According to recent reports in several Swiss newspapers, including Catherine Boss/Marie Maurisse, ‘Auf den Spuren des Milliardärs’ in the SonntagsZeiting of 8th December and Simone Schmid, ‘Hotel Dolder im Visier der Fahnder’ in the Tagesanzeiger of 9th December, the Swiss Federal Customs Administration (FCA) has opened an investigation into the billionaire owner of one of Zurich’s most renowned luxury hotels and a well-known gallery for allegedly importing paintings without declaring them to customs.
The newspapers report that the gallery first arranged for the paintings to be brought into Swiss territory from an open customs warehouse and then to be transferred to the hotel owned by the billionaire. As far as art galleries in Switzerland are concerned, importing artworks is not subject to VAT; however, any subsequent sale to clients is (see art. 53 para. 1 lit. c Federal Act on Value Added Tax). The FCA is now investigating whether the paintings have de facto reached their final destination and thus triggered the VAT. Among the paintings, many are by famous artists such as Joan Miró, Andy Warhol, Salvador Dalí and Damien Hirst. With an estimated market value of 75 million Swiss Francs the VAT of 8% (see art. 55 para. 1 Federal Act on Value Added Tax) amounts to 6 million Swiss Francs. However, the owner of the hotel argues that he is merely putting the paintings on display in his hotel where they are up for sale.
Avoidance of VAT with regards to the import of art works to Switzerland has increased in the recent past. According to the FCA, on average 175 cases are investigated every year. The majority of these cases drag on for a long time whilst all legal remedies are exhausted, especially in those cases involving paintings of significant value. Most FCA investigations result in a fine – see Andreas Schmid, ‘Hunderte Bussen für illegalen Kunstimport’ in the Neue Zürcher Zeitung of 10th December.
The two suspects are presumed innocent until proven guilty.