By Alex Cutts
International trading in the art world is common practice and with billionaire collectors being based at all corners of the globe, trades within the industry are often dealt with overseas where pieces face monumental customs fees upon arrival. This is where freeports come in.
Disguised as warehouses from the outside – freeports are tax free zones that dominate the art industry. They are areas of land put in place by governments which are exempt from certain national legislation, including VAT and customs laws.
On the border of France and Switzerland, in the heart of the Swiss Alps, lies a secret warehouse complex – the Geneva Freeport. This freeport is a 60,000 square metre plot of land rented by the city of Geneva where assets are stored and safeguarded.
Freeports like these house valuable goods and collectable items such as fine wine but more importantly artwork.
It is reported that the Geneva freeport is home to a million pieces of artwork including the works of some of the most notable names in the industry, such as Picasso and da Vinci.
When investors buy artwork at auction, global trading means that pieces are shipped overseas to countries where they plan on being displayed. But in order to avoid the costly fees they are faced with on arrival, freeports play a role in holding the pieces for free.
Whilst stored here, items can gain value, but in keeping these pieces locked away for money’s sake they are hidden from the eyes of gallery goes and fine art enthusiasts.
Leonardo da Vinci’s Salvator Mundi broke world records back in November 2017 after it was sold at auction for a sensational $450 million. However, after its previous sale in 2012 it was stored in the Geneva Freeport away from the eyes of the public.
Freeports are commonly used to store billionaire’s goods as they host no fees and leave no trace on their wealth and status unlike banks. Artworks are stored with complete anonymity making them invisible to local authorities. This act of secrecy allows dealers and their private collections to appear invisible to their competitor investors and as the Middle East begins to invest their wealth into the world of arts and cultures, collectors vie with them.
As well as saving billionaire buyers millions of dollars in taxes, freeports often offer other services alongside. Many freeports offer a whole new level of security, keeping pieces closely guarded often behind bulletproof walls and under constant, 24-hour surveillance.
With freeports being home to almost 80% of artworks at some point in their existence, these secret warehouses are set to become bigger and more common within the industry where they will continue to make tax arrangements, transactions and the preservation of art much simpler.