Headline June 03, 2016/ ''' THE ULTRA RICH'S BAZAAR '''


FREEPORTS ARE SOMETHING of a fiscal no-man's land. The  ''free'' refers to the suspension of custom duties and taxes. This benefit may have been originally intended as temporary, while goods were in transit-

But for much of the stored wealth it is, in effect, permanent as there is no time limit: a painting can be flown in from another country and stored for decades without attracting a levy.

Better still, sales of goods in freeports  generally incur no value-added or capital-gains taxes. These are (technically payable in the destination country when an item leaves this parallel fiscal universe, but by then it may have changed hands several times. 

*SWISS DATA SAFE*   -which sells storage for valuables and digital archives at several undisclosed sites deep in the Gotthard granite. It claims :
To offer protection from  ''the forces of nature'', civil unrest, disasters and terrorist attacks''. such places have a low risk of fire or being hit by a plane. But they cannot offer the tax advantages that freeports can.

On the other hand, gold storage is part of Singapore's strategy to become the Switzerland of the East.  The city-state's moneymen want to take its share of global gold storage and trading to  10 -15% within a decade, from 2% in 2012.

To spur this growth, it has removed a 7% sales tax on precious metals [One highly respected magazine understood that the Luxembourg freeport's gold-storage ambitions will get a fillip the Grand Duchy's central bank, which at the time planned to to move its reserves -sitting at the Bank of England  -to the facility once it opens. The bank declined to comment].

*Switzerland remains the world's leading gold repository*. Its import of yellow metal have exceeded imports by some  13,000 tonnes  -worth $560 billion at that time's price- since the late 1960s, says the customs agency 

The gap has widened sharply since  the mid-2000s. But trade statistics do not tell the whole story, since they fail to capture the quantities of gold that go straight from runways to freeports.

Wealth piled up in freeports is a headache for insurers. the main building in Geneva holds art worth perhaps $100 billion. 
The Nahmad art-dealing dynasty alone is said to have dozens of Picassos there. More art is stored in Geneva than insurers are comfortable covering, says Robert Read of Hiscox, an art insurer. Coverage for new items is hard to come by at any price.

Insurers fear fire most, followed by a heist or a plane crash. They fret that they may not have a clear picture of their exposure at any given site, because some clients may have moved collections into freeports without informing them.
[Art is generally insured on a global basis, meaning it is covered wherever it is].

This has raised fears that insurers could struggle to pay claims of some catastrophe struck. 
AXA Art, another insurer, has started asking clients to tell it when they are moving costly works into storage so that it can get a better idea of how exposed it is, says the firm's boss Ulrich Guntram.

It is no help that freeports have habitually been loth to divulge even basic security information, for fear that their clients  {obsessed with secrecy as they are} would object. In Geneva, for instance, insurers were long left to guess at the number of storage areas in the structure and the fire-resistance of the walls separating them -factors that greatly affect potential losses.

The Swiss have become more a bit more co-operatives in recent years in response to the greater openness of newer freeports, says Mr Gutram. 

In a bid to soothe worries about concentrated storage, the private firm that operates Geneva's freeport [which leases it from the majority owner, the local canton] is building a new warehouse a short distance from its existing structures. Most of the art is now stored in vaults under main building.

These were built in the 1970s as a way for banks to avoid a planned tax on gold held in their own vaults. The levy was repealed, the banks took back their gold, and paintings and sculpture soon began to fill the void.

Luxembourg's freeport, which opened some time later, conducted a roadshow for the insurers that highlighted the facility's state-of-the-art safety features, including fire-fighting systems that suck oxygen from the air while releasing inert gases instead of water, so as not to damage the art.

Insurance is cheaper for those willing to park their assets in remote places. Switzerland is dotted with disused military bunkers, blasted into the Alpine rock during the second world war and cold war.

The government has been selling these, and some have been bought by firms hoping to convert them into high altitude treasure chests. 

Freeport representatives, attend art fairs, hoping to attract clients by promoting these benefits. Alan Vandeborre, who has set up freeports in Asia, has estimated that the  tax exemption  for users of the one in Beijing will amount to an average saving of 34%.

Even better, this is all legal  -though some countries have had to alter their statute books to accommodate the concept. Luxembourg amended the its laws in 2011 to codify its freeport's tax perks. That, plus the offer of land by the airport, helped persuade the project's backers to put it there rather than in London or Amsterdam.

Luxembourg's government views the freeport as a useful adjunct to its burgeoning financial centre, which has been built on tax friendliness.

Deloitte, which helps firms and rich individuals minimise taxes, brokered the deal. Mr Arendt believes that freeport could help Luxembourg compete with London and New York in art finance, which includes structuring loans with paintings as collateral.

The Honour and Serving of the ''Operational Research on Life and Living'' continues. Thank Ya all for reading and sharing forward. 

With respectful dedication to the Students, Professors and Teachers of the World. See Ya all on !WOW!  -the World Students Society and !E-WOW! the Ecosystem 2011:

''' Hoarding Hordes '''

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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