Resale Royalties Explained: Why European Artists Get Paid Twice and American Ones Don't

When a painting that sold for $10,000 at a gallery resells at auction for $1 million, the artist gets nothing in the United States — and a royalty in most of Europe. The dividing line is the European Union's Directive 2001/84/EC, which obliges member states to give artists an unwaivable resale royalty on secondary transactions, mirrored in the UK's Artist's Resale Right carried over from the same framework. More than 80 countries, most following the Berne Convention's Article 14ter, recognize some version of the right. The United States, the world's largest art market, is the conspicuous exception.

How Does the Artists' Resale Right Work in Europe?

The right attaches to secondary sales involving art-market professionals — auction houses and dealers — and pays the artist a sliding-scale percentage of the sale price, capped.

The EU directive, adopted in 2001 and implemented by the mid-2000s, sets common architecture: a royalty of between 0.25% and 4% depending on the price band, calculated on a degressive scale, with a maximum total payout per sale capped in the low thousands of euros. Sales below a modest threshold — roughly €1,000 or the local equivalent — are exempt, and sales directly between individuals without a professional intermediary fall outside the right. Crucially, the royalty is unwaivable: an artist cannot sign it away in a gallery contract, which is exactly the provision American critics of the right predicted would chill markets. The UK's Artist's Resale Right, harmonized with the directive before Brexit, survives in British law, administered through collecting societies — DACS in the UK, ADAGP in France, VG Bild-Kunst in Germany — which pool the royalties and distribute them to artists or their heirs. The posthumous term follows copyright: roughly 70 years after the artist's death in these jurisdictions.

Why Is There No Federal Royalty in the United States?

Because Congress never passed one, and the one state that tried had its law struck down. The story runs through California and the Fifth Amendment.

California enacted the Resale Royalty Act in 1976 — the California Art Preservation Act's royalty provision — requiring a 5% royalty to artists on resales of their work in California. It stood for nearly four decades, rarely enforced, more symbol than revenue stream. Then a wave of class actions in the 2010s targeted the major auction houses, and the federal courts delivered the verdict: in 2018, the Ninth Circuit held that the royalty obligation, when applied to sales occurring after 1978, was preempted by federal copyright law. The right survived only in a legal shadow for pre-1978 sales. Separately, the Copyright Office had studied the question and reported to Congress in 2013, finding the empirical case for an American ARR unpersuasive and declining to recommend adoption. Since then, legislative proposals — including versions of an American Royalties Everywhere (ARE) Act — have been introduced without passing. The result is the current asymmetry: an artist in Paris or London is paid on the secondary market; an artist in New York is not.

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What Are the Arguments For and Against?

The case for is comparative fairness. Every other creative field — music, film, publishing — pays its creators on downstream exploitation through copyright. Visual artists alone are paid once, because their work sells as a unique object rather than a licensed copy. The royalty also addresses the canonical heartbreak: artists selling cheap early and watching collectors flip their mature work at multiples. Posthumous royalties give estates and foundations a revenue stream for scholarship and authentication work.

The case against is practical, and the auction houses have made it forcefully. Royalties raise transaction costs on exactly the sales that are most mobile: high-value consignments can move between London and New York with a phone call, and the UK's implementation experience in the 2000s was watched closely for evidence of business migrating. Critics also note the distribution problem — the royalty's capped, percentage-based structure concentrates payouts on high-volume blue-chip names rather than the struggling mid-career artists it was meant to protect. Defenders answer that the same objection applies to every copyright royalty and nobody proposes abolishing those.

What Happens in Practice?

In ARR jurisdictions, collecting societies have become significant economic actors. They process millions of euros in royalties annually across thousands of artists, and for many living mid-career artists in Europe the resale right produces a modest but real annual payment — a pension of sorts funded by their own early sales. Administration is mostly invisible to collectors: the auction house deducts and remits, the price is quoted accordingly.

In the United States, the gap is filled privately, unevenly. Some artists and their galleries negotiate consignment terms that include a share of any future gallery resale, though nothing binds private or auction buyers. A few prominent artists have built resale participation into their contracts through market power alone. And the estate-planning world has developed workarounds — foundations, staged donations, contract structures — that partially substitute for what statute provides in Europe. Meanwhile, digital art produced its own mutation: smart-contract royalties on NFT marketplaces in the 2020s implemented a voluntary, code-enforced resale royalty at scale for the first time — and then the largest platforms made royalties optional, reproducing the American pattern in a new medium within two years. The technology changed. The politics did not.

FAQ

Do artists get royalties when their work is resold?

In the EU and UK, yes — the Artists' Resale Right pays a capped, sliding-scale royalty on sales through dealers and auction houses, administered by collecting societies like DACS and ADAGP. In the United States, no federal resale royalty exists, so American artists generally receive nothing from secondary sales.

Is there a resale royalty anywhere in the US?

Not currently in enforceable form. California's 1976 Resale Royalty Act was largely struck down in 2018, when the Ninth Circuit held federal copyright law preempted it for post-1978 sales. Federal proposals have been introduced repeatedly without passing.

How large is the EU royalty?

Between 0.25% and 4% of the sale price on a degressive scale, with the total capped per sale at a low-four-figure amount in euros. Sales below roughly €1,000 and private sales without an art-market intermediary are exempt.

Do heirs receive resale royalties?

In ARR jurisdictions, yes — the right survives the artist for the duration of copyright, roughly 70 years after death, and collecting societies pay estates and foundations. This funds much of the authentication and scholarship work artist foundations perform.

Could US law change?

Only by act of Congress. The Copyright Office's 2013 report declined to recommend a federal ARR, and subsequent bills have stalled. Given auction-house opposition and the market's preference for the status quo, change would likely require a shift in political attention to creators' economic rights.