In Brief

Artists Lose Royalty Rights on Primary Market Sales in Italy

Artists may lose their cut of the profits, but industry experts say it’s crucial to keep Italy’s galleries competitive with the international market.

The European Fine Art Fair (TEFAF) in New York, Spring 2019 (photo by author)

Artists working with Italian galleries may see their cut of the profits decrease thanks to new guidelines published by the Italian Society of Authors and Publishers (SIAE) limiting resale rights to the secondary market.

The royalties collecting agency reached an out-of-court agreement with a consortium of Italian and international galleries — including the Italian Association of Modern and Contemporary Art Galleries — after six years of negotiations meant to keep the country’s art world competitive in the global market.

In February, SIAE published its new policy, which states that “the resale right applies only in cases where the transaction, subsequent to the first transfer made directly by the author of the work, takes place through an art market professional (for more than €3,000 [~$3,360 USD]).”

In 2006, Italy interpreted the European Union’s directive on artist resale rights to cover all transactions made by galleries acting on behalf of artists under consignment agreements. Not every other country in the governing bloc followed suit. The United Kingdom, for example, interpreted the rule as deeming an artwork’s buyer and seller to be mutually liable for the payment of artist royalties. Until quite recently, France also required auction houses to cover the costs of resale royalties.

The United States has never had a federally-implemented policy for resale royalties in the visual arts; however, California did pass the Resale Royalties Act in 1977, which allowed state residents selling their art nationwide to earn 5 percent off any resale over $1,000. Last year, a federal appeals court overturned the statute, saying it conflicted with American copyright law’s first-sale doctrine.

Italy’s new guidelines will have a ripple effect on how the country’s art market does business. According to the Art Newspaperthere are calls in the industry to introduce paper contracts between artists and galleries. This is far from the global standard, which typically operates on verbal contracts.

Fabrizio Orsi, the chief financial officer of Galleria Continue, tells the publication that after the SIAE change, galleries “will be obliged to have written contracts with the artists — either representation or non-representation sales mandates, commission agreements or value contracts — and must diligently conserve such documentation” in order to prove that they are operating as a venue for the primary market.

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