In a previous article, we explored the Resale Right for Visual Artists Act and the changes this is set to bring to New Zealand’s art market.

While the Act is a milestone in recognizing artists’ ongoing stake in their work, it does not apply to all art, nor to all resales of art.  This article explains some of the issues involved in identifying whether a sale will qualify or not.

The Artist

First, the artist must be “eligible”. An eligible artist is an artist who is either a New Zealand citizen, a person domiciled or resident in New Zealand, or a citizen or resident of a reciprocating country. 

This means that the Act will have a broad reach, not just limited to New Zealand artists, but also to foreign artists if their work is sold in New Zealand and they are from countries with similar schemes. 

A deceased artist who met these criteria at the time of their death is also considered to be an eligible artist, meaning that their successors can exercise the resale right for a period of 50 years of the artist’s death.

The Art

Not only does the artist need to be eligible, but the artwork in question must also qualify as an “original visual artwork”.

Something is a “visual artwork” under the Act if it is: 

• a cultural expression of Māori or Pacific peoples;
• a painting, drawing, carving, engraving, etching, lithography, woodcutting, or printing (including a book of prints);
• sculpture, collage, or modelling;
• craftwork, ceramics, glassware, jewellery, textiles, weaving, metalware, or furniture;
• photography or video art;
• multimedia art;
• art that is created using computers or other electronic devices.

The Act also explicitly covers other ethnic or cultural art that is a variation of one of the above.

However, there are also specific exclusions: buildings, dramatic and musical works are not covered, nor are literary works—unless they incorporate a visual element. Additionally, the Act allows for further exclusions through regulations, offering flexibility to adapt to evolving artistic landscapes.

And of course there are implicit exclusions too. For example, the Act does not protect things that are not “visual art” such as songs or musical arrangements, spoken poetry, dance or performance art.

The “original” requirement means that the visual artwork in question was created by, or under the authority of, an artist; or one of a limited number of copies of a visual artwork made by that artist or under their authority.

We expect that a number of difficult cases will arise in the case of objects that are at the thresholds of these definitions, and we intend to return to this in later articles.

The Sale

Finally, the resale must be a “qualifying resale,” which means that the sale must meet certain criteria, depending upon whether it is either a “professional” resale, or a “voluntary qualifying” resale.

It must be a “resale”

In both cases, the sale must be a “resale”.   A “resale” is any transfer of the ownership of a qualifying artwork, except its first transfer of ownership. It doesn’t matter whether the first transfer of ownership was made for money or other consideration, so the first transfer could be a gift or a swap, as well as a sale for money.

Professional resales

The Professional

A professional resale is a resale in which at least one art market professional participates, such as an auctioneer, an art dealer; art consultant; the owner or operator of an art gallery that deals in visual artworks; or any other person who is in the business of dealing in visual artworks. A sale is also captured if it involves a publicly funded art gallery; or a publicly funded museum, library, or archive that collects and displays artworks.

The New Zealand Connection

A professional resale must have a connection to New Zealand, in that the professional involved must have residency or be incorporated or carrying out business in New Zealand, and the sale in question must relate to that part of their dealings in visual artwork that occur (at least in part) in New Zealand. 

This is significant as, on the face of it, it will be sufficient to trigger a connection to New Zealand if part of an overall transaction or series of transactions in question occurs in New Zealand.  For example, if an art market professional has acquired an artwork (or the right to sell it on behalf of someone) while carrying out business in New Zealand, this seems to be enough to establish the requisite connection to bring the sale under the Act even if the work is later sold overseas through or by that person. One wonders what implications this might have for international dealers and auction houses who take consignments from New Zealand based clients as part of their business, as they (and their clients) may be captured under the Act even if the sale ultimately occurs in a country without reciprocal rights.

The Price

A professional resale must meet a minimum value set by regulations before the Act will apply. This is currently set at $2,000.

The resale value is the consideration given for the artwork, which could be in New Zealand dollars, foreign currency converted to New Zealand dollars, or even goods and services paid in kind. However, this value does not include any additional costs like GST or buyer’s premium.

The Timing

The last criteria for a professional resale to qualify for royalty payments under the Act is one of timing, requiring that:

• If the artist is alive at the time of sale, that the contract for the resale has to be entered into at a time the artist is eligible (as set out above under the heading “who is eligible”); or,
• if dead:
  • that the artist was eligible at the time of their death; and
  • the contract for the resale has to be entered into at a time that is on or before the 50th anniversary of the death of the artist (or the death of the last artist involved in the creation of the work if more that one artist was involved). 

Artists may wish to take note of this, as they may lose their right to resale royalties under the Act if they shift their residency to a country that does not have reciprocating rights if they either were not New Zealand citizens in the first place, or choose to surrender their citizenship.

It is also relevant to note that the Act does not have retrospective effect, meaning that it does not apply to any sales that were contracted for before the Act comes into effect on 1 December 2024, even if the contract is completed after that date.

Voluntary Resales

The Act also allows for voluntary qualifying resales to be made via the process established by the Act. This means that even if a resale doesn’t meet the professional criteria, all parties can agree in writing for it to be a qualifying resale anyway. This agreement must specify the resale royalty percentage (which can be more or less than the 5% specified in the Act), and indicate which party will provide the necessary information to the collection agency. 

It should be noted that the Act does not prevent the parties to an otherwise non-qualifying resale paying a royalty to the artist directly without informing the collection agency, if they so choose.

Conclusions

On the face of things, determining what a qualifying resale is may seem straightforward and in many cases that will be true. However, it is expected that a lot of difficult issues will arise in practice, particularly around the definition of what counts as an original visual artwork and issues of artist eligibility, sale timing and connections to New Zealand.

If you need legal assistance with any of these issues, please feel free to contact us to see if we can help.

The information on this website is general in nature and may not be up to date. It is not intended as legal advice for any specific situation or person and should not be relied on for that purpose. You should always seek up to date legal advice for your specific situation.

Contact us to find out more.