Tax avoidance of the superrich – How freeports are used… — Transcript

And so, ladies and gentlemen, we moved to the Leonardo da Vinci, the Salvatore Mundi, the masterpiece by Leonardo of Christ the Savior, previously in the collections of three kings of England. The world has become a very dangerous place, and that's where I think the art market fits in because the art market is seen as another safe haven. 352 million, it's bid 352 million dollars. It is the bid, and the piece is sold in there. Foreign.

the art markets fits in because the Arts Market is seen as another Safe Haven 352 million it's bit 352 million dollars is the bid and the piece is sold in there foreign [Music] [Music] towards understanding the role of

[Music] [Music] Towards understanding the role of customs warehouses for art and valuable objects starts in New York at the world's most important art market. Around 25 billion dollars worth of art is traded annually. Austrian-born Fritz Dietl experienced how the boom on Wall Street spilled over into art and expensive collectibles. We here in New York were the years, and um, is an art forwarder. His company transports priceless paintings to auctions and galleries in custom-made crates. He has even transported the Salvatore Mundi. He says in recent years he's been delivering ever more artworks not to museums but to extremely secure warehouses known as freeports. Is the world's most precious painting the Salvatore Mundi, created in Da Vinci's workshop around the year 1500?

into art and expensive Collectibles we here in New York were the years and um is an art forwarder his company transports Priceless paintings to auctions and galleries in custom-made crates he has even transported to Salvatore Mundi he says

Since its sale at Christie's in New York in 2017, it has disappeared from the public eye. Other works of art vanish too. For his exhibitions, Austrian curator Alfred Weidinger frequently asks for paintings on loan, but often he can't get them because they've been stored in freeports. This is the weekly foreigner believes has profound consequences. Foreign Swiss lawyer and art market expert Monica Rota sees other motives for collectors to put their paintings in storage: escape to next the INE shop inside.

since its sale at Christie's in New York in 2017 it has disappeared from the public eye other works of art vanish too for his exhibitions Austrian curator Alfred weidinger frequently asks for paintings on loan but often he can't get

[Music] Geneva ranks among Europe's most important financial centers, and it is home to a facility where high-priced collectors' items, art, and taxes intersect or indeed don't. The so-called Freeport of Geneva is a customs warehouse. The Salvatore Mundi, the most expensive painting in the world to date, is also said to have been kept here for years. What are they like, these places that shelter such treasures inside their walls? House Festival is the Geneva Freeport, located on Swiss soil and is majority owned by the canton.

um [Music] Geneva ranks among Europe's most important Financial Centers and it is home to a facility where high-priced collectors items art and taxes intersect or indeed don't the so-called Freeport of Geneva is a customs Warehouse the Salvatore Mundi the most expensive

While goods are stored here, the country does not levy any sales tax or customs duties. Items from all over the world can be brought here directly from the airport. What is the purpose of this place? Why does Switzerland offer warehouses for expensive objects under a suspended tax regime? Jaime Pagani was a member of the Geneva city government until 2020.

while goods are stored here the country does not Levy any sales tax or customs duties items from all over the world can be brought here directly from the airport what is the purpose of this place why does Switzerland offer warehouses

For a long time, he tells us, primarily Swiss banks had attracted foreign assets, but things changed in 2017, he thinks, when the country started to pass on information to tax authorities of other countries. His suspicion arose after he became a member of the Geneva city government in 2007 and later became city president. Could customs warehouses like the Geneva Freeport serve as havens for secret assets, as Pagani believes? We ask for permission to film but deferred till later.

for a long time he tells us primarily Swiss banks had attracted foreign assets but things changed in 2017 he thinks when the country started to pass on information to tax authorities of other countries is his suspicion arose after he became a

