GERMANY Law and Practice Contributed by: Tanja Schienke-Ohletz, Flick Gocke Schaumburg
Their main responsibility is to provide the client with expert, careful and truthful information about the characteristics, value, authenticity and risks of the artwork. They should incorporate their expertise into their advice and also take into account the client’s risk profile and objectives. The details depend on the contract – ie, which specific obligations have been stipulated. This also determines the service to be pro - vided (eg, acquisition of artworks that will increase in value or the compilation of a specific art collection). The advice must be both investor-oriented (taking into account the client’s knowledge, objectives and risk tolerance) and object-oriented (comprehensive infor - mation about the art object and its special features). In the event of incorrect or incomplete advice, the art adviser is liable for damages if the client suffers finan - cial loss as a result. The burden of proof for a breach of duty lies with the client. 6.6 Anti-Money Laundering Regulations and the Art Market The Money Laundering Act applies in Germany. This also covers art dealers and auction houses, which have extensive obligations under money laundering law. The key obligations include the following, in par - ticular. • General due diligence obligations – according the German GwG, art dealers and auction houses must verify the identity of the contracting party for transactions exceeding EUR10,000 (or EUR2,000 for cash transactions) and, where applicable, also the identity of the person acting on their behalf and the beneficial owner. In addition, information about the purpose and nature of the business relationship must be obtained and evaluated, and the business relationship must be monitored on an ongoing basis. • Risk management – in general, there is an obli - gation to set up a risk management system that includes a risk analysis and internal security meas - ures. In certain cases, a money laundering officer must be appointed to monitor these obligations for the auction house. • Suspicion reporting obligation – if facts come to light that indicate money laundering or terrorist
financing, a report must be made immediately to the Financial Intelligence Unit (FIU). The reporting obligation also applies to unusual or implausible transactions.
7. Collections 7.1 Legal Status of Collections
Art collections and libraries may also qualify as cul - tural property under the Cultural Property Protection Act (KGSG). Collections such as library holdings and collections, provided they have artistic, historical, scientific or other cultural value, are also covered by the scope of protection. Libraries are also expressly referred to as “cultural property preservation institu - tions”. This is subject to the following rules, otherwise, the general rules apply to art collections. • Protection includes, in particular, a ban on uncon - trolled export from Germany, the possibility of registration in lists of nationally valuable cultural property, and claims for return and restitution in the event of unlawful removal or deprivation. • The donation or inheritance of an art collection may also be eligible for tax relief if, under certain condi - tions, it is made available to the general public. In summary, art collections and libraries are specially protected as cultural assets within the meaning of the KGSG and other regulations, in particular against emi - gration, loss and unlawful removal. 8. Photography 8.1 When Are Photographs Protected as Art? Photographs can be considered works of art and are therefore also subject to copyright. The prerequisite is that they are photographic works that represent the intellectual creation of their author. It is necessary for the photograph to be the result of an individual, creative design, whereby the requirements for the level of design are low.
52 CHAMBERS.COM
Powered by FlippingBook