WRITTEN QUESTION E-1151/02 by Erik Meijer (GUE/NGL) to the Commission. EU-US competition for the trade in works of art and alternative methods of maintaining the European share.
Date: 2002-04-22
Institutions: European Parliament, Provisional data
Subjects: European Union, United States, VAT, artist's resale right, competition, export, fine arts, international market, sale, tax system

C 52 E/40

Official Journal of the European Union

EN

6.3.2003

Reply

(5 November 2002)

The Council would remind the Honourable Member of the position it adopted when the Union was
preparing the November 2001 meeting of the EU/Israel Association Council. It would point out that arms
sales to Israel continue to be governed by the EU’s Code of Conduct on arms exports. As the Council has
stated in replies to questions by other Honourable Members, it reserves the right to claim reparation in
appropriate fora for damage caused to infrastructure financed in whole or in part by the EU.

(2003/C 52 E/050)

WRITTEN QUESTION E-1151/02

by Erik Meijer (GUE/NGL) to the Commission

(22 April 2002)

Subject: EU-US competition for the trade in works of art and alternative methods of maintaining the

European share

1.
Can the Commission confirm the findings of a study by The European Fine Art Foundation (TEFAF)
that in 1999 EU countries imported works of art worth EUR 1,53 billion and exported works of art worth
EUR 1,81 billion and that the European share of the international art market has fallen by 7 % over the
past four years while the American share has risen by 7 %?

2.
Do these figures imply only that dealers are moving their activities outside Europe because of higher
profit margins, or does it also imply that increasing numbers of works of art produced in Europe are
leaving this continent to be purchased by wealthy people, in particular Americans, elsewhere?

3.
Have the figures given in (1) above been used by TEFAF in its contacts with the Commission to
oppose the maintenance or introduction of legislative and administrative provisions to regulate the market
within the EU, such as import duties on art and resale rights?

4.
How does the Commission view TEFAF’s argument that it is more favourable for dealers to export
their art holdings to America and to sell them in that country as there is no taxation and royalty
obligations do not apply for 70 years, thus making the seller’s profit margin higher while the works of art
are still cheaper for the purchasers?

5.
Does the Commission consider that there are opportunities to alter the figures in a completely
different way from that requested by TEFAF, for example by introducing or extending export duties which
make it less attractive to sell works of art from EU Member States outside EU territory?

6. What other steps might the Commission consider taking to deal with this problem in the years
ahead?

Source: ‘de Volkskrant’ newspaper, 8 March 2002

Answer given by Mr Bolkestein on behalf of the Commission

(12 June 2002)

The Honourable Member is concerned about the competition between the Community and the United
States for the trade in works of art. All of the six questions arise from the findings of a recent study,
published by the European Fine Art Foundation (TEFAF),
the annual Maastricht
International Fine Art and Antiques Fair. The Commission recently answered another Written Question
concerning the same study, P-0861/02 from Lord Inglewood (1). On top of that previous reply, the
Commission would like to make the following comments.

the organiser of

6.3.2003

EN

Official Journal of the European Union

C 52 E/41

The Commission observes that the above report was commissioned by TEFAF, a Dutch foundation, with
the support of other organisations representing art dealers. Some of these organisations were active in
producing and submitting to the Parliament, the Council and the Commission several contributions
alleging that the Community harmonisation would lead to negative consequences for the Community art
market. This was particularly the case at the time of the negotiations of Directive 2001/84/EC of the
Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an
original work of art (2) (‘Droit de suite’). Likewise, the economic and regulatory analysis carried out in the
TEFAF report reflects to a large extent exclusively the views of certain art trade organisations.

Targets of TEFAF’s criticisms are, in particular, the VAT regime for works of art introduced by Council
Directive 94/5/EC of 14 February 1994, supplementing the common system of value added tax and
amending Directive 77/388/EEC (cid:1) Special arrangements applicable to second-hand goods, works of art,
collectors’ items and antiques (3) and the harmonisation of the resale right at Community level (Directive
2001/84/EC). Indeed, many factors influence the evolution of the art market, such as its global nature,
exchange rate fluctuations, the tendency of vendors to choose the market where they can get the best
selling price, the likely effect of the 1999 stock market boom in the United States on consumption
expenditure, and this particularly on luxury goods, the effective duopoly in relation to auction sales (cf. the
recent Commission’s (4) statement of objections sent to Christie’s and Sotheby’s about their colluding to fix
fees during the 1990s). Therefore,
it seems at the least temerarious to affirm that the decline of the
Community art market in the past four years should be attributed only to ‘taxation and regulations’
introduced at Community level since 1995.

The argument that it is more favourable for dealers to export their art holdings to the United States and to
sell them there because of the lack of taxation and resale right in that country is contradicted by the fact
that the introduction,
in 1995, of the special VAT regime for works of art because of Community
harmonisation has not had an adverse effect on the competitiveness of the Community’s art market
compared to the art markets of non-Community countries (cf. the 1999 Commission’s report (5) on the
impact of Directive 94/5/EC). Furthermore, the resale right has not yet brought about any change in the
Member States, since Directive 2001/84/EC is to be implemented only by 1 January 2006. No Member
State has yet initiated implementing legislation.

Furthermore, it is necessary to recall that, generally speaking, VAT applies to all sales of goods and services
in the Community. Transactions in works of art are like any other transactions and are subject to the same
rules. Accordingly, if works of art are sold by artists resident in the Community to Community residents,
VAT at the appropriate rate is chargeable. If works of art are sold to non-Community residents, and the
works are exported from the Community, no VAT arises. If works of art are imported into the Community
and purchased by Community residents, or if works of art are purchased outside of the Community and
imported, then VAT is payable in the Community. If, on the other hand, works of art imported for re-sale
are simply purchased for export, no VAT arises. The VAT treatment of works of art could not therefore, be
a determining factor regarding the seller’s decision as to whether a work of art is put up for sale in the
Community or the United States market. It is clear that vendors of works of art will generally sell where
they perceive that they will get the best price. While there is little variance between the fees charged by
auctioneers, the cost of carriage, insurance and freight arising when works of art move between locations
can be significant. A vendor will generally take these additional costs into consideration when deciding
where he will sell. However, more often than not, the choice is determined by the strength of the market
itself. If it is perceived that a better price would be obtained in one location than another, for whatever
reason, then a vendor will take the appropriate business decision.

The Honourable Member asks what measures the Commission intends to adopt in order to maintain the
competitiveness of the Community art market. In accordance with its commitments, the Commission is
considering to take the necessary actions to extend the application of the resale right at international level.
Moreover, before 1 January 2009 the Commission will carry out an economic study on the competitive-
ness of the market in modern and contemporary art in the Community. The Commission will pay due
attention to the reliability of the figures therein.

(1) See page 21.
(2) OJ L 272, 13.10.2001.
(3) OJ L 60, 3.3.1994.
(4)
IP/02/595, 19.4.2002.
(5) COM(1999) 185 final.