Resale Rights – Advice for Artists
If you are an artist who has sold their work professionally, at some point you might have heard of “ARR.” This legal requirement in the UK ‘s secondary art market is a big part of reselling art – and if you are an artist, it’s important to know what it is and how it affects you.
What is ARR?
ARR stands for Artist Resale Rights. This is a royalty added to art sales which take place on the secondary market. It only applies to original artworks that are sold for an amount greater than £1,000 (as of 1 April 2024.) There are other requirements that have to be met, such as the sale taking place through a professional art seller like an auction house, an online art sales platform, or through a dealer.
The royalties are calculated on a sliding scale depending on the amount the artwork was sold for, and are capped at £12,500. The seller of the artwork and the art market professional who brokered the sale are jointly responsible for making sure ARR is paid.
Why is ARR important?
As an artist advances in their career, their artworks will almost always appreciate in value. This means that someone who bought an early work can sell it for a profit later on, sometimes for a lot more depending on how far the artist has progressed.
Because the increase in value of an artwork is, usually, a result of the artist’s hard work, ARR essentially means that they are able to enjoy the profits of their own efforts. For many artists, this is an important part of supporting themselves financially in what can be a very challenging career path. And, because the royalties are calculated as a percentage of the sale, ARR is fairly easy to incorporate into a resale price without having too big of an impact on the buyer or seller.
How do you register?
Artists cannot collect ARR directly from the person reselling their work, or from the art market professional who sold the work. Instead, you must register with a collecting agency. In the UK, there are two agencies you can register with, the Design and Artists Copyright Society (DACS) and the Artists’ Collecting Society (ACS). These agencies will administer the collections on the artist’s behalf.
Joining these societies is free, although you will have to pay a fee of 15% of any royalties that you are due.
Do you pay VAT?
ARR is not subject to VAT, so you will not have to pay VAT on your royalties; the ARR calculations are also based on the sale price of the artwork excluding VAT. This means that you don’t have to worry about margin schemes, as these won’t be taken into account when the calculations are made.
Getting what you’re owed
If you are an unregistered artist, don’t worry – you may be able to register to collect royalties on sales that have already occurred. The collecting agencies DACS and ACS request quarterly information from art sellers, and take ARR payments accordingly on any sales that qualify. Art market professionals are also required to make sure that they have reported any sale subject to ARR, even if they have not received a request.
This can mean that you might already have royalties waiting when you register. And if not, once you have registered the collecting society can take steps to trace any sales for which ARR is due. However, the collecting agencies will not reach out to you – the artist is responsible for making sure they are registered.
If you are an artist, or know an artist whose work may have been sold on the secondary market, make sure to register as soon as possible. Head to the DACS or ACS websites to learn more, or read our previous article on this topic.
