artists  in  the  various 
Member  States  while  promoting  a  harmonious  development  of  the  art  market.  Most 
Member  States  therefore  came  out  in  favour  of  a  Commission  initiative  aimed  at 
harmonizing  the  right. 

the  artist's  resale  right.  At 

(12)  OJN0L6O,  3.3.1994,  p.16. 

19 

C.  The  appropriate  legal  basis 

1.  At  a hearing  of non-governmental  international  organizations  devoted  to  harmonization 
of the  artist's resale  right  in the  1980s,  and in  certain  programmes  and  memoranda,  the 
Commission  indicated  that,  when  the  time  was  ripe,  a  proposal  for  a  Directive 
approximating  Member  States'  laws  on  the  artist's  resale  right  might  be  envisaged  in 
accordance with  Article  100 of the  EEC  Treaty. 

2.  At that time, the Economic and Social Committee and the European Parliament were also 
concerned  about the problem  and  supported  an initiative based on this Treaty  provision 
enabling  the  approximation  of  Member  States'  laws  and  regulations  having  a  direct 
impact  on the  establishment  and  functioning  of the  common  market. 

3.  The rules  on the establishment  of the common  market  are laid  down  in  Article  7 of the 
EC  Treaty.  The  common  market  was to  have been  established  by  the  end  of  the  third 
stage of the transitional  period,  i.e. in  1969.  Its establishment  is, therefore,  no longer a 
present-day  issue. 

4. 

Since then, the  1987 Single European  Act and the  1992 Treaty  on European  Union  have 
changed  the  primary  legislation  by  inserting  a  number  of  new  legal  bases  both  in 
the  Treaty  chapter  on  approximation  of  laws  and  elsewhere. 

Article  100a(l)  of  the  Treaty  as  amended  by  the  Treaty  on  European  Union 
stipulates  that: 

"By way  of  derogation  from  Article  J 00  and  save  where  otherwise  provided  in  this 
Treaty, the following  provisions  shall apply for  the achievement of the objectives set out 
in Article  7a.  The Council shall,  acting  in accordance  with  the procedure  referred  to 
in  Article  189b  and  after  consulting  the  Economic  and  Social  Committee,  adopt  the 
measures for  the  approximation  of  the  provisions  laid  down  by  law,  regulation  or 
administrative action in Member  States which have as their object the establishment and 
functioning  of  the internal  market". 

5.  However,  some interests concerned have consistently  proposed, at recent hearings on the 
subject  of  the  artist's  resale  right,  that  it  would  be  appropriate,  in  the  event  of  a 
legislative  initiative  by  the  Commission,  to  base  the  proposal  on  Article  100  of 
the  Treaty.  This provision  requires the  Council  to  act  unanimously  on the  proposal. 

6.  The  authorities  of  one  Member  State  suggested,  during  the  most  recent  round 
of  consultations,  that  Article  128  of  the  Treaty,  as  inserted  by  the  Treaty  on 
European  Union  in the  Title  on culture,  is the appropriate  legal  basis.  Whilst  it  is  true 
that  the Community  is required  to take  cultural  aspects into  account  in  its  action  under 
other  provisions  of  the  Treaty  (Article  128(4)),  any  harmonization  of  the  laws  and 
regulations  of  the Member  States is expressly  excluded  (first  indent  of  Article  128(5)). 

20 

7.  Owing to the differences  between  the legal  arrangements applicable to the artist's  resale 
right, and bearing in mind the unequal  conditions of protection  and the resulting  impact 
on  competitive  conditions  within  the  art  market,  the  Commission  is of the  opinion  that 
this  situation  may  have  an  adverse  effect  on  the  functioning  of  the  internal  market.  It 
follows  that  Article  100a  is  the  appropriate  legal  basis  for  the  present  proposal. 
Attention  may  be  drawn  in  this  respect  to  the  judgment  of  the  Court  of  Justice  of 
13 July  1995 in Case C-350/92,  Spain v Council, in which the Court expressly  confirms 
that  Article  100a  is the  correct  legal  basis  for  a harmonization  measure  in  the  field  of 
intellectual  property  rights  pursuing 
in  Article  7a  of 
the EC  Treaty. 

the  objectives  set  forth 

V.  Particular  provisions 

1.  The purpose  of the proposal  for  a Directive is to harmonize the artist's resale right.  On 
the  basis  of  Article  14ter  of  the  Berne  Convention  for  the  Protection  of  Literary  and 
Artistic  Works  (as  revised  by  the  1971  Paris  Act),  the  Directive  determines  the 
subject-matter  of  the  right.  In  this  respect,  provision  is  made  for  excluding  private 
transactions  between  private  individuals  from  the  scope  so  as  to  avoid  the  practical 
problems  stemming  from  the  difficulty  of  monitoring  such  operations. 

