04/13/2024

News/Events/Exhibits

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Freeports : The world's largest museums remain unseen

Often considered the world’s most extensive museums, these warehouses contain extraordinary artworks bearing the signatures of Picasso, Rembrandt, Leonardo da Vinci, or Modigliani.

Freeports are designated areas exempt from customs duties and VAT, making them ideal for storing invaluable goods.

 

Yet, these treasures remain deeply concealed, shrouded in utmost secrecy, accessible only to a select few. Zoom in.

Ports Francs et Entrepôts de Genève — Wikipédia

Ever wondered how a free port works ?

Picture a hidden, ultra-secure space filled with countless masterpieces... That's precisely what a free port is all about. These zones, often dubbed the world's grandest museums, gather goods of immeasurable value.

Located in a free trade zone, they are exempt from customs duties and VAT. Thus, individuals and businesses can store their goods there without having to pay the usual taxes.

Items within the free port remain untaxed. So, any transactions conducted there, whether buying or selling, are VAT-free.

Furthermore, if someone loans out their artwork for display, they won't be hit with VAT either, despite boosting the artwork's value and exposure.

 

Thanks to this unique setup, free ports are hailed as the ultimate destination for showcasing art, exquisite jewelry, fine wines, and all sorts of high-value treasures.

For example :

Mr. Dubois is an avid collector. Just recently, he got his hands on an amazing piece to add to his collection : a Picasso. He acquired the artwork for 5 million euros at an auction.

Instead of showing it off at home or leaving it at an art gallery, he decided to stash it away in the free port of Geneva. It's kept safe in a special room there, with top-notch security and complete secrecy, alongside loads of other precious artworks.

They keep the temperature and humidity just right to make sure the painting stays in mint condition for a very long time.

By storing his Picasso within a free port, Mr. Dubois takes advantage of a complete exemption from customs duties and VAT, resulting in significant savings on the artwork's holding and transaction costs.

Outside of these zones, importing such a piece into France would have incurred additional fees of up to 20% of its value in taxes and duties.

When Mr. Dubois decides to loan his painting for a temporary exhibition at the Museum of Modern Art in Paris, he once again benefits from the advantageous tax status of the free port: the loan is VAT exempt

Thus, the visibility and value of the artwork could potentially increase by 10% to 15% through public exhibition, without ever incurring additional costs for the collector.

Within these warehouses lie invaluable treasures, their collective worth soaring into the billions of euros. Some speculate this sum could even eclipse the value of esteemed collections of renowned museums.

Nevertheless, the artworks within remain elusive, shrouded from view, concealed within sealed crates accessible only to a fortunate few.

 

 

What advantages do free ports bring to the art market ?

 

Free ports provide numerous appealing benefits for collectors, dealers, and other players in the art market.

1- Duty and Tax Exemption

 

One of the standout perks of free ports is their unique status. Artworks imported to these ports are exempt from standard customs duties and taxes. This translates to substantial savings for collectors and art dealers, particularly when handling high-value pieces.

4- Privacy

 

Discretion is another key asset of free ports. These warehouses ensure a high level of privacy, allowing art market players to carry out transactions or hold artworks confidentially if they wish. This feature is particularly appreciated in a sector where discretion can be paramount for various reasons, ranging from privacy protection to investment strategy.

 

2- Secure Storage

 

Free ports boast highly attractive storage conditions for art owners. With state-of-the-art security measures in place, they offer a dependable and secure environment.

Stored artworks are protected against risks of damage, theft, or deterioration. This ensures the preservation of the artworks in impeccable condition, which is essential for maintaining their aesthetic and financial value.

 

5- Ease of international transfer

 

Artworks stored in a free port enjoy great international mobility.

They can be shipped to other destinations around the world without requiring the payment of additional taxes or customs duties. International transactions and loans for traveling exhibitions are thus facilitated.

3- Logistical Flexibility

 

Free ports offer collectors and art dealers the opportunity to store their artworks indefinitely without incurring additional fees.

This specificity allows them to enjoy great flexibility in managing their transactions and collections. Consequently, they can easily adapt to market fluctuations or their own needs.

 

 

Which primary free ports do art collectors favor?

 

As you might expect, free ports rank high among the preferred spots for both collectors and art dealers. They offer an extremely secure environment free from customs duties and VAT, allowing artwork owners to safeguard their treasures indefinitely.

Comparable to the greatest museums in the world, free ports hold treasures of great value. Unfortunately, access is restricted to a select few.

But if you're fortunate enough to attend one of the on-site sales, here's a rundown of the top free ports in Europe and across the globe.

 

 

In Europe : 

 

In Europe, the three main free ports are those of Geneva, Luxembourg, and Le Bourget. They all have enhanced security systems and welcome goods worth millions of euros. 

 

Free Port of Geneva :

 

The Geneva Free Port, located in a peripheral area to the southwest of the city, is arguably the world’s largest museum. Internationally recognized for its expertise in storing artworks, it offers a perfectly secure environment of 150,000 square meters.

