The British art market faces a “potential catastrophe” if plans to extend a European Union levy on artists’ resale rights, known as droit de suite, go ahead, a report has warned.
The levy was introduced across the EU in 2006. In most countries, it takes the form of a sliding-scale tax of up to 4 per cent on all sales of art works made by artists who have died in the last 70 years.
The UK was granted a temporary and partial exemption, with the levy applying only to living artists.
But the 70-year rule is due to come into force in 2010 – and a report by the Intellectual Property Office says its imposition could seriously threaten the UK’s dominance in the modern and contemporary market.
It says that major art works by artists such as Matisse and Picasso would be subject to the new levy, which could move sales to other world centres such as New York.
“The impact of extending artists’ resale rights is viewed in apocalyptic terms by most UK art market professionals,” says the report. “They sincerely believe that London’s attractiveness will be badly damaged.”
Anthony Browne, chairman of the British Art Market Federation, said although the UK market had remained buoyant since the introduction of droit de suite in February 2006, that was only because the period had seen an unprecedented boom in the prices of modern art.
Extension of the levy would have a dramatic effect, he added, causing “a damaging erosion of trade to competing markets that are unencumbered by this system”.
The report, by Katy Graddy, Noah Horowitz and Stefan Szymanski, university academics, also says the original point of introducing droit de suite – to help redistribute money to struggling artists – has not borne fruit.
It says about £2.5m ($5m) of artists’ resale rights is being collected annually, but that the top-selling 100 artists are collecting 80 per cent of the payments. The median payment to artists, according to auction house data, is just £256.
The expense of administering the levy entailed a set-up cost of £1m, and recurrent administration costs of £50,000 a year.
The report’s fears are backed up by a report on the French art market by the French ministry of culture, which calls for droit de suite in France to be restricted to living artists’ work, as it is currently in the UK.
“This is a watershed point in the debate, and both reports should serve to strengthen our government’s resolve to protect the market and oppose the EU’s proposals,” said Mr Browne.