But perhaps the design of the buildings could offer clues to their purpose. The Geneva-based architects 3BM3 first designed an annex to the local Freeport before planning a number of freeports abroad. [Music] In 2010, Benedict Montong and Carmelo Standardo oversaw the completion of their first freeport for art and precious goods. [Music] [Music] The barrier exterior. The architects show us both sides of their freeport: the imposing foyer and the heavily secured storage rooms. Here, security fortifications and cool aesthetics merge into a new type of building, a secure vault to house highly precious objects, financed by an art forwarder from Geneva.

but perhaps the design of the buildings could offer Clues to their purpose The geneva-based Architects 3bm 3 first designed an Annex to the local Freeport before planning a number of freeports abroad [Music] s is in 2010 Benedict montong and Carmelo

At Luxembourg airport, right next to the runway, lies the second freeport the architects built for Eve Bouvier. Foreign. For an interview with Eve Bouvier, a filming permit remains unanswered, but we come across archival footage from the grand opening in the autumn of 2014. The orchestra plays an anthem composed especially for the occasion. The opening of a warehouse staged as a society event. Foreign. [Applause] Also does the honors as a developer. He harbors big plans for freeports' objectives. [Music] Foreign.

into a new type of building a Secure Vault to house highly precious objects financed by an art forwarder from genevaulations at Luxembourg airport right next to the runway lies the second Freeport The Architects built for Eve Bouvier foreign

The entrepreneur has created something new: high-security warehouses but with an exquisite design addressing a wealthy clientele. But Bouvier also pursues other ambitions. He also doubles as a successful art dealer himself with excellent connections. In 2013, he sold the Salvatore Mundi for some 127 million dollars, the very work that would later sell as the world's most expensive artwork at Christie's. Bouvier doesn't want dull logistics warehouses. He envisions his freeports as a network of glamorous treasure vaults. The media report Uber warehouses for the ultra-rich. The Economist calls them BBC speculates Geneva may hold the most important art collection that no one can see.

the orchestra plays an Anthem composed especially for the occasion the opening of a Wares staged as a society event foreign [Applause] also does the honors as a developer he Harbors big plans for freeports objectives [Music] foreign the entrepreneur has created something

But with the freeport's success, questions arise. Politics starts taking notice. Following the Panama Papers, the EU Parliament creates a committee to investigate covert flows of capital. Freeports are also put on the agenda. Evelyn Regner, delegate of the Austrian Social Democrats in the European Parliament, joins the investigations. Their questions earn the delegates an invitation to the Luxembourg Freeport in February 2018.

the very work that would later sell as the world's most expensive artwork at Christie's Bouvier doesn't want dull Logistics warehouses he envisions his freeports as a network of glamorous treasure vaults the media report Uber warehouses for the ultra-rich The

[Music] Yankees, uh, the liberal politician Wolf Klinz lives in Berlin. Two was on the investigative committee is foreign. Believes the weakening of banking secrecy is an incentive for countries to allow customs warehouses on their territory. Foreign. Since 2017, this so-called automatic information exchange has been in place. It makes hiding money in bank accounts more difficult. Investments in art and valuable collectibles, on the other hand, are increasing, and these things need to be stored. This is and Kevin Horton. But not all storage for valuables enjoys suspended customs.

investigate covert flows of capital freeports are also put on the agenda Evelyn Regner delegate of the Austrian social Democrats in the European Parliament joins the investigations their questions earn the delegates an invitation to the Luxembourg Freeport in February 2018.

