The Role of Art & Antique Dealers An Added Value
and taxation. An example cited was that in some countries, antiques are treated the same as new goods and restoration work was not accounted for in margins on sales.
iii. Resale royalties: Resale royalties apply directly only to Contemporary and Modern fine art dealers, however, there was consensus among these dealers that they had a negative effect on their trade while not helping artists significantly. Many Contemporary dealers pointed out that many of the artists that they represented were also opposed to the levy, and would prefer it removed in order to promote a strong market. One of the biggest problems identified was that royalties potentially deter art buyers, as they are structured in such a way that the buyer is still forced to pay the levy even if they lose money on a subsequent sale. Dealers felt that this was souring the relationship between artists and collectors over time by demanding a cut even when collectors lose money. (“Royalties are despicable, artists don’t want then and they are leading to a gradual poisoning of the patronage relationship”). Dealers also stated concerns over the inequities with regard to how the levy is charged by auction houses,12
and feel dealers are most heavily penalised as they
are forced to “pay on every cent” despite being much more of an incubator for young artists. An important concern raised was that one of the most crucial differences between vendors was that auction houses could pass the charge on to buyers relatively easily, however, dealers were always in a one-on-one bargaining situation with buyers and extra charges such as these were used as part of the negotiation.
In order to keep their businesses functioning efficiently, a number of dealers reported that dealer associations had worked directly with the police and governments to make legislation work in practice.
Many dealers have taken an increasingly strategic approach to the geographic locations of their businesses to ensure they can transact in the most fiscally attractive tax and regulatory bases around the world. This legal and often prudent strategy of de-localising business has been pursued especially by some dealers in Europe, as the mounting costs of VAT, resale royalties and other internal policies create a less favourable environment in which to conduct sales of certain sectors of art and antiques.
12
The EU Regulations that introduced the royalty state only that the levy is applied to the sale price, i.e. "the price obtained for the sale, net of the tax payable on the sale", and do not stipulate whether the basis of calculation includes the auction houses seller commission and/or buyer's premium, or the dealer's commission on the sale. In countries such as the UK, the Patent Office has suggested that if the sale is by auction, the "sale price" is the hammer price and if the sale is through a dealer, it is the "ticket price". In practice therefore, auction houses in the UK apply the levy to the hammer price only.
38 Historical & Future Perspectives
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