2.  The  decisive  factor  when  it  comes  to  enforcing  the  artist's  resale  right  is  the  type  of 
exploitation to which works are subject,  namely resale by public officers,  auction houses 
or  other  commercial  agents.  In  principle,  royalties  are  payable  on  any  transaction 
involving  the  ownership  of  works  apart  from  the  first  sale. 

3.  The  effectiveness  of  the  artist's  resale  right  is  necessarily  conditional  on  the  right's 

inalienability  and the  impossibility  of  waiving  it. 

4.  At the hearings, the vast  majority  of  participants  considered  that  public  auctions  should 
not be the only operations subject to the artist's resale right, but that sales and exchanges 
effected  through  dealers  or  commercial  agents  should  also  be  covered.  The  fact  that, 
basically,  the same types of work  change  hands in galleries and  at public  sales  suggests 
that  they  should  be placed  on  an  equal  footing. 

5.  The works subject to the artist's resale right must be specified  if the right is to be applied 
uniformly.  The  concept  of  original  work  must  therefore  be  defined  more  closely.  A 
unique  copy  of  a work  is without  a doubt  embraced  by the  concept.  Certain  categories 
of  work  made  in  a  limited  number  of  copies  must  be  able  to  confer  entitlement  to 
payment  of royalties  on  condition  that  they  are  copies  considered  to be  such  according 
to  professional  usage. 

6.  Royalties  should be payable on the  sale price. Any  attempt to limit the assessment  basis 
to the increase in value compared with the purchase price would  encounter  considerable 
regulatory  difficulties.  Artists'  resale  royalties,  like  any  other  royalty,  must  be  payable 
by  reason  of the  exploitation  of the  work,  irrespective  of the  success it  achieves. 

7.  The amount  on which the royalty is based must not be too high lest the right become the 
preserve  of  the  best-known  artists.  A  threshold  of  ECU  1 000  is  an  average  amount 
compared  with  the various  national  thresholds  currently  laid  down. 

21 

8.  The Commission considers it appropriate that Member  States should be given the option 
of applying the artist's resale right from  a threshold lower than the Community  threshold, 
despite the  fact  that this  derogation  is not  a unifying  factor. 

If a Member  State avails itself of this opportunity, the artist's resale right will  apply  also 
to  a category  of  works with  a low  market  value.  Any  disparity  created  is not likely  to 
affect  trade  to  an  appreciable  extent  within  the  internal  market.  The  introduction  of  a 
lower  national  threshold  may  be justified  on  manifest  social  grounds. 

9.  The  rate  of the  royalty  should  not be too high.  Being  the  average  of the rates  adopted 

by  the  various Member  States,  a basic  rate  of  4%  seems  reasonable. 

10.  Harmonization  of the artist's resale right should not have the effect  of encouraging  sales 

of  works  of  contemporary  art  outside the  Community. 

11.  Some interests concerned have accordingly proposed that royalties be imposed on exports 
to  non-Community  countries  to  prevent  people  from  evading  payment  when  a work  is 
sold.  Apart  from  the  practical  problems  involved  in  policing  exports,  such  an  approach 
conflicts  with  the  principle  of  the  territoriality  of  the  artist's  resale  right.  Royalties 
cannot  therefore  be  charged  on  sales in  third  countries. 

12.  The Commission  considers it would be preferable to provide for a tapering scale of rates 
of  royalty  based  on  three  price  bands.  The  rate  proposed  for  amounts  in  excess  of 
ECU  250  000,  i.e.  2%  of  the  sale  price  net  of  tax,  approximates  to  the  additional 
expenses incurred in the event of a work being exported with a view to evading royalties. 

13.  As to those  entitled  to  receive royalties,  it was  suggested  at the  hearings  on the  subject 
that  the number  of persons eligible after  the author's death be limited.  However,  in the 
light  of  the  subsidiarity  principle,  any  initiative  affecting  Member  States'  laws  of 
succession  should  be  avoided,  all  the  more  so  since  the  matter  is  not  such  as to  affect 
the  functioning  of  the  internal  market. 

