Abstract
This article addresses how global art markets are becoming an outlet of choice for those wishing to hide assets. Recent efforts by the OECD and the U.S. Treasury have made it more difficult for people to avoid taxes by taking money “offshore”. These efforts, however, do not cover physical assets such as fine art. Citing data collected in Luxembourg—a jurisdiction angling to become a worldwide leader in “art finance”—I discuss the characteristics of this emerging system of opaque economic activity. The first of these is a “freeport”, a luxurious and securitized warehouse where investors can store, buy, and sell art tax free with minimal oversight. The second element points to the work of art-finance professionals, who issue loans using fine art as collateral and develop “art funds” linked to the market value of certain artworks. The final elements cover lax scrutiny by enforcement authorities as well as the secrecy techniques typically on offer in offshore centers. Combining these elements in jurisdictions such as Luxembourg can make mobile and secret the vast wealth stored in fine art. I end the article by asking whether artworks linked to freeports and opaque financial products have become the contemporary version of the numbered Swiss bank account or the suitcase full of cash.
Highlights
It was a typical winter day for northwestern Europe
Amid the gusts and cold rain, I attempted to make my way from the Luxembourg City center to “Le Freeport”, a hyper-luxurious and securitized warehouse for fine art and other collectible assets that opened its 10-ton doors for business in September 2014
Unlike most trips within this tiny Grand Duchy, which one can do on foot or via public transport, my journey to the Luxembourg Freeport was long and circuitous and proceeded in an uncertain manner
Summary
It was a typical winter day for northwestern Europe. Amid the gusts and cold rain, I attempted to make my way from the Luxembourg City center to “Le Freeport”, a hyper-luxurious and securitized warehouse for fine art and other collectible assets that opened its 10-ton doors for business in September 2014. With regards to its security measures, the Luxembourg Freeport resembles a companion facility in Singapore, as both are owned by the Swiss art transporter and dealer Yves Bouvier. 62) notes that “iris scanners, magnetic locks, and a security system known as Cerberus guard the [facility]’s storerooms, whose contents are said to be insured for a hundred billion dollars”. On their trip to photograph Bouvier’s Singapore facility, Woods and Galimberti (2015) reveal the following: “One of the most secure places on Earth, the [Singapore] Freeport has biometric recognition, more than 200 security cameras, vibration detection technology, Nitrogen fire extinguishers and seven-ton doors”.
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