Despite its discreet external appearance, comparable to a simple set of warehouses, this free zone actually houses an impressive collection of some of the world's most valuable objects. The value of the goods it contains is estimated at around $100 billion, which is just over €92 billion.

The Geneva Free Port offers the rental of several rooms of various sizes. These vaults are equipped with thermal and hygrometric control for the proper preservation of collectibles, artworks, exceptional products, fine wines, etc.

Art owners can choose between two regimes to store their goods: the duty-free deposit regime or the Swiss regime. The first option allows them to benefit from the suspension of VAT and customs duties until the goods are definitively imported into the destination country. The storage period for goods is unlimited. The second option allows Swiss or imported art owners to store their artworks outside the customs regime. Thus, they benefit from the same quality of service with a service tailored to their needs. 

 

Free port of Luxembourg :

 

Luxembourg’s free port, located near the Luxembourg-Findel International Airport, ranks among the largest in the world, although it doesn't overshadow Geneva's.

Designed exclusively for storing works of art, it's equipped with all the facilities to meet the demands of collectors, museums, and art dealers in terms of security, preservation, and confidentiality.

It's essentially a modern fortress dedicated to safeguarding the most precious treasures. This zone, free from customs duties and taxes, houses artworks, vintage cars, gold, diamonds... away from prying eyes and usual taxation.

Its reinforced security, meticulous controls, and state-of-the-art anti-intrusion systems,

 

makes it one of the safest places in the world to store assets valued at over 10 billion euros.

Free port in Le Bourget :

 

The Le Bourget free port is the latest art conservation space to emerge in France. Strategically located near Paris, it serves as a solution for museums, art galleries, and private collectors seeking a modern and secure storage facility near the capital.

Covering approximately 25,000 square meters, this facility is designed to provide optimal conservation conditions, including temperature and humidity control, as well as a hypoxia system to reduce fire hazards.

Its state-of-the-art security is ensured by a 24/7 operational security control center and reinforced with some of the most robust anti-intrusion measures in the world.

In essence, this freeport can be likened to an ultra-secure vault, tailored to safeguard treasures of significant value, all the while maintaining discretion in regards to its clientele and details around investment.

 

 

 

Across the globe

Beyond European borders, individuals can safeguard their artworks within Singapore's free port, with London soon to follow suit with a similar initiative. Meanwhile, Hong Kong stands as a free port in its own right. 

Free Port of Singapore :

Singapore's free port, built in 2010 near the Changi Airport, serves as an impenetrable sanctuary dedicated to preserving extraordinary goods.

This highly secure facility was inspired by Geneva’s Free Port. It houses thousands of artworks, gemstones, vintage cars, fine wines, etc. These valuable assets find refuge in windowless chambers, meticulously monitored at all times.

Beyond its primary focus on security, this free port provides a meticulously controlled environment ensuring consistent temperature and humidity levels.

 

Now a pivotal hub for collectors and art professionals, this locale is hailed as a tax haven due to its exemption from VAT on stored goods.

Free Port of Hong Kong :

Hong Kong is renowned as a cornerstone of international trade. Its strategic location south of China facilitates global exchanges.

Thanks to its status as a free port, the Pearl of the Orient provides a straightforward and advantageous tax framework, with no duties or tariffs on imports and exports.

Hong Kong boasts exceptional logistics, featuring one of the world's leading commercial ports and an international airport, further enhancing its attractiveness on the world stage.

The London Free Port :

The establishment of the first free port in London, announced during the 2021 London International Shipping Week, marks a significant milestone in the United Kingdom's strategy to strengthen its role as an industrial and logistical hub.

This project is part of the 2021 Finance Act which designated eight strategic sites. It kicked off with a substantial investment of £300 million by DP World in the London Gateway Terminal.

The Thames Free Port, which also includes the Port of Tilbury and the Ford factory in Dagenham, promises to transform the area into a vibrant hub of activity by boasting enticing customs incentives.

 

Photos sources :

https://lecourrier.ch/2018/09/12/voyage-detudes-dans-les-ports-francs/

https://www.virgule.lu/economie/le-freeport-disponible-a-la-vente/233325.html

https://www.lequotidiendelart.com/articles/14246-au-bourget-coffre-fort-high-tech-pour-%C5%93uvres-d-art.html

https://lepetitjournal.com/singapour/actualites/zone-interdite-plongee-au-coeur-du-singapore-free-port-qui-abrite-des-milliers-doeuvres-dart-45378

https://www.lesechos.fr/2014/05/hong-kong-port-franc-et-lieu-libre-du-negoce-de-lart-en-asie-282918

https://www.lecho.be/economie-politique/europe/general/le-royaume-uni-mise-sur-les-ports-francs/10278884.html

https://www.taxpolicycenter.org/taxvox/does-world-need-tax-advantaged-art-freeports

 

 

Article published by Julien ARBELAITZ