Last updated [04/04/2022]
FAQ - Frequently asked Questions
Buying and selling Art in the Netherlands
Passing of title
When does ownership of art pass from seller to buyer?
Ownership of goods passes from seller to buyer at the time of the delivery. Delivery can take place by giving the buyer actual possession of the good. It can also be agreed that delivery will take place upon the moment of receipt of payment.
Implied warranty of title
Does the law of your jurisdiction provide that the seller gives the buyer an implied warranty of title?
The Dutch Civil Code (DCC) provides for the presumption that whoever has possession of a good is the owner of that good (article 3:119 DCC). This presumption can, inter alia, be refuted if it was later found that the seller did not have the power of disposition, for example, because the good was stolen. Nevertheless, the buyer may have acquired the ownership of the good provided, inter alia, that the transfer was not performed gratuitously and the buyer acted in good faith (article 3:86 DCC).
Can the ownership of art, antiques or collectibles be registered? Can theft or loss of a work be recorded on a public register or database?
There is no general public register for the ownership of art. However, cultural objects that have been granted protective status under the Act of 9 December 2015, Relating to the Combining and Amendment of Rules Regarding Cultural Heritage (the Heritage Act) are registered in the Register for Protected Cultural Objects and Collections . The register is accessible via: http://data.collectienederland.nl/vc/wbc-2/. The listed owner is presumed to be the legal owner for the purposes of a claim for restitution of such a protected cultural object.
Theft or loss of an object can be reported to the Dutch police, which may decide to report it to Interpol for the purpose of putting it in its database of stolen art (see www.interpol.int).
Also, private initiatives such as the Art loss Register provide for the possibility to record theft or loss of an object against a fee (see www.artloss.com).
Risk of loss or damage
When does risk of loss or damage pass from seller to buyer if the contract is silent on the issue?
In general, the risk of loss or damage passes on transfer of ownership. This is usually the moment the buyer gets actual possession of the bought object. The parties are free to contractually agree on a different point in time.
Does the law provide that the seller gives the buyer implied warranties other than an implied warranty of title?
There are no specific implied warranties - this is not a legal concept under Dutch law. However, it could be said that the notion that an object must have the characteristics a buyer may expect on the basis of the agreement and, in particular, must be fit for the ordinary purpose or a buyer’s particular purpose, can be understood as such an implied warranty. In a business-to-business relationship, liability in this respect can be excluded or limited contractually.
Import controls Export and import tax
Does any liability to pay tax arise upon exporting or importing art, antiques or collectibles?
Depending on the VAT position of the exporter, generally the zero per cent VAT rate should apply to the export of art, antiques or collectible items or alternatively the export is out of scope for VAT (both options leading to no VAT liability for the exporter).
For import transactions, the importer is in principle liable to pay VAT. In the Netherlands the VAT rate for art, antiques or collectible items is currently 6 per cent in The Netherlands. The reduced VAT rate may be increased to 9 per cent as of 1 January 2019 (according to the announcement of the Dutch government, which has, however, not been formalised in legislative proposals as per the date of writing).
However, there are certain methods to suspend the import VAT liability, for example, importing under a customs regime (eg, ATA Carnet or Temporary Import).
Usually, if the goods qualify as art, antiques or collectible items within Chapter 97 of the Harmonized System no custom duties are levied. Upon the exportation of goods, the EU does not levy any custom duties.
Direct and indirect taxation
Outline of the main types of tax liability arising from ownership and transfer of art, antiques and collectibles.
Direct taxation - personal income tax
Private ownership of art, antiques or collectible items by a private individual can constitute taxable income in box 1 (eg, when ownership is part of an active trading activity) or box 3 (passive holding of art, antiques or collectible items).
In box 1 (active trading) the net results (ie, the net sale proceeds) are taxed at progressive rates of up to 52 per cent. Losses can be deductible.
In box 3 (passive holding) the annual tax burden is based on deemed rates of return realised with the passive holding of the items of art, antiques or collectibles. The tax rate in box 3 (for 2018) is maximised at 1.61 per cent of the value of the item at 1 January of the same year. Losses are not deductible. If the art is however held for the personal use of the individual (and not mainly as a passive investment) it is exempt from taxation in box 3.