14.  The  rules  on  managing  the  artist's  resale  right  should  be  flexible.  A  number  of 
Member  States require that the right be managed by a national  performing  right  society. 
In  principle,  it  can  be managed  by  a public  authority,  by  collecting  societies  or  by  the 
owner  of the  right  himself,  in  which  case he  must  be free  to  decide  how to  exercise  it. 
The  proposal  confines  itself  to  providing  for  the  possibility  of  Member  States'  making 
recourse to a collecting society mandatory. In that event, the necessary  conclusions must 
be drawn from  the Phil Collins judgment  with collecting societies being obliged to treat 
authors  from  other  Member  States  equally. 

15.  Enjoyment  of the artist's resale right must be restricted to nationals of Member  States of 
the  European  Union  and  foreign  authors  whose  countries  afford  such  protection  to 
Community  authors. 

22 

16.  The duration  of the artist's resale right should  be up to 70 years after  the author's death, 
as provided for  in Directive  93/98/EEC on the term  of protection  for  copyright.  At this 
stage,  it  is  not  appropriate  to  introduce,  as was  proposed  by  some  interests  concerned, 
a rule whereby  a work becomes public  property  provided  a given  royalty  is paid  to the 
author  when  it  is resold  {domaine public  payant). 

17.  Lastly,  in  the  interests  of  effective  application  of  the  artist's  resale  right,  suitable 
procedures  are  laid  down  for  monitoring  transactions,  including  the  introduction  of  a 
right for the author or his authorized representative to obtain information  from the person 
liable for payment of a royalty. Any monitoring procedures must apply without  prejudice 
to  provisions  designed  to  safeguard  privacy. 

23 

Proposal  for  a 
EUROPEAN  PARLIAMENT  AND  COUNCIL  DIRECTIVE 
on the  resale  right  for  the benefit  of  the  author 
of  an  original  work  of  art 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article  100a thereof, 

Having  regard  to the  proposal  from  the  Commission(I), 

Having  regard  to the  opinion  of the Economic  and  Social  Committee(2), 

Acting  in  accordance with  the procedure  laid  down  in  Article  189b  of the Treaty(3), 

1.  Whereas, in the field  of copyright, the artist's resale right is an inalienable right  enjoyed 
by the  author of an original  work  of  art or original  manuscript to an interest in any  sale 
of  the work  subsequent  to the  first  transfer  by  the  author; 

2.  Whereas the artist's resale right is intended  to ensure that  authors  share in the  economic 
success  of  their  works;  whereas  it  helps  to  redress  the  balance  between  the  economic 
situation  of  authors and that of  other creators who benefit  from  successive  exploitations 
of  their  works; 

3.  Whereas  the  artist's  resale  right  forms  an  integral  part  of  copyright  and  is  an  essential 
prerogative  for  authors;  whereas  the  imposition  of  such  a  right  in  all  Member  States 
meets the need  for  providing creators with  an adequate and  standard  level  of  protection; 

4.  Whereas  under  Article  128(4)  of  the  Treaty  the  Community  is to  take  cultural  aspects 

into  account  in  its  action  under  other  provisions  of  the  Treaty; 

5.  Whereas the Berne Convention for the Protection of Literary and Artistic Works provides 
that  the  artist's  resale  right  is  available  only  if  legislation  in  the  country  to  which  the 
author belongs so permits; whereas the right is therefore  optional  and subject to the rule 
of  reciprocity;  whereas  it  follows  from  the  case-law  of  the  Court  of  Justice  of  the 
European  Communities  on  the  application  of  the  principle  of  non-discrimination 
laid  down  in  Article  6 of  the  Treaty,  as  shown  in  the judgment  of  20  October  1993  in 
Joined  Cases C-92/92  and C-326/92, Phil Collins and Others(4). that domestic  provisions 

(1)  OJ  No C 
(2)  OJ  No C 

(3) 

(4) 

Opinion  of  the European  Parliament  of 
[1993]  ECR 1-5145. 

