Max Hastings, writing in the Guardian newspaper on January 3 2005, under the caption 'Art Failure' and the strap line 'The proposed levy on the sale of European artwork will devastate Britain's dealers and auction houses', provoked a flurry of published letters to the editor concerning the introduction of the Artists' Resale Right into UK law from January 2006.

This was soon followed by an Early Day Motion in the House of Commons, supported by 58 MPs from all three main political parties, calling for the implementation of the proposed UK legislation to benefit as many artists as possible. The introduction of the Artists' Resale Right into UK law is required by a European Directive and is part of the European Commission's harmonisation programme to align the intellectual property laws of EU member states. There is no purpose in arguing, as some have done recently, that it should not be implemented in the UK; it will be, and across the EU, from January 2006.

What is worthy of consultation and debate is how the Artists' Resale Right will be administered in the UK from next year. The Government is about to issue a public consultation document seeking views on key questions as to the method and manner of its implementation, because the EU gives each member state a degree of flexibility in these respects.

This new Artists' Resale Right will give to artists and other visual creators, for their lifetime plus 70 years after death, a legal right to a small percentage share of the sale price of their works in the secondary marketplace (that is, after the first sale from the studio). The idea is that such artists and their families will modestly benefit from the commercial success of their works. Known as Droit de Suite, it has been operating on the continent since the 20's, and in most EU member states for decades except in the UK, Republic of Ireland, Austria, the Netherlands, Italy and Luxemburg. Three key questions are likely for consultation and debate.

Should the minimum resale price at which the Artists' Resale Right apply be lower than the €3,000 threshold required by the EU directive; in other words, should it benefit artists whose works are resold at a figure lower than around €2,000, or should it only apply to those whose resales reach that or a higher price. EU member states have discretion to legislate for a lower figure, but must legislate for it to apply at sales of at least €3,000 or above. Arguably, a lower entry threshold would benefit a larger number of emerging artists.

EU member states have the option of delaying the introduction of the Artists' Resale Right for deceased artists' estates until 2012; in other words, it will only apply to artists living from 2006 onwards, but not to the estates of artists who died before 31 December 2005 - unless the Government chooses to give their families that right. Arguably, its implementation from 2006 for living artists and the families of recently deceased artists, would benefit all those for whom the directive was intended.

Should the resale royalty percentage be higher than the EU directive's minimum requirement of 4% of the price of resales up to €50,000; in other words, on the resale of a work at around £35,000 artists or their estates will receive £1,400 and, in the case of a resale at around £2,000, they will receive £800. The directive allows member states to choose to increase the lower rate from 4% to 5%.

Member states have no discretion about the four subsequent resale royalty percentage rates, which will apply as follows: resales over €50,000 up to €200,000 (£35,000-£140,000) an artists' royalty of 3% (maximum royalty to artist for that tranche: £4,200); resales over €200,000 up to €350,000 (£140,000-£245,000) an artists' royalty of 1% (maximum royalty to artist for that tranche: £2,450); resales over €350,000 up to €500,000 (£245,000-£350,000) 0.5% (maximum royalty to artist for that tranche: £4,200); resales over €500,000 (£350,000) 0.25%. These tranches of resale prices and royalty rates are cumulative, and so there is a maximum royalty payment on any one sale of €12,500 (£9,000). In other words, the resale of a work for €3 million would provide a maximum royalty payment of €12,500 (£9,000), as would a work resold for €500,000.

Arguably, the works of the vast majority of UK artists do not resell for more than €3,000 (£2,000), and so they would not have the Resale Right. But if this threshold were lowered by the UK Government to become, say, €1,000 (£700), which they have the discretion to do and as many artists are currently suggesting, then it is estimated that as many as 35% more artists in the UK would enjoy the Resale Right.

There remain some, like Hastings, who still argue that contemporary art sales in the UK (London, actually) will decamp to New York or Switzerland where there is no Artists' Resale Royalty, and buyers and sellers alike can avoid this burdensome additional tax on their transactions. This was the argument mounted decades ago by UK contemporary art dealers (and some of their artist clients) successfully to persuade successive UK governments not to introduce the Artists' Resale Right. That argument eventually failed, and it remains to be seen whether the predicted apocalypse will occur. There are indicators that it will not happen: collectors spending, say, €500,000 are unlikely to be concerned about the payment of a relatively modest €12,500, when their 20% buyer's premium to the dealer/auction house/saleroom could amount to a much more significant €100,000; and consumer laws within the EU are generally much more supportive and protective of buyers (in the event of a defect in the work, in its ownership, provenance, or authenticity) than are the laws in states beyond the EU, including those in the US.

At the time of writing the parliamentary motion (Early Day Motion No 479) regarding Artists' Resale Right was still open for backbench MPs to sign, and was gathering substantial cross-party support as a result of artists writing to their MPs urging them to add their name in support. The full text is as follows: 'That this House notes the forthcoming publication by the Patent Office of its consultation document on the detailed implementation of the Artists' Resale Right Directive; welcomes this opportunity to comment upon the implementation of legislation which entitles visual creators whose work is protected by copyright to a share of the price each time their work is resold, thus helping the creative community by enabling artists to share in their work's commercial success and increasing value; notes that the Design and Artists Copyright Society (DACS) represents 56,000 fine artists and their heirs in addition to 16,000 photographers, illustrators, craftspeople, cartoonists, architects, animators and designers; supports the view of DACS that the Directive should be implemented so that as many artists and their heirs as possible can benefit from its provisions; believes that collection of royalties should be through an efficient and compulsory system administered by a not-for-profit organisation such as DACS, that the rate of royalty at the minimum resale price should be set at 5 per cent, and that the resale price threshold at which it becomes payable should be as low as practicable in order to benefit artists on lower incomes and those whose work does not command high prices; and believes that this legislation will give a substantial boost not only to thousands of artists and their heirs, but also to the whole art market.'

© Henry Lydiate 2005

• royalty fee
• Artists Royalties
• working internationally