Direct taxation - corporate income tax
If the art is held by a company (eg, a Dutch BV) the net result (gain or loss from sales activities, or income from letting out) constitutes taxable income for Dutch corporate income tax purposes. The tax rate is 20 per cent or 25 per cent (for that part of profits exceeding €200,000). The corporate income tax rate may be reduced to 16 per cent and 21 per cent (for that part of profits exceeding €200,000) over the next years according to announcements from the Dutch government, which have, however, not been formalised in legislative proposals as per the date of this publication.
Indirect tax - VAT
As regards VAT, it is important to distinguish whether the art, antique or collectible item qualifies as such under the applicable definitions in the Dutch VAT rules and regulations and what kind of person is involved in the transfer thereof. The reduced VAT rate of 6 per cent applies to sales by the artist or by entrepreneurs who are not resellers. In other circumstances the applicable VAT rate is normally 21 per cent.
Outline any tax exemptions or special conditions applicable to art, antiques and collectibles.
Public benefit organisations
These organisations are focused on charity (for example sports, art, science) and are eligible for several tax benefits. One of these benefits is that donations (which includes donations of art, antiques and collectibles) to qualified charity organisations are tax exempt for gift and inheritance tax purposes. Furthermore, individuals or companies could, when all criteria are met, be eligible to deduct donations to a public charity from their Dutch taxable (corporate) income. These deductions are often limited.
Margin scheme for VAT
In the Netherlands a margin scheme is possible for traders in margin goods that are bought without VAT. The margin scheme entails that the VAT is not calculated based on the turnover but on the profit margin. The margin scheme applies to resellers only. Under Dutch VAT law, a reseller is an entrepreneur whose activities mainly consist of the resale of used art, antiques and collectibles. The margin scheme does not apply automatically; the reseller must opt in for this specific VAT scheme.
Collectors’ pieces and works of art not intended for sale may be imported exempt from VAT by galleries, museums and other institutions that are approved by the Dutch government.
As mentioned, if goods qualify as art, antiques or collectible items within Chapter 97 of the Harmonized System no custom duties are levied and upon exportation of such goods the EU does not levy any custom duties. In addition, an exemption from customs duties according to article 43 of the Council Regulation on Exemption from Customs Duty applies to goods of an educational, scientific or cultural nature, which are listed in Annex II of the Council Regulation on Exemption from Customs Duty ((EC) No. 1186/2009 of 16 November 2009).
Borrowing against art
In your jurisdiction what is the usual type of security interest taken against art, antiques and collectibles?
The usual type of security interest is the right of pledge. Under Dutch law, there are two types of pledge: possessory pledge and undisclosed pledge. In the case of a possessory pledge, the lender takes physical possession of the work. In the case of an undisclosed pledge, the work remains in the possession of the borrower. Pawnbrokers are generally where one can borrow against art.
If the borrower borrowing against art assets in your jurisdiction qualifies as a consumer, does the loan automatically qualify as a consumer loan, and are there any exemptions allowing the lender to make a non-consumer loan to a private borrower?
If the borrower is a consumer, a loan will qualify as a consumer loan to which the provisions on consumer credit agreements apply (article 7:57 et seq DCC). These provisions mainly contain more extensive pre-contractual informational requirements to adhere to. However, the following exceptions may apply to the borrowing against art by consumers. First, if the liability of the borrower is strictly limited to the pledged item. Second, if the loan has to be repaid within three months and only insignificant costs are involved. In these two situations, the stricter rules do not apply.
Register of security interests
Is there a public register where security interests over art, antiques or collectibles can be registered? What is the effect of registration? Is the security interest registered against the borrower or the art?
No, there is no public register where security interests over art, antiques or collectables can be registered.
Non-possessory security interests Sale of collateral on default
If the borrower defaults on the loan, may the lender sell the collateral under the loan agreement, or must the lender seek permission from the courts?
If the borrower defaults on the loan, the lender may sell the pledged good without court intervention. The security interest (eg, the pledge) as such constitutes entitlement to enforcement (article 3:248 DCC).
Intellectual property rights
Does copyright vest automatically in the creator, or must the creator register copyright to benefit from protection?
