On 22 June 2006, amidst a bumper week for high-profile art sales in London, David Hockney’s painting The Splash was sold at Sotheby’s for £2.9 million, a record for the artist and a far cry from the prices Hockney was commanding when he painted it in the 1960s. However an important new right has been enjoyed by Britsh artists since February 2006, which allows them to share in the increase in value of their work - the “Artists Re-Sale Right”, created by the UK’s implementation of the EU Artists Re-Sale Right Directive.

The new right gives living artists (and their successors in title) the right to receive a percentage of the sale proceeds by way of a royalty when their work is re-sold through a dealer or auction house, or in a transaction otherwise involving an “art market professional” as seller, buyer or intermediary.

To qualify as a “re-sale”, the sale must be a sale subsequent to the first transfer of ownership by the author. This means that the royalty is only payable on sales made after the artist (or their Estate) has either first sold or first transferred the work, even if that transfer was by way of gift.

The right is to be treated substantially in the same way as the artist’s copyright but with a key difference – the artist cannot transfer or assign the right. Neither can they waive it or contract out of it.

“Works” to which the new right applies are defined as “any work of graphic or plastic art” and include not only paintings, drawings, sculptures and photographs, but also (arguably) jewellery and furniture. The examples specified in the Regulations are not an exhaustive list.

The royalty is calculated as a percentage of the sale price but the right will only apply if the sale price (net of tax) is equivalent to or more than 1,000 Euros. The percentage applicable is on a sliding scale and decreases with increases in the sale price. For example, where the sale price is between 1,000 and 50,000 Euros, the applicable percentage is 4%, whereas, at the top end, where the sale price exceeds 500,000 Euros, the applicable percentage is 0.25%. Note however that the total amount of royalty payable cannot exceed 12,500 Euros – hardly enough to ripple the waters of Hockney’s pool, but potentially vital income for a newer artist whose work suddenly grows in popularity.