Part III · Structures · No. 09

Freeport storage

A bonded warehouse or free zone where art, wine, and collectibles sit in suspended customs status — not yet imported for VAT and duty purposes. Geneva pioneered the model; Luxembourg, Singapore, and Delaware followed in different forms; and the transparency reforms of the past decade have changed the regulatory environment around them.

What the structure is

A freeport (or free port) is a designated customs-bonded warehouse or free zone where goods are stored under customs supervision without payment of import duty or VAT until released into the local market. Goods may enter, be stored, change hands, and depart without entering the customs territory of the host jurisdiction for duty and import-VAT purposes. The mechanism is grounded in customs and trade law dating to the 19th century — the Geneva facility traces to 1888 — and its modern luxury-storage form developed at Geneva in the late 20th century.

Storage facilities offer climate-controlled vaults, on-site viewing rooms, conservation services, and customs-supervised transit. Principal facilities include the Ports Francs et Entrepôts de Genève SA (Geneva Freeport, majority-owned by the Canton of Geneva); the Luxembourg facility at Findel airport, opened in 2014 as "Le Freeport" and renamed the Luxembourg High Security Hub in 2021; Le Freeport in Singapore's Changi Airport free trade zone, opened in 2010 and sold by its founder in 2022 to a company controlled by Jihan Wu; and, in the United States, the Delaware Freeport in Newark, Delaware, which operates as a foreign-trade-zone site. Ownership and branding of private facilities change; verify the current operator before relying on any name.

The tax problem it addresses

• Import VAT and duty deferral. Goods stored in a freeport or customs warehouse are outside the local import-VAT and customs base while in bond (Swiss import VAT on art is the standard 8.1% rate; EU member-state import VAT on art is typically at a reduced rate). Sales of goods while in bond can, depending on local VAT rules, occur without an import-VAT event.
• Cross-jurisdictional transfer simplification. A work can move from one collector to another while remaining in the same freeport vault — no physical export, no import event in another jurisdiction.
• Cataloguing and inventory management. Stored holdings are professionally managed with insurance, conservation, and documentation. Useful for collections too large for residence storage.

Mechanics

Storage providers enter into a custody contract with the owner (or owner's entity). The goods are entered into customs-bonded status on arrival; the storage facility is responsible to customs for the goods' presence and movement. The owner has access to view, photograph, and inspect; physical removal triggers the import VAT and duty events of the destination jurisdiction.

Sale of bonded goods between two non-resident parties: the parties contract, the storage facility's records change beneficial ownership of the deposited goods, and the goods remain in bond. No VAT event occurs until release from bond.

The applicable statutes and authorities

• Switzerland: Federal Customs Act (Loi sur les douanes, LD) and Customs Ordinance (OD); Federal VAT Act (LTVA).
• EU: Union Customs Code (Regulation (EU) No 952/2013), Articles 240-249 (customs warehouses and free zones).
• Luxembourg: Customs and VAT regimes consistent with EU framework.
• Singapore: Free Trade Zones Act, Customs Act, and Goods and Services Tax Act.
• United States: 19 U.S.C. §1555 (bonded warehouses); 19 C.F.R. Part 19; Foreign Trade Zone Act of 1934 (19 U.S.C. §81a et seq.).

Substance and audit risk

The freeport itself is not a tax-planning device — it is a customs status that produces deferral of import-event taxes. The owner's own income, estate, and gift tax position with respect to stored holdings is unaffected by storage location. A U.S. person owning art stored in the Geneva Freeport still includes the art in his or her U.S. gross estate at death; storage location does not change inclusion.

Anti-money-laundering and transparency reforms have changed the diligence environment around freeports:

• Switzerland tightened its rules for free ports and open customs warehouses in amendments effective 1 January 2016: operators must keep inventories recording goods and the name and address of their owners (with fuller detail for "sensitive" goods such as art, wine, and vehicles), goods declared for export may be stored only for a limited period (six months, extendable), and operating licences became time-limited.
• The EU's 5th Anti-Money Laundering Directive (Directive (EU) 2018/843, transposition deadline 10 January 2020) made persons trading in works of art, and persons storing or trading works of art in free ports, "obliged entities" where transactions reach €10,000 or more. The 2024 EU AML package — Regulation (EU) 2024/1624, applying generally from 10 July 2027 — carries these obligations into a directly applicable regulation. (The so-called 6th Directive, 2018/1673, harmonizes the criminal offence of money laundering rather than extending customer-due-diligence duties.)
• The U.S. Anti-Money Laundering Act of 2020 added dealers in antiquities to the Bank Secrecy Act definition of financial institution and directed a Treasury study of the art market (published 2022); FinCEN rulemaking on antiquities dealers has not been finalized, and art dealers are not currently subject to a dedicated BSA program rule.

Policy scrutiny: the European Parliamentary Research Service's 2018 study, "Money laundering and tax evasion risks in free ports", identified freeport-related laundering and evasion risks; national investigations and litigation (including disputes over works held in Geneva) have periodically produced public reporting of holdings.

Cost and complexity

Storage fees vary widely by facility, space, and service level and are quoted privately; insurance, climate-control, handling, and access charges layer on top. Onboarding involves the facility's due-diligence (know-your-customer) process, customs documentation, and registration of the depositing person or entity.

Common combinations

• Freeport storage + foreign holding entity. Cayman or Luxembourg entity owns the works; freeport stores them. Layered for VAT, estate, and reporting purposes.
• Geneva freeport for European market access. Works held in Geneva pending sale; on release into the EU, import VAT is due in the member state of import, so the freeport defers rather than eliminates the tax.
• Singapore freeport for Asian market access. Works held in Singapore for sale to Asian collectors.
• Delaware storage for the U.S. market. Original works of art generally enter the United States duty-free (HTSUS heading 9701) and there is no federal VAT, so the U.S. draw is mainly state tax: Delaware has no state sales or use tax, so a buyer who takes delivery and stores the work there does not incur Delaware sales/use tax. Use tax may still be owed if the work is later brought into the buyer's home state.
• Charitable contribution from storage. A work can be transferred from storage to a museum donee; the §170 deduction rules (related use, qualified appraisal) apply as for any contribution of tangible personal property, and any import formalities fall due on release from bond.

Recent developments

EU obligations on art-market participants and free-port operators derive from the 5th AML Directive (transposed from 2020) and, from July 2027, the AML Regulation (EU) 2024/1624; beneficial-ownership transparency of entities using freeports is increasingly expected by operators and banks.

The Geneva Freeport's regulatory environment has been progressively tightened by Swiss federal authorities, most notably through the customs-warehouse amendments effective 1 January 2016; Swiss free ports also came under renewed pressure after 2022 to identify assets subject to sanctions.

In the United States, Delaware-based storage (including the Delaware Freeport in Newark) markets primarily the state's lack of sales and use tax and foreign-trade-zone handling for imports in transit; the AML overlay applies through U.S. dealer reporting (such as Form 8300) and customs supervision.

Reviewed October 2026