ARR currency change information

Why has the ARR threshold changed from Euro (€) to Pound Sterling (£)?

The Government made the amendment to the ARR Regulations to reduce regulatory burdens and costs on UK businesses. This follows the Retained EU Law (Revocation and Reform) Act which passed through Parliament in October 2023.

The amendment was tabled to address the anomaly of the ARR Regulations that required the sale to be calculated in Euro (€) before being converted into Pounds Sterling (£) to administer the right.

The Government has said that this change better reflects the UK market and provide greater business certainty by removing exchange rate fluctuations when calculating whether an artwork is eligible for ARR and the royalty payment due.

What has been amended?

The amendment means that all references in the ARR Regulations to Euro (€) have been replaced by references to Pound Sterling (£) and applies to all sales concluded from 1 April 2024. The key changes to the ARR Regulations are:

• The minimum sale price for a work to qualify for ARR has changed from €1000 to £1000.
• The maximum sale price of a work that meets the conditions of the exemption relating to works recently acquired from the artist (known as the ‘bought as stock’ exemption) has changed from €10,000 to £10,000.
  
• The maximum royalty an artist or their heir can receive per transaction has changed from €12,500 to £12,500

The calculation of an ARR royalty in Schedule 1 of the ARR Regulations has changed currency from Euro to Pound Sterling. For example, “0 to 50,000 euro” has been substituted by “£0 to £50,000” and so forth.

When did the ARR currency change come into effect?

The currency change to Pound Sterling is effective from 1 April 2024. Sales concluded prior to this date will be subject to the Euros currency calculation.

I am an artist or legal beneficiary of an artist, how does the ARR currency change affect my income from sales of my work on the secondary market?

To qualify for a royalty, from 1 April 2024, your artwork must sell for more than £1000 to meet the threshold before a royalty is due.

I am an Art Market Professional – how does the ARR currency change affect me?

The change from Euro (€) to GBP Pound Sterling (£) simplifies the royalty collection process.

From 1 April 2024, you will only need to declare sales which have resold for more than £1000.

As the royalty is worked according to a sliding scale from 4% to 0.25%, the calculation of the royalty will also therefore change. For example, “0 to 50,000 euro” has changed to “£0 to £50,000” and so forth.

Sales taking place at the higher end of the threshold and the maximum royalty due to the artist or their beneficiary are also affected by this change. The maximum an artist or their beneficiary can receive is capped at £12,500 for one sale of one work, which is reached when the work sold for £2 million or more.

In addition, the maximum sale price of a work that meets the conditions of the exemption relating to works recently acquired from the artist (known as the ‘bought as stock’ exemption) has also changed from €10,000 to £10,000.

As an art market professional, do I need to do anything differently when submitting sales information and paying ARR?

The Request For Sales Information that we sent you in April relates to sales taking place on or before 31 March 2024 and therefore the Euro currency will apply.

When we write to you in August requesting your sales information from 1 April, you will no longer need to convert your sale to Euros if the sale took place after this date. If you are including a sale that took place before the 1 April, then the threshold in Euro will apply and the equivalent in Pounds Sterling must be worked out according to the European Central Bank exchange rate on the date the artwork was sold.

How will I know what is due in Pound Sterling (£) for sales concluded before 1st April 2024?

Use retain the Royalty Calculator and Threshold Calculator on our website, to continue to help you calculate the royalty due on a given sale concluded prior to 1 April 2024.

Does this impact the exclusion of VAT or Buyers Premium from the sale price?

Royalties will continue to be calculated on the sale price minus VAT for galleries, and the hammer price (sale price minus VAT and Buyers Premium) for auction houses.

VAT does not apply to the Artist’s Resale Right and this will continue to be the case. Resale royalties are calculated on the sale price excluding VAT. If you operate the VAT margin scheme, exclude VAT elements which are included in the sale price. The royalty itself is also not subject to VAT.