EU art tax criticised by dealers

Artists' heirs will benefit from re-sales of work for up to 70 years after the artist dies

Art dealers have criticised the government for failing to oppose a change to an EU art tax, which comes into force in January.

"Droit de suite" provides artists - or their heirs within 70 years of their death - with a percentage of the re-sale price of their work.

The 70-year limit was introduced in 2006, but the UK delayed it till 2012.

Dealers complain that it has created a competitive disadvantage as countries such as China and the US do not pay it.

Research conducted by arts consultancy Arts Economics suggests that the proportion of the fine art market affected will grow from 13% to 60%.

Britain is the second largest market, after the US, with 18%, although five years ago it conducted a quarter of all sales. The art market in Britain will be the most affected within the EU.

British Art Market Federation, which represents auction houses, dealers and galleries, said it was surprised the government had not lobbied in Brussels, given the impact on the UK market.

"I am very surprised the government didn't recognise that and do more to try and press the case in Brussels," federation chairman Anthony Browne told BBC Radio 4's The World This Weekend.

Chinese growth

He said attempts to get a further delay had failed because "there really was not enough pressure, particularly from our own government, on the European Commission."

In a report last week, the European Commission acknowledged concerns about its effect, and promised to carry out research in two years time to see how far droit de suite was responsible for the decline in Britain's share of the art market, or if other factors, such as the growing importance of China, were driving it.

One of the final auctions to be conducted before the rules change was the sale of 20th Century Art at Christies in London last Thursday.

It included the work of living artists, who already receive droit de suite, and dead artists whose heirs will benefit from future sales.

Christopher Foley, who runs Lane Fine Art, said he stopped dealing in the work of living artists when the payment was first introduced in 2006.

He fears the extension to heirs will destroy the British market for selling the most expensive pictures. "They will be moved off shore to sensible places like Switzerland and America and they'll be sold there."

Robert Scott is one of those heirs who will benefit when the rules change. Prices paid for the work of his father William, who died in 1989, have risen significantly. A painting the artist sold for £60 in 1950 fetched £1 million at a sale three years ago.

Transport costs

Mr Scott told the BBC that the extension of re-sale payments will allow artists' families to benefit in the same way the heirs of writers and composers do. He rejects the suggestion that sales will be driven away from the UK.

"That sounds like a load of nonsense to me," he told the programme, pointing out that his father's work is often exported from the US to be sold in Britain because prices are higher.

Even after next month, when his father's work will become eligible, he says sales are unlikely to shift abroad because the cost of shipping a painting to New York or Hong Kong is likely to cost more than the payment of droit de suite.

There is a sliding scale of payments from 4% of the sale price of cheaper items to 0.25% of the most expensive.

The maximum payment for the sale of one item is capped at 12,500 euros (£10,500).

The World This Weekend can be heard on the BBC iPlayer.