09 April 2010

Art and cultural assets news - spring: free ports

Kenneth Mullen
Partner | UK

A free port is a tax-free zone where goods may be stored free of tax. There are free ports in the UK. However, they do not offer as many tax advantages or the high level of security as the well established free ports in Switzerland. A newly opened state-of-the-art free port in Singapore looks set to create competition for the Swiss free ports.

United Kingdom

In the UK, there are free ports (or zones) in Humberside, Liverpool, Prestwick, Sheerness, Southampton and Tilbury. In these designated areas, goods imported from outside the EU are not subject to import VAT and Customs duties until they are released out of the free port into the EU. There are no special reliefs from other taxes in free ports. Supplies of goods and services within the zone are subject to normal VAT rules.

The main advantage of using such a facility in the UK is the cash-flow benefi t for the potential seller, who does not have to pay import VAT and Customs duties on the goods until they are exported or released into free circulation.

Art market professionals generally rely on tax reliefs, such as temporary importation or bonded warehousing, rather than placing art in English free ports.


Swiss free ports have a long tradition. For years, they have hosted sophisticated fi ne art storage facilities. Billions of pounds' worth of art is stored there in high security warehouses. The main free ports are in Geneva, Zurich, Basel and Chiasso.

Until recently, free ports were deemed to be outside the Swiss customs territory. Swiss customs laws did not apply in the free ports, and goods stored there duty-free were treated by Swiss Customs as foreign goods.

Since the Swiss Customs Act 2005 came into force in 2009, free ports are within the Swiss customs territory, albeit subject to a specifi c customs regime. Goods stored in a free port do not go through Swiss Customs. Their dutyfree status is unaffected. They continue to be exempt from Swiss import VAT and Customs duties. Storage in a free port remains unlimited in time. Some on-site services are now subject to Swiss VAT (7.6%) but not storage fees or insurance premiums.

The Act has led to fears that confi dentiality in the free ports would be eroded. This is because storage facilities are now required to maintain a register of parties who lease storage space in the free ports, and of parties who store property there. A further obligation is to maintain an electronic inventory of specified types of property. Importantly, this information must be made available to Swiss Customs upon request.

Amongst the specified types of property feature paintings, works of art, antiques and collectible items. The list also includes jewellery, precious stones, precious metals and watches.

The information that must be recorded in the inventory is set out in the Swiss regulations implementing the Customs Act. It includes the identity of person(s) authorized to deal with the stored property, the estimated value of the property and the country it has come from.


Singapore has recently opened a high tech, high security free port. The Singapore FreePort Pte Ltd is the world's largest free port, and the first in Asia, that is dedicated to the storage of fine art and collectibles. The Singapore free port operates as a public private partnership. Shareholders include the Singapore National Arts Council, the Singapore National Heritage Board and Swiss private investors. The entire facility, based at Changi airport, with over 22,500 sq of storage space, offers clients a secure and confi dential environment to store and display art works without any duty or tax being levied until the goods leave the free trade zone. There is no obligation to keep inventories. The nature of the goods, their value and the identity of the owner can remain confidential.

Category: Article

Focus areas