Art forwarding firm Constance in Vienna offers 35,000 square meters of high-security storage for most items. Here, sales tax has been levied as usual. Company director Birgit Vikas is seeing strong demand and is planning additional warehouses. Is foreign. In most EU countries, private companies can obtain a license to operate a customs warehouse. In Austria too, fast. Um. [Music] However, Vikas believes her clients would not be able to avoid taxes in the long run with these valuables.

information exchange has been in place it makes hiding money in bank accounts more difficult investments in art and valuable collectibles on the other hand are increasing and these things need to be stored this is and Kevin Horton but not all storage for valuables enjoys

It is taking a sculpture worth a million euros from abroad to Austria would typically cost a collector 130,000 euros in value-added tax. By storing it in a customs warehouse, these duties can be suspended until it leaves storage. But do all objects eventually leave? What is the combined value of all those objects stored under a suspended tax regime? Birgit Vikas does not want to comment on this. In Germany too, new art storage facilities have sprung up in recent years. Liberal politician Wolf Klinz resigned from the EU Parliament in 2019. The topic of customs warehouses still preoccupies him. He is taking interest in a facility in Thuringia, some 350 kilometers from Berlin.

warehouses is foreign in most EU countries private companies can obtain a license to operate a customs Warehouse in Austria too fast um [Music] however vikas believes her clients would not be able to avoid taxes in the long run with these valuables

Yeah, we're fine in this. Foreign had a currency depository built at the end of the 1990s. Today it houses art under the name Central Depot. Owner Nicholas Perrin has agreed to show Wolf Klinz and us around. As an architect, he was involved in its construction. [Music] Explosions. When the state withdrew, it sold the building along with its fancy furnishings. Foreign. Just about 400 of the 4,000 square meters of space enjoy a suspended customs regime there. We cannot film. Instead, Perrin shows us an unoccupied storage room. Um. Foreign.

eventually leave what is the combined value of all those objects stored under a suspended tax regime beer get vikas does not want to comment on this in Germany too new art storage facilities have sprung up in recent years liberal

And his partner paid just 3.5 million euros for the building on this game. Yeah. Foreign artists. [Music] One point raises questions. [Music] Foreign. [Music] [Music] His name. Yeah, customs warehouses were once strictly transit zones. Today, valuables can reside here permanently. Perrin understands how that raises questions. Harbor. Foreign. Germany too, private operators can obtain a license for a customs warehouse. Perrin sa.

end of the 1990s today it houses art under the name Central Depot owner Nicholas Perrin has agreed to show wolf clinch and us around as an architect he was involved in its construction [Music] explosions when the state withdrew it sold the

building along with its fancy furnishings foreign just about 400 of the 4 000 square meters of space enjoy a suspended Customs regime there we cannot film instead paren shows us an unoccupied storage room um foreign and his partner paid just 3.5 million

euros for the building on this game yeah foreign artists [Music] one point raises questions [Music] foreign [Music] [Music] his name yeah Customs warehouses were once strictly Transit zones today valuables can reside here permanently perren understands how that raises questions

Harbor foreign Germany too private operators can obtain a license for a customs Warehouse paren says his clients rely on suspended Customs mostly when having artworks restored in Germany or if clints considers that plausible but could there be anything else fueling

the demand for suspended custom storage from his office in Manhattan a short distance from the major auction houses art Forder for its detail has long observed the increasing importance of freeports awesome language foreign value-added tax is generally not imposed

this creates an attractive environment for investing in art many an investor in on this is but detail stresses as soon as the objects leave the warehouse all taxes are due what then makes Customs warehouses appealing we get a message from Geneva

Freeport has a new executive director and Claire Bish grants us an interview foreign for security reasons we are not allowed to film any storage rooms or hallways [Music] instead Bish introduces us to various service providers within the Freeport

including art conservator Andrea Hoffman for services within the duty-free Zone sales tax is not due until the property leaves the Freeport is um [Music] the director emphasizes the freeport's role primarily to preserve and protect important works of art

to her the often voiced accusation freeports could facilitate tax avoidance schemes stems from a misconception is foreign same in movies directions so will all taxes ultimately be due after all the Channel Island of Jersey is often called a tax Haven tens of thousands of

offshore companies are said to be registered here John Christensen is a native of the island and once served as economic advisor to the government changed sides and founded the tax Justice Network which aims to shut down tax Havens

