Recently I had the pleasure of advising an art collector in New York about fine art storage solutions and I realised how much knowledge of the art world I take for granted every day. Therefore, here below I answered the most frequently asked questions about fine art storages and Freeports. I hope you'll find it useful.
Table of Contents
NORMAL STORAGE VS. FINE ART STORAGE
With the term "normal storage" I refer to any room, which can store objects. This can be a self-storage unit in the city, a storage unit rented from a relocation company, a garage unit or your attic.
The primary difference between a normal storage and a fine art storage is its climate. In fact, a normal storage is usually heated, but provides no control over its humidity level, which will vary with the changing seasons and weather. On the other hand, a fine art storage will always come with a climate control system to keep both temperature and humidity on a constant level at all times (usually, ca. 21°C and 50% relative humidity).
Some fine art storage providers may offer you the choice between renting a heated room or a climate controlled room. Though slightly more expensive, always opt for a climate controlled storage room for your art collection, as it will help better preserve your artworks in the long term.
An additional difference can be found in the security measures. Artworks can be worth millions of dollars, therefore discretion and security are the alpha and omega of any fine art storage facility. Besides the standard security measures, such as CCTV cameras, alarms against burglars and smoke detectors, clients are usually requested to verify their identity upon entering a fine art storage, for example by showing their identity card or passport. If a client or an art consultant is accessing a third-party's collection, as it may happen in view of a sale, they will be accompanied by a storage supervisor at all times.
Upon request, high-value artworks can also be protected by passwords. This means that the client, who wishes to access this specific work, will need to not only prove his/her identity and make an appointment, but also provide the correct password upon checking into the storage facility. Finally, fine art storages often offer vaults, which can be as protected as a bank.
Fine art storages can be privately owned or managed by collectors, museums and galleries. Or, as it usually happens, they can be provided and organised by fine art shipping companies around the world. In this case, I'd like to mention a last difference: the in-house customer service.
Actually, fine art shipping companies will have an experienced team of art handlers on-site, who can professionally assist you with packing, unpacking, installing and storing your works. Next to fine art storage solutions, they can offer viewing rooms, should an art consultant or a conservator need to see the artefact. If the work needs to be shipped, they can help with it too. Having all these different services under one roof can be a huge advantage.
CONCIERGE STORAGE VS. PRIVATE STORAGE
A private fine art storage unit consists of a climate controlled room, locked with a door, in which the artworks belonging to a single collector are exclusively stored. The collector pays a fixed monthly fee for the storage unit, independently from the number of works stored in it. This is particularly appreciated by collectors, who value privacy and anonymity above all.
A concierge storage (sometimes also called "group storage" or similar) consists of a large hall, where the artworks belonging to several different collectors are stored together. In a concierge storage clients pay per square meter occupied. Though the storage providers will do their best to guarantee privacy, they cannot guarantee that a client accessing his artworks in the concierge storage won't be able to read the labels on someone else's crates.
WHAT SHALL I CONSIDER BEFORE CHOOSING A FINE ART FACILITY?
a) Storage provider vs. your own property storage
First of all, you need to decide whether to opt for an external storage provider, such as a fine art shipping company, or create your very own fine art storage in a property building. The latter may save rent costs in the long term. However, it comes with its very own set of challenges, such as the introduction of the adequate infrastructure, climate control system, security measures, personnel, etc.
For the sake of this article, let us assume that you opted for an external storage provider.
b) Active vs. passive art collection
Now think about your art collection. Is it very active? Do you move your artworks in and out of storage frequently, e.g. for exhibiting, selling or conservation purposes? Do you or your clients need to have access to the artworks in storage on a regular basis?
In this case, a fine art storage facility located in a well-connected area, such as the city centre, may be the best solution for you. These storage facilities offer shuttle services within the city on a daily basis, which can be very convenient. Because of their central location, the rent fees here are usually more expensive than those located in the countryside, but the advantages are worth the price.
Is your collection rather passive? Are you just looking for a suitable long-term storage for your works? Then a professional fine art storage facility located outside the city would be the most cost-effective solution. Storage providers on the countryside usually have weekly shuttles to the city or the nearest airport (or even more often during busy times), so don't worry. Should you need to relocate a couple of artworks at some point, you will not be left alone dealing with it.
c) Location
Storing your collection in your home town is not always the most effective solution. Think about WHERE your artworks are more active. Perhaps you live in Europe, but most of your art sales take place in New York. Or you live in Zurich, but you decided to loan exclusively to museums in London. Whatever the reason, it makes sense to consider storing your collection in the place where it is the most active in order to save money on international shipments.
d) Services
Particularly if your collection is very active, verify that the storage provider can help you with a bright spectrum of services by asking as many questions as possible:
- Is the storage provider going to compile a detailed storage report for you on a monthly / quarterly basis? Does it offer this service for free?
- Are you going to receive a personal login account to download your storage reports at your convenience?
- Do they have a license to collect artworks from the local airport on your behalf or will they need to collaborate with a partner company for that?
- Do they have their own fine art trucks?
- Do they have daily / weekly shuttles to the nearest cities?
- Do they have their own in-house carpentry or do they collaborate with external companies to produce shipping crates?
- How many viewing rooms do they have? What are their floor plans, dimensions and lightning conditions? What are the opening hours for visitors? What are their rent fees?