24 

containing  reciprocity  clauses  cannot  be  relied  upon  in order to  deny  nationals of  other 
Member  States  rights  conferred  on  national  authors;  whereas  the  application  of  such 
clauses  in  the  Community  context  runs  counter  to  the  principle  of  equal  treatment 
resulting  from  the  prohibition  of  any  discrimination  on  grounds  of  nationality; 

6.  Whereas the  artist's resale  right  is  currently  provided  for  by the  domestic  legislation  of 
a  majority  of  Member  States;  whereas  such  laws,  where  they  exist,  display  certain 
differences,  notably  as regards the works covered, those entitled to receive royalties, the 
rate  applied,  the  sales  subject  to  payment  of  a  royalty,  and  the  basis  of  assessment 
thereof;  whereas  the  application  or  non-application  of  such  a  right  has  a  significant 
impact  on the competitive  environment  within  the internal  market;  whereas  as with  any 
other  parafiscal  charge  it  is  an  element  which  must  be  taken  into  account  by  each 
individual  wishing  to  sell  a work  of  art;  whereas  this  right  is therefore  a  factor  which 
contributes to the creation  of distortions of competition  as well as displacements  of sales 
within  the  Community; 

7.  Whereas  such  disparities  in  the  application  of  the  artist's  resale  right  by  the 
Member  States have  a direct  negative  impact  on  the  proper  functioning  of  the  internal 
market  in  works  of  art  as  provided  for  by  Article  7a  of  the  Treaty;  whereas  in  such  a 
situation  Article  100a  of the  Treaty  constitutes  the  appropriate  legal  basis; 

8.  Whereas  the  objectives  of  the  Community  as  set  out  in  the  Treaty  include  laying  the 
foundations  of  an  ever  closer  union  among  the  peoples  of  Europe,  promoting  closer 
relations  between  the  Member  States  belonging  to  the  Community,  and  ensuring  their 
economic  and  social  progress by  common  action  to  eliminate the barriers which  divide 
Europe;  whereas  to  that  end  the  Treaty  provides  for  the  establishment  of  an  internal 
market  which  presupposes  the  abolition  of  obstacles  to  the  free  movement  of  goods, 
freedom  to provide  services  and  freedom  of  establishment,  and by the introduction  of a 
system  ensuring  that  competition  in  the  common  market  is  not  distorted;  whereas 
harmonization  of  Member  States'  laws  on  the  artist's  resale  right  contributes  to  the 
attainment  of  these  objectives; 

9.  Whereas  Council  Directive  77/388/EEC(5),  as  amended  by  Directive  94/5/EC(6), 
amending 
supplementing 
the 
Directive  77/388/EEC  progressively 
introduces  a  Community  system  of  taxation 
applicable  inter  alia to works  of  art; whereas  measures  confined  to  the tax  field  are  not 
sufficient  to  guarantee  the  harmonious  functioning  of  the  art  market;  whereas  this 
objective  cannot be attained without harmonization  in the field  of the artist's resale right; 

system  of  value 

common 

added 

and 

tax 

10.  Whereas  existing  differences  between  laws  should  be  eliminated  where  they  have  a 
distorting effect  on the functioning  of the internal market, and the emergence of any new 
differences  of  that  kind  should  be  prevented;  whereas  there  is  no  need  to  eliminate  or 
prevent the emergence of differences  which  cannot be expected to affect  the  functioning 
of  the  internal  market; 

(5)  OJNo  L  145,  13.6.1977,  p.  1. 
(6)  OJN0L6O,  3.3.1994,  p.  16. 

25 

11.  Whereas it is not necessary to harmonize every provision  of Member  States' laws on the 
artist's  resale  right; whereas  it  will  be  sufficient  to  limit  the  harmonization  exercise  to 
those  domestic  provisions  which  have the  most  direct  impact  on the  functioning  of  the 
internal  market; whereas, however, the objectives  of this limited  harmonization  exercise 
cannot  be  sufficiently  achieved  by  the  Member  States  acting  alone;  whereas,  in 
accordance with the third  paragraph  of Article  3b of the  Treaty, the proposed  course of 
action  does not go beyond what  is necessary  to  achieve the abovementioned  objectives; 
whereas this Directive is therefore,  in its entirety, consistent with the requirements of the 
principles  of  subsidiarity  and  proportionality; 

12.  Whereas,  pursuant  to  Council  Directive  93/98/EC(7),  the  term  of  copyright  runs  for 
70 years  after  the  author's  death;  whereas the  same period  should  be  laid  down  for  the 
artist's resale right; whereas, consequently,  only the originals  of works  of  contemporary 
or  modern  art  may  fall  within  the  scope  of  the  artist's  resale  right;  whereas,  in  general, 
works of  contemporary  or modern  art occupy  a relatively  modest  place  among  sales by 
public  auction; 