the financial secrecy index is basically a way of ranking the way in which countries enable their clients ultra high net wealth individuals and high net wealth individuals to hide wealth offshore clearly freeports are being used as an important part of

offshore wealth management clearly a lot of wealth is being shifted to freeports and clearly it belongs in any index which tries to to understand the ways in which countries like Luxembourg or Singapore or Switzerland are deliberately and knowingly creating this offshore space

where very wealthy people can hide their wealth for Christiansen it's obvious how the freeports are being used for sure on paper all taxes would ultimately be due but to attract the money of the super rich many states would deliberately

leave loopholes Christensen shows us how he believes the system works so look here we have a very wealthy person actually lives in Europe but wants to buy a work about here it is this is a a world painting which is

being bought at auction in New York after 50 million euros in practice the the work of art won't actually go to Paris it's going to be put into a Freeport facility in Luxembourg so it's going to fly straight from New York into

Luxembourg airport so there it is but actually this person doesn't want to disclose at all that it belongs to them so she's going to put it through a company which is registered in the British Virgin Islands and there it is

it sits between the work of art itself and the ultimate beneficial owner and as a further Safeguard the company shares don't actually belong to this person that they belong to this trust and this trust has been established with trustees

lawyers in Jersey and there's no information at all about who owns that trust so what's happened here is you set up a vehicle for avoiding tax there's no wealth taxes imposed on this there's no capital gains tax imposed on this

there's no value-added tax no import tariffs no inheritance taxes whatsoever in other words this is a totally tax-free structure and even better the work of art will my double in value and there'll be no tax at all imposed upon it at any

stage Christensen raises serious accusations against freeports and the countries that host them he says he is familiar with constructs involving shell companies from his time on the island but are they really used in connection with freeports we get in touch with an Insider who used

to work for one of the companies held by Freeport founder Eve Bouvier eventually he agrees to an interview um foreign [Music] shortly after the opening of his Singapore Freeport Bouvier invited staff from other business units there I'm wrong

um crazy one kind of the safe boxing month for your coil and North Carolina the Freeport is located directly at Singapore Airport gold and diamonds could be brought here directly from the tarmac even anonymously um let's end this understands polish custom

films Sunrise Limited in British Virgin Islands is foreign could the freeports be harboring assets without knowing their true owners because they're held through shell companies [Music] um are there any cases at all in which such constructs have become public

John Christensen monitor secret Financial dealings around the world while we are filming he discovers a new lead from the USA Shady Financial transactions continue to come to light as a result of the Panama papers a report that's just come out from the

U.S Senate the subcommittee on investigations and they're talking about Uh Russian oligarchs using the Art Market to hold wealth and launder money and they're referring in particular to one family Arcadia Rottenberg who apparently was holding value blood Works in Germany

the U.S report does not address tax evasion but rather the circumvention of political sanctions but the mechanics are allegedly the same the documents give my new details of how confidence of Russia's President Putin used offshore companies to covertly

trade high-value paintings to move funds a customs Warehouse in Germany was serving as a hub Boris and Arcadia Rottenberg had moved millions in this way all this while they were sanctioned not to conduct business in the West in the

wake of Russia's annexation of Crimea in Germany Christoph trout Fetter collaborates with John Christensen he also knows how rarely it's possible to uncover such deals foreign life and I'm concrete and file as is I'm problem as is where the artworks of the sanctioned

Russian oligarchs were stored in freshen near cologne in the warehouses of hazenkamp Germany's largest art forwarding company with multiple sites across Europe not until the investigations from the USA did this come to light what else is stored here

owner and managing director Hans evad Schneider agrees to an interview and this is [Music] in 2019 the agent of the Russian oligarchs shell companies ordered the paintings to be transported to Moscow um Kamp even have known who really owned

the paintings would he have been obliged to know foreign in total the paintings were worth over 18 million dollars their present whereabouts remain unknown no further investigations into the case have been carried out in Germany Swiss Financial legal expert Monica rot

