The resale royalty scheme applies to all sales after the first transfer of ownership (whether that first transfer was for money or not).
This means it’s important that the parties consider whether the estate sale in question is (or is not) the first ever transfer of ownership of the artwork, or rather whether there has been a previous transfer of ownership.
For example:
- If the executor/administrator of an artist’s estate sells an artwork created by the artist, then assuming this is the very first time ownership that specific artwork is being transferred, then it is not considered a “resale” under the Artist Resale Royalty Scheme. In this scenario, the sale by the estate is effectively that “first transfer” out of the artist’s original ownership – regarded as if it were a sale by the deceased artist themself (with the executor acting as their representative).
By contrast, the royalty only applies to second (or subsequent) sales after the artwork’s first transfer from the original artist. For instance:
- If the deceased artist was not the first owner of the artwork. Say the estate includes an artwork that was acquired by the deceased artist (including by gift or inheritance). In this scenario, the estate’s sale of the artwork would be a second or subsequent transfer of the artwork, and subject to the scheme.
- If the sale is by a successor – they are not the first owner of the artwork. They have inherited the artwork from the deceased artist, meaning there has already been a first transfer of ownership from the artist (via the estate) to the successor. That first transfer is not a resale, however, if the successor chooses to sell the artwork, it will be subject to the scheme.
- Similarly, if the estate gifts the artwork (say to a museum or gallery), the giftee is not the first owner. If the giftee subsequently sells the artwork this is a resale for the purposes of the scheme.
- If a purchaser buys the artwork directly from the estate, and that purchaser chooses to subsequently auction the artwork, this would be the second or subsequent transfer of ownership and subject to the scheme.