WHAT'S A FREEPORT AND HOW DOES IT WORK?
A Freeport is a special customs status that allows artworks to be stored at a customs-approved location without having to pay import taxes. Such location is usually a fine art warehouse, managed and operated by a renowned and certified shipping company, who acts on behalf of the local Customs officers. Generally, we talk of a "Freeport warehouse" or simply "Freeport".
For obvious reasons, Freeports are subjected to very strict regulations. Customs officers have the right to inspect them and request detailed inventory lists at any time. Artworks stored in Freeport are not permitted to leave the warehouse under any circumstances, not even for a couple of hours. They can be restored, viewed, photographed and sold within the Freeport warehouse. However, if you wish to relocate the work (e.g. to your local framer or home), you will need to import it first, either temporarily or definitively.
Artworks can be stored in Freeport for unlimited time. Their monthly storage rent fees are the same as for imported artworks. There are no special / cheaper / more expensive rent fees for works in Freeport. The only difference is their customs status and consequent freedom within the country: an imported work can leave the warehouse at any time, while an artwork in Freeport must remain within the Freeport facility. To import an artwork one must pay VAT (7.7% in Switzerland, as of July 2023), while no taxes are due to keep an artwork in Freeport.
Today there are only a few Freeport warehouses in the world: precisely, in Switzerland (Geneva, Zurich, Chiasso), Luxembourg, Singapore and Hong Kong. Nevertheless, many large cities offer similar solutions for temporary tax suspension.
Example:
During Art Basel in Basel I purchased a painting for CHF 3,000,000. I'm unsure whether I want to hang it in my house in Zurich or install it in my holiday house in Italy. I would like to think about it, but the gallery needs me to collect the painting ASAP. What do I do?
Delivering to my house in Zurich would require me to import the work and pay 7.7% VAT. If I change my mind later on, I'll also need to pay for additional shipping to Italy and 22% Italian import tax on top of that.
Until I make up my mind, the best solution would be to store the painting in one of the Freeport facilities in Switzerland. As long as the artwork stays there, I will not need to pay any import taxes.
FREEPORT VS. CUSTOMS BONDED WAREHOUSE
Nowadays almost any large city in the world can offer storage facilities with some sort of tax suspension for artworks and other dutiable goods. These are often promoted as Freeports, though in many cases they are not. Usually, they are Customs Bonded Warehouses or storage facilities with great branding.
A Bond is a customs procedure. As long as an artwork remains in Bond, its owner does not need to pay any import taxes on it. Normally, artworks in Bond are tied to and stored in designated warehouses, called Customs Bonded Warehouses (or simply Bonded Warehouses). Bonded artworks cannot leave their Bonded Warehouse until they change customs procedure and/or import duties are paid.
Compared to Freeports, Customs Bonded Warehouses operate under a different set of rules, which varies from country to country. For example, artworks can be stored in a Bonded Warehouse in London for no more than 5 years. During their time in Bond they can neither be sold nor restored. This is not the case for artworks stored in traditional Freeports in Switzerland, Luxembourg or Hong Kong.
Fritz Dietl's "Freeport" in Delaware (USA) provides another interesting case study. Importing original artworks in the USA is generally duty-free, though subject to sales and use tax (8.875% in New York City). Delaware is one of only five States in the USA without statewide sales or use tax. For this reason, in recent years it has become a very attractive tax-heaven for collectors. In 2015 Fritz Dietl opened his highly publicised Delaware Freeport there, a modern fine art storage facility, where sales tax and import duties are suspended for works coming from abroad.
Now, don't get me wrong - I'm not commenting on the quality of services at the Delaware Freeport (which I believe to be really good by the way, though I haven't used this facility in a few years now). However, is the Delaware facility a Freeport in the global sense? In this case the tax suspension is not an exclusive characteristic of Fritz Dietl's warehouse: the entire State of Delaware comes without sales or use tax!
Additionally, according to the New Yorker tax and delivery rules, artworks sent from New York to Delaware can benefit from tax suspension, if and only if the buyer does not arrange and directly pay for the shipment. This means that collectors can benefit from the tax suspension in Delaware only if the shipment is arranged by the seller.
Just to be clear: traditional Freeports are tax-free, no matter who organises the shipment or where the artwork comes from.
HOW CAN I STORE MY ARTWORKS IN FREEPORT?
Should the local authority or Customs Officers come to the Freeport facility for an inspection, the Freeport provider must be able to answer questions about your identity and artworks in storage.
Therefore, before accepting your art collection into storage, the Freeport provider will kindly request you to submit a copy of your passport to prove your identity, as well as a detailed description of your valuables coming to storage. Such description is usually provided in the form of a proforma invoice and shall include the artist's name, full captions of the artworks and their value. Some providers may request an image of the work(s) as well. In case of artworks with a sensitive history, such as archeological artefacts found in war zones, they may also ask you additional information about the legal ownership and provenance.
The same applies for artworks belonging to a company, foundation or trust. In this case, the Freeport provider will require proof of the existence of such structures, as well as a copy of the passport of the CEO or beneficiary person.
Fine art storages and Freeports are a complex art of their own. There is so much to say about them! But hopefully this post helped you better understand how they work. Should you have any more questions, please don't hesitate to contact me any time.