A Scottish council is to pay compensation to a German Jewish woman’s family after it emerged Nazi-looted artwork was in a local museum.

The section of 16th century tapestry was owned by Emma Budge before it was sold under a forced auction following her death in 1937. Her family received none of the proceeds of this sale.

It was later purchased by Sir William Burrell in 1938 for £315 and was housed in a Glasgow museum following his death 20 years later.

Entitled ‘The Visitation’, the tapestry depicts the pregnant Virgin Mary and Saint Elizabeth, the future mother of Saint John the Baptist. It formed part of a sizable art collection owned by Budge and her husband that was lost to the family.

However Glasgow City Council has now approved a claim lodged by the Budge estate that the work is ‘spoliated’ or plundered art.

The UK Government’s Spoliation Advisory Panel – set up to consider claims over cultural objects lost during the Nazi era – recommended that an ex-gratia payment reflecting the current market value of ‘The Visitation’ is made to the family.

Discussions will soon take place to determine how much the local authority will need to pay.

In return, Budge’s heirs will relinquish any claim to the tapestry.

It will now be exhibited alongside information about how it was acquired and details on the resolution of the claim.

Cllr Archie Graham, the depute leader of Glasgow City Council and chair of Glasgow Life, said: ‘Glasgow has led the way in attempting to identify objects that may have been acquired as a result of Nazi atrocities and has been posting details of objects where provenance may not be certain on the UK Government’s website since 1998.

‘In cases where a claim is proven, the city has always been resolute that it has a moral duty to put right the mistakes of the past, no matter how long the passage of time.’