believes States need to take a closer look it is a foreign what is the legal situation in Germany do authorities identify the owners of assets stored in customs warehouses Fabio demasi co-chairs the left-wing party at the German Parliament

he has submitted a question to the Ministry of Finance because he fears a tax loophole then uh the response from the Ministry of Finance confirms his concerns losses [Music] the ministry concedes in Germany it is perfectly legal to store valuables in

the name of shell companies for an indefinite period of time in 2020 alone art and valuables worth more than 900 million euros were newly put into suspended custom storage in Germany how much of this is tax avoidance by International standards the sum seems

small today even a single work by an important artist can gross hundreds of Millions how many such works are stored in Geneva Jaime Pagani follows his suspicion that freeports are used systematically to avoid taxes he believes Freeport entrepreneur Eve Bouvier himself might

have acted in this way during deals with a Russian billionaire is in 2003 Bouvier started his transactions with Dimitri ribolovlev he sold him paintings for a total of almost 2 billion dollars is the fiscalmo so are there as Pagani believes regular

art sales taking place inside the Freeport of which the world and particularly tax authorities know nothing the existence of dedicated sales rooms within the facility is readily confirmed by director bish op yeah solution [Music] this is we find another lead on transactions

within the freeports among the 38 paintings that Eve Bouvier is said to have sold to Dimitri iribalovlev one work stands out alongside the famous Salvatore Mundi water serpents too by Gustav Klimt the sale price in 2013. over 183 million dollars

50 million more than even the Salvatore itself back then Museum manager Alfred weidinger is a leading expert on the works of the Austrian painter um it's perfect this is he is familiar with the sales of paintings in customs warehouses because

foreign worth many millions change hands buyers want to be absolutely certain each time an appraiser is called in to confirm the authenticity [Music] is foreign [Music] Warehouse [Music] initially riding was surprised it just changed hands but they never

seem to leave the Customs Warehouse difference normally no information about such sales becomes public but in this case the business partners became locked in a high-profile legal battle over the prices paid according to reports Bouvier now lives in Singapore he did not respond to an

interview request Remy Pagani is primarily concerned with whether Bouvier and his geneva-based company natural locultra filed taxes on their profits universe according to Swiss media the Geneva tax authorities are now investigating a tax debt of 330 million Swiss Francs because

of tax confidentiality authorities will not disclose any details says Pagani but he still wants to know more about the case Savannah Nicola we um performance [Music] okay foreign in Austria a friend of MEP Evelyn Regner has filed formal questions about Customs

warehouses the government was to answer whether offshore structures with Customs warehouses are legally possible in Austria uh this is [Music] [Music] regarding the requested value of the items in Austrian Customs warehouses the ministry remains silent freeports discrete Customs warehouses

for Treasures like art and gold classic cars or wine a system for tax avoidance and confidential deals critics say legal loopholes could be used to conceal true ownership and many states have been hesitant to regulate we've seen a shift towards a world in

which politicians think it's their job to attract investment by making huge concessions regulatory concessions and tax concessions will let you bring your stuff here your money your wealth will manage your wealth here and we'll keep it secret why do

politicians have such a hard time closing such loopholes yeah the induction is [Music] foreign had not been answered by the time our filming was completed John Christensen fears that brexit will further strengthen the move towards Customs warehouses the European Union's been talking about

getting rid of freeports for a very long time it still has major Freeport facilities and now the British government's talking about massively expanding Freeport facilities this expansion will make it much easier for very high wet net worth individuals for

oligarchs and plutocrats to hide their money offshore and to continue to avoid and evade paying taxes and the boom continues in 2020 a new art Warehouse opened at Le Bossier airport in Paris by shanu an art logistics company that

has taken over the business of Freeport entrepreneur Eve Bouvier in Geneva as to whether this was a customs warehouse and whether Anonymous storage via offshore companies is possible here the company did not answer [Music] foreign [Music]