Free ports are warehouses where the 0.01 percent stash their collections of "art, antiquities, wine, gold, jewels, and other priceless artifacts and never pay tax on them," says Wyatt Cavalier in his newsletter, The WC. One warehouse in Geneva holds more than $10 billion in art, never to be seen by the owners, who would rather avoid paying taxes on their Velazquez than look at it. Similar dragon hoards are in Luxembourg, Monaco, Singapore, Zurich, Beijing, and Delaware.
They exist outside the formal jurisdiction of any country; the clients remain anonymous and the assets are kept a secret.
And though you may have never heard of free ports, they're a big deal in the art world:
- 28% of artists and collectors have used a free port;
- 42% of dealers and brokers say their clients use them.
Why use a free port?
If you buy a $10m painting from a dealer in France and want to bring it to the US (or anywhere else, really), you'll have to pay import duties as high as $2m – $3m. Storing it in a free port gets around this. For around $1,000 per month, you'll never pay those import taxes on your van Gogh.
Moreover, when it comes time to sell your piece, you can skip sales tax via the free port's informal economy. The crate moves from your unit to the buyer's unit, and the money moves from her Swiss bank account to yours.