13.  Whereas the  scope  of the artist's  resale  right  should  be  extended  to any  resale, with  the 
exception  of transactions between private individuals, of the work  subsequent to the first 
sale  by  the  author;  whereas  the  artist's  resale  right  therefore  applies  to  transactions 
effected  by  all  professional  sellers,  such  as salerooms,  art galleries  and,  in  general,  any 
dealer  in works  of  art; 

14.  Whereas  effective  rules  should  be  laid  down  based  on  experience  already  gained  at 
national  level  with  the  artist's  resale  right;  whereas  it  is  appropriate  to  calculate  the 
royalty  as a percentage  of the sale price and not of the increase in value of works whose 
original  value  has  increased; 

15.  Whereas  the  categories  of  works  of  art  subject  to  the  artist's  resale  right  should  be 

harmonized;  whereas  works  of  applied  art  should  be  excluded; 

16.  Whereas the fixing  of a Community minimum  threshold for the application  of the artist's 
resale right takes account  of the requirements  of the internal  market;  whereas,  however, 
Member  States  should  be  given  the  opportunity  to  fix  national  thresholds  which  are 
lower  than  the  Community  threshold  so  as to further  the  interests  of young  artists; 

17.  Whereas  the  non-application  of  the  artist's  resale  right  below  the  minimum  threshold 
makes  it  possible to  avoid  disproportionately  high  collection  and  administration  costs; 

18.  Whereas  the  rates  set  by  the  different  Member  States  for  the  application  of  the  artist's 
resale right vary considerably at present; whereas the effective  functioning  of the internal 
market  in works  of  contemporary  or  modern  art  requires the  fixing  of  uniform  rates; 

19.  Whereas a system consisting of a tapering scale of rates for  several  price bands may help 
to  prevent  the  Community  rules  on  the  artist's  resale  right  from  being  circumvented; 
whereas the rates must reflect  the interests both  of artistic  circles and  of the  art market; 

(7)  O J N o L 2 9 0,  24.11.1993,  p. 9. 

26 

20.  Whereas the person  liable  for  payment  of  the royalty  is the  seller;  whereas the  latter  is 

the person  or undertaking  on whose behalf  the  sale is  concluded; 

21.  Whereas  provision  should  be  made  for  the  possibility  of  periodic  adjustment  of  the 
threshold  and  rates; whereas, to  this end,  it  is appropriate  to entrust to the  Commission 
the task  of  drawing  up  periodic  reports  on the  practical  effect  of the  application  of  the 
artist's  resale  right  and,  where  appropriate,  of  making  proposals  for  amendment  of  the 
threshold  and rates; 

22.  Whereas the persons entitled to receive royalties must be specified,  due regard being had 
to the  principle  of  subsidiarity;  whereas it is not  appropriate to take  action through  this 
Directive  in  relation  to  Member  States'  laws  of  succession;  whereas,  however,  those 
entitled  under  the  author  must  be  able  to  benefit  fully  from  the  resale  right  after 
his  death; 

23.  Whereas  Member  States  should  be  free  to  determine  the  procedures  for  collecting  and 
managing  the  amounts  paid  over  by  virtue  of  the  artist's  resale  right;  whereas  in  this 
respect  management  by  a  collecting  society  is  one  possibility;  whereas,  however, 
Member  States must ensure that amounts intended for authors who are nationals of other 
Member  States  are in  fact  collected  and  distributed; 

24.  Whereas  enjoyment  of  the  artist's  resale  right  must  be  restricted  to  nationals  of  the 
Member  States  and  foreign  authors  whose  countries  afford  such  protection  to  authors 
who  are nationals  of  Member  States; 

25.  Whereas  appropriate  procedures  for  monitoring  transactions  should  be  introduced  so as 
to  ensure  by  practical  means  that  the  artist's  resale  right  is  effectively  applied  by 
Member  States; whereas  this  implies  a right  on the  part  of the  author  or  his  authorized 
representative  to  obtain  any  necessary  information  from  the  person  liable  for  payment 
of  royalties, 

HAVE  ADOPTED  THIS  DIRECTIVE: 

CHAPTER  I 

Scope 

Article 1 
Subject-matter  of  the  artist's resale  right 

Member  States shall provide, for the benefit  of the author of an original work of art, an artist's 
resale  right,  to  be  defined  as  an  inalienable  right  to  receive  a  percentage  of  the  sale  price 
obtained  from  any  resale  of  the  work,  with  the  exception  of  transactions  effected  by 
individuals  acting  in  their  private  capacity,  subsequent  to  the  first  transfer  of  the  work  by 
the  author. 

