From Barron's Penta:
Freeports in Freefall?
The crackdown has begun. After months of speculation, increased scrutiny among tax authorities and regulators around the globe, not to mention a major art fraud scandal that ensnared the opaque inner workings of the Geneva Freeport, the Swiss government just announced it was placing tough new controls on its freeports, those transit ports which have, in recent years, become maximum-security safety-deposit boxes with tax benefits.
The new regulations, which take effect in January, mark a radical departure for business as usual at the freeports where secrecy and anonymity have made them attractive destinations for art collectors storing their treasures while avoiding tax liabilities. But those very protections the freeports offer its clients have also made them vulnerable to a host of illegal activities and the stricter rules are part of the government’s broader clamp down on money laundering, tax evasion and black market trades. “With the introduction of the new amendment,” the Swiss authorities announced, “the legislature wishes to ensure the required transparency towards domestic and foreign authorities on the stored goods. In addition, Switzerland’s position in the fight against money laundering has been strengthened.”
In other words, for those who’ve secreted away their Picasso’s and Modigliani’s for years, using the freeports much like the art world’s Cayman Islands — the gig is up, at least in Switzerland. Under the new set of rules, goods stored for export will now have a six-month time limit while a host of new disclosure requirements come into play, including that owners must now declare their identity as well as the identity of anyone buying those goods destined to leave the freeports. Further, the Swiss have extended their reach, adding wine, cigars, cars, and furniture to the list of goods required for disclosure.
“This could be a total game changer,” says a former U.S. law-enforcement official who now deals with art market issues in private practice. “It could revert the use of the freeports back to how they were intended as furthering trade – instead of operating as tax-free stash houses.” Adding, “This raises the stakes considerably and will probably cause a number of collectors to rethink the ways in which they manage, store or transfer their assets....MUCH MORE
The Delaware Freeport
(Photo by Fritz Dietl)
Okay, maybe not Delaware.
However, if interested here are some of the ins and outs of the tax implications from Art Law Report:
Art: War Between the 'Freeport King' and the Oligarch and How Dmitry Rybolovlev Made a Quick $300 Million
Super Wealth: Barron's Penta Calls For Avoidance Of Geneva-style Freeports
Update: "What's the Scam? Why Did Deloitte Set Up Their Art & Finance Practice In Luxembourg?"
Possibly also of interest:
If it were a museum, some say that it would probably be the best museum in the world
"Oligarchs and Orchestras: Inside Luxembourg’s Secretive Low-Tax ‘Fortress of Art’ Warehouse"
"(Sm)art Investing: Rich Move Assets from Banks to Warehouses" ($4 trillion in 'treasure' assets)