The enjoyment and exercise of copyright is not subject to any formalities. All literary and artistic works are protected by copyright if such a work is the result of the author’s own intellectual creation.
Copyright is automatically vested in the actual creator of a work (the ‘author’, article 1 of the Dutch Copyright Act (DCA)). However, there are some deviations to this rule. For example, employers are deemed to be the authors of works made by employees. Also, the person or company designated on the work as the author is presumed to be the author and, thus, the copyright owner, in the absence of proof to the contrary.
What is the duration of copyright protection?
In general, copyright expires 70 years after the death of the author (article 37(1) DCA). If a work was made by two or more authors, the copyright expires 70 years after the death of the last surviving co-creator (article 37(2) DCA).
If a legal entity is deemed to be the author of a work, the term of protection runs for 70 years after the work was first made public. The same term applies to anonymous works. However, if the author makes itself known within the 70 years after first publication, copyright protection will be extended for 70 years after the creator’s death.
Display without right holder's consent
Can an artwork protected by copyright be exhibited in public without the copyright owner’s consent?
Yes, the owner, possessor or holder of a drawing, painting, sculpture, architecture or a work of applied art is permitted to make public or reproduce a work without the copyright owner’s consent as far as this is necessary for the public exhibition or public sale of that work (article 23 DCA). This includes the right to use the artwork in an advertisement to promote such a public exhibition or public sale, but commercial exhibition is not allowed without consent. Also, the copyright owner can limit this exhibition right contractually.
In any event, the moral rights of the author of a work must be respected (ie, the right to be named as the author).
Reproduction of copyright works in catalogues and adverts
Can artworks protected by copyright be reproduced in printed and digital museum catalogues or in advertisements for exhibitions without the copyright owner’s consent?
Yes, copyright-protected drawing, painting, sculpture, architecture or a work of applied art can be reproduced in printed and digital museum catalogues or in advertisements without the copyright owner’s consent. However, the purpose of the catalogue or advertisement must be limited to the promotion of the exhibition and exclude any commercial use. For example, consent of the author will be required if a catalogue that contains an image of the work is sold by a museum for profit.
In any event, the moral rights of the author of a work must be respected (ie, the right to be named as the author).
Copyright in public artworks
Are public artworks protected by copyright?
Public artworks (including public sculpture, street art or architecture) are protected by copyright like any other work that is the result of the author’s own intellectual creation. However, copyright owners cannot prohibit the reproduction or publication of an image of an artwork that has been made to be permanently situated in a public place (article 18 DCA).
Artist's resale right
Does the artist’s resale right apply?
Article 43a of the DCA provides for the right, for the benefit of the author of an original work of art, to receive a percentage of the price obtained for any resale, made by professionals from the art market, of his or her work (such as auction houses, galleries or any other art market) with a minimum sales price of €3,000. The resale royalty is payable to the author of the work and, after the death of the author, its testamentary successors.
The resale right applies to works of graphic art or plastic art such as collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs, which are made (in limited numbers) by the artist himself or herself or under his or her authority. Copies are included if they are original works of art according to professional usage (limited productions or signed works, for example).
The resale royalty provided for in article 43 of the DCA is set at the following rates:
4 per cent for the portion of the sale price up to €50,000;
3 per cent for the portion of the sale price from €50,000,01 to €200,000;
1 per cent for the portion of the sale price from €200,000,01 to €350,000;
0.5 per cent for the portion of the sale price from €350,000,01 to €500,000; and
0.25 per cent for the portion of the sale price exceeding €500,000 .
However, the total amount of the royalty may not exceed €12,500. The obligation to pay the royalty rests with the professional art dealer involved in the sale. The resale royalty becomes due at the moment the sales price of the original work of art becomes due, and, in any case, three months after the contract of sales was concluded. The limitation period for an action for payment of the royalty is three years following the day when the owner acquired knowledge of both the claimable royalty and of the person owing the royalty. In any case, the limitation period is 20 years from the time the compensation became due.
Beneficiaries can collect resale rights directly, but it is possible to join a collective management organisation like Pictoright . However, this is not compulsory.