27 

Article  2 
Works  of  art  to which  the  artist's  resale  right  relates 

For  the  purposes  of  this Directive,  "original  work"  means  manuscripts  and  works  of  plastic 
art such  as pictures,  collages, paintings, drawings,  engravings,  prints, lithographs,  sculptures, 
tapestries,  ceramics  and  photographs,  provided  they  are  made  by  the  artist  himself  or  are 
copies  considered 
to  be  original  works  of  art  according  to  professional  usage  in 
the  Community. 

CHAPTER  n 

Particular  provisions 

Article  3 
Threshold 

1.  Royalties  collected  pursuant  to  Article  1 shall  be  payable  when  the  sale  price  is  equal 

to  or higher  than  ECU  1 000. 

2.  Member  States may fix a national  threshold  which is lower than the threshold  laid  down 

in  paragraph  1. 

Article  4 
Rates  and  collection 

The royalty  collected  pursuant  to  Article  1 shall  be  set  at the following  rates: 

(a)  4% of the  sale price between  ECU  1 000  and  ECU  50 000; 

(b)  3% of the  sale price  between  ECU  50 000  and  ECU  250 000; 

(c)  2% of the  sale price  above ECU  250 000. 

The royalty  shall  be payable by  the  seller. 

Article  5 
Calculation  basis 

The  sale prices  referred  to  in  Articles  3 and  4  are  net  of tax. 

Article  6 
Persons  entitled  to  receive  royalties 

1.  The  royalty  collected  under  Article  1 shall  be  payable  to  the  author  of  the  work  and, 

after  his  death,  to those  entitled  under  him. 

2.  Member  States may provide for  the collective management  of  sums paid  over by  virtue 
of  the  artist's  resale  right.  They  shall  determine  the  arrangements  for  collecting  and 
distributing  royalties where  the  author  is a national  of  another  Member  State. 

28 

Article  7 
Third-country  nationals  entitled  to receive  royalties 

Member  States shall  provide that  authors who are nationals  of third  countries  shall  enjoy  the 
artist's  resale  right  in  accordance  with  this  Directive,  provided  that  authors  from  the 
Member  States enjoy  reciprocal  treatment  in the third  countries  concerned. 

Article  8 
Duration  of the  artist's  resale  right 

The artist's resale right shall last for the period laid down in Article  1  of Directive  93/98/EEC. 

Article  9 
Right  to  obtain  information 

The author or his authorized representative may require any dealer,  sales director or organizer 
of  public  sales to furnish  any  information  that  may  be necessary  in  order  to  secure  payment 
of sums payable under the artist's resale right during the previous year of original works of  art. 

CHAPTER  III 

Final  provisions 

Article  10 
Revision  clause 

The Commission  shall present to the European Parliament, the Council  and the Economic and 
Social Committee not later than  1 January  2004 and every five years thereafter  a report on the 
implementation  of  this  Directive  and  shall,  where  appropriate,  put  forward  proposals  for 
adjusting  the minimum  threshold  and the rates  of the royalties to take  account  of  changes in 
the  sector. 

Article  11 
Implementation 

1.  Member  States shall  bring into force the laws, regulations  and administrative  provisions 

necessary  to  comply  with  this Directive  before  1 January  1999. 

When  Member  States  adopt  these  provisions,  these  shall  contain  a  reference  to  this 
Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official 
publication.  The  procedure  for  such  reference  shall  be  adopted  by  Member  States. 

2.  Member  States  shall  communicate  to  the  Commission  the  provisions  of  national  law 

which  they  adopt  in the  field  covered  by  this Directive. 

29 

Article  12 
Entry  into  force 

This Directive  shall  enter  into force  on the twentieth  day  following  that  of  its publication  in 
the  Official  Journal  of the European  Communities. 

This Directive  is  addressed  to the Member  States. 

Article  13 

Done  at  Brussels, 

For  the European  Parliament 
The President 

For  the  Council 
The  President 

30 

ISSN 0254-1475 

COM(96) 97 final 

DOCUMENTS 

EN 

06 

Catalogue number  :  CB-CO-96-125-EN-C 

ISBN 92-78-01765-5 

Office for Official Publications of the European Communities 

L-2985 Luxembourg 

31