What are the moral rights for visual artists? Can they be waived or assigned?
Authors have the following moral rights (article 25, DCA):
1- The right to object to the disclosure of the work without mentioning the name of the author, unless objecting would be unreasonable;
2- The right to object to the disclosure of the work under a different name than the name of the actual author and to changes in the name of the work or the author mentioned on the work, unless objecting would be unreasonable;
3- The right to object to alterations made to the work, unless the nature of the alteration is such that objecting would be unreasonable; and
4- The right to object to any distortion, mutilation or other impairment of the work that could be prejudicial to the reputation or name of the author or to his or her dignity as the author.
Moral rights cannot be assigned. Only testamentary successors are entitled to moral rights.
Authors can waive their moral right under (1-), namely , the right to attribution. The rights under (2-) and (3-) can only be waived as far as it concerns alterations to the work or to the title. The right under (4-) cannot be waived.
Accounting to the principal
Does the law require the agent to account to the principal for any commission or other compensation received by the agent while conducting the principal’s business?
Normally an agent is not entitled to receive any commission or compensation directly. The agent’s role is to negotiate and possibly conclude transactions on behalf of the principal, after which the principal will pay a commission or compensation to the agent. The principal must supply to the agent a statement of all transactions concluded at the end of each month so that the commission can be calculated. An agent should disclose any commission or compensation paid to him by third parties to facilitate the transaction to the principal.
Disclosed agent commission
Does disclosure to the principal that the agent will receive a commission allow the agent to keep the commission unless the principal objects?
The principal is responsible for payment of a commission to the agent within a certain time.
Undisclosed agent commission
If a third party pays a commission to an agent that is not disclosed to the principal, can the principal claim the commission from the third party?
By definition, an agent works for the principal. An agent has the obligation to look after his or her principal’s interests and act dutifully and in good faith at all times. Therefore, the agent should disclose any commission or compensation paid to him or her by third parties to facilitate the transaction to the principal. It will depend on the agency agreement made with the principal in this regard whether the agent is allowed to keep such commission or compensation received. In any case, an agent will need implied or expressed consent of the principal to keep the commission or compensation received.
Protection of interests in consigned works
How can consignors of artworks to dealers protect their interest in the artwork if the dealer goes into liquidation?
The consignment of an artwork does not change the ownership of the artwork. It depends on the terms of the consignment agreement, but the general idea will be that the consignor wishes to keep his or her identity confidential and for that reason uses a middleman (a dealer) to sell the art work on his or her behalf but in the dealer’s own name to keep his or her identity concealed. Assuming that the art work has not been sold yet, if the dealer goes into liquidation, the consignor can claim the return of his or her property from the administrator. Since it is presumed that whoever has possession of a good is the owner of that good, the consignor will need to provide evidence that he or she (and not the dealer) is the owner, for example by showing the applicable consignment agreement. There is no register where consignors can register interest in consigned art works.
Are auctions of art, antiques or collectibles subject to specific regulation in your jurisdiction?
Public auctions in which goods are sold to the highest bidder need to comply with the Act on Official Surveillance at Auction Sales 1971, which provides that it is prohibited to hold a public auction other than before the presence of a notary or court-appointed bailiff. Although often notaries or court appointed bailiffs are present at public auctions, it is noted that this law does not seem to be actively enforced. Moreover, it is unclear how this 1971 Act needs to be complied with in case of the current practice of online sales of goods.
May auctioneers in your jurisdiction sell art, antiques or collectibles privately; offer advances or loans against art, antiques or collectibles; and offer auction guarantees?
Yes, auctioneer offices may sell items privately and offer advantages or loans against art, antiques or collectible items. It is noted that if the auctioneer office acts as a pawn broker (ie, money is lent to a consumer in exchange for possession against a fee), specific regulations that seek to protect consumers apply. For example, these regulations set a maximum on the interest rate that can be applied. Auction guarantees are not prohibited by law.
Lending to museums
Responsibility for insurance
Who is responsible for insuring art, antiques or collectibles loaned to a public museum in your jurisdiction?
The insurance arrangement has to be agreed between the parties. Typically, the lender is responsible for the all-risk and nail-to-nail insurance of the object on loan. It is possible for museums to apply for an ‘indemnity certificate’ to be issued by the state to save on the insurance costs. Basically, the state then gives a subsidy for an exhibition or long-term loan, subject to the suspensive condition of loss or damage to the objects given on loan. This makes it easier for museums to loan foreign objects of art for exhibitions in the Netherlands. The insurance premium will go down since the museum will only have to insure part of the risk of damages involved; the rest of the damages incurred will be covered by the subsidy.
Are artworks, antiques or collectibles loaned to a public museum in your jurisdiction immune from seizure?
No. Museums need to respect a judicial seizure order, should this occur. However, it is possible to request the Ministry of Foreign Affairs to issue a guarantee against seizure in which it is usually stated that the Dutch State will oppose attempts at seizure or other enforcement measures when such measures are contrary to international law. Whether this will be issued largely depends on the circumstances of the case, and in particular on information available on the provenance of the object concerned. Also, it will only be issued in cases where the object is owned by the state of origin.
What are the anti-money laundering compliance obligations placed on the art trade?
Art dealers that buy or sell goods for which they pay or receive more than €10,000 in cash need to comply with the Anti-Money Laundering and Terrorist Financing Act. This Act is also applicable to art dealers than only act as intermediaries, if payment in cash for the goods bought or sold by their clients exceeds €15,000. In order to comply with the obligations of this Act, the art dealer needs to verify and store information on its contract partners, representatives, the ultimate beneficial owner and the transaction as such. In particular, the art dealer will need to:
- identify and verify its contract partner and representatives (for natural persons via a passport or ID card, for a legal entity via a chambers of commerce registration);
- identify and verify the ultimate beneficial owner;
- verify whether the contract partner or representative qualifies as a politically exposed person or is listed on an international sanctions list;
- establish the purpose and nature of the intended transaction; and
- monitor the business relationship.
The art dealer will need to take a copy of the identification document (passport or ID card) of the contract party or the representative. In the case of a suspicious transaction or contract partner or representative, this should be reported to the Financial Intelligence Unit.
ion No. 338/97 of 9 December 1996 as items that were significantly altered from their natural raw state prior to 3 March 2047 (which is 50 years prior to the adoption of the Regulation) for the purposes of jewellery, adornment, art, utility or musical instruments. Items acquired prior to 3 March 1947 in their natural state, such as a raw elephant tusk or turtle shell, cannot be considered as antiques and are subject to the requirement to obtain an EU certificate for import and export. Such pre-convention antiques may be sold, exported or imported within the EU without an EU Certificate provided they were imported in the EU legally. For export outside or import inside the EU a CITES permit will be required.
In what circumstances may consumers cancel the sale of art, antiques or collectibles?
Further to the EU Consumer Rights Directive, consumers buying art at a distance (for example online or by means of distance communication such as telephone or email) or outside the dealer’s business usual business premises have the right to cancel the contract within 14 days of the date on which the consumer takes physical possession of the object bought, without giving any reason. This cancellation right cannot be excluded by contract.
This cancellation right can also be exercised in case of sales via online auctions, unless the auction qualifies as a ‘public auction’, which is defined as a method of sale where property is offered by a trader to consumers, who attend or are given the possibility to attend in person, through a transparent, competitive bidding procedure run by an auctioneer, and where the successful bidder is bound to purchase the property, so a ‘live traditional auction’. This means that if a consumer, instead of bidding in the public auction room, bids online or on the telephone, he or she cannot invoke the cancellation right afterwards.
Duties of businesses selling to consumers
Are there any other obligations for art businesses selling to consumers?
In the case of distance contracts of sale, comprehensive obligations further to consumer protection laws apply. For example, information obligations require sellers to provide information on the goods sold, the identity of the seller, the address and contact details of the seller, pricing, delivery, payment methods, complaint policies, guarantees etc, before the contract is concluded. The consumer needs to be able to store this information on a durable medium.
* The authors would like to thank Johan Swagers, Bünyamin Çubuk (VAT) and Bart-Jan Kalshoven (Customs), tax specialists from KPMG Meijburg & Co, for providing assistance with tax-related questions 14, 15 and 16 (email: email@example.com).