Customs Warehouses in Switzerland: An Introduction

Posted on: May 4, 2015 by

A recent art fraud scandal has put Mr Yves Bouvier into the media spotlight. Mr Bouvier, also known as the ‘Freeport King’, oversees freeport operations in Geneva, Luxembourg, and Singapore. He is the largest private shareholder of Ports Francs & Entreports de Geneve SA, the company running the freeport in Geneva. (The majority shareholder is the Canton of Geneva with 86% of the shares.) Mr Bouvier is also the majority shareholder and president of the art storage, shipping, and servicing company Natural Le Coultre SA, which is the major tenant of the Geneva Freeport, renting warehouse space of over 20,000 sqm.

The Geneva freeport has specialised in art and other valuables. Besides storage facilities, a whole ecosystem around art has emerged, including show rooms, restoration experts, frame makers, and art authentication laboratories. Switzerland has a long tradition in customs warehouses, going back as far as 1888 when the Geneva freeport was founded.

There are two types of customs warehouses in Switzerland: duty-free warehouses (so-called ‘freeports’) and open customs warehouses. Both are part of the Swiss customs territory (freeports only since the revision of the Federal Customs Act ‘CustA’ in 2007) and are supervised by the Swiss Customs Administration.

Freeports (arts 62-66 CustA) are privately run warehouses, in which goods can be stored without triggering the payment of customs duty and VAT (see art. 62 para. 3 CustA and art. 23 para. 2 ciph. 3 Federal Value Added Tax Act ‘VatA’). Only when goods are imported into the country are they subject to these duties. In addition, the sale of goods stored in freeports does not incur VAT. Again, VAT and customs duty are only payable at the destination country when the goods leave the freeport.

Besides the postponement of customs duties and VAT, freeports offer a high-degree of security and privacy, sought after by art market participants. However, since the revision of the CustA in 2007 (which entered into force on 1st May 2009), warehousekeepers are required to keep an electronic inventory of all ‘sensitive goods’ (art. 66 para. 1 CustA). Artworks, collectibles, antiquities and cultural objects are considered ‘sensitive goods’ (art. 182 para. 2 and annex II paras. 5 and 14 of the Federal Customs Ordinance ‘CustO’). The inventory of ‘sensitive goods’ must include key data points such as country of origin, measurements, value, date of admission into storage, and details of the person authorized to dispose of the stored goods (art. 184 para. 1 CustO). Customs authorities are permanently on site and can inspect the inventories at any time (art. 184 para. 3 CustO).

It’s worth noting that there are enhanced declaratory requirements for cultural objects when imported into Switzerland since the enactment of the Federal Cultural Property Transfer Act ‘CPTA’ on 1st June 2005. Storing cultural objects in freeports is considered an import into Switzerland and thus triggers the same declaratory requirements (art. 19 CPTA and art. 25 Federal Cultural Property Transfer Ordinance).

With the notable exception of the Geneva freeport, the importance of freeports in Switzerland has decreased. Of the 18 freeports in existence in 2008, only 10 still remain. On the other hand, the number of open customs warehouses has increased dramatically. There are currently over 250 of which around 25 specialise in fine art.

Open customs warehouses (arts 50-57 CustA) are set up by shipping companies on their own premises and offer similar advantages as freeports. However, unlike freeports customs authorities are not permanently on site and conduct spot checks only. As a result, the licence to operate an open customs warehouse is subject to strict rules and the customs authorities require a security deposit of usually 2% of the value of stored goods. In addition, an inventory has to be maintained not only for ‘sensitive’ but for all stored goods (art. 56 para. 1 CustA).

The value of goods stored in Swiss customs warehouses is immense: The Swiss Federal Audit Office ‘SFAO’ has estimated that the value in open customs warehouses exceeded Swiss Francs 15 billion in 2012. There are no reliable estimates with regards to the value in freeports, but newspapers have reported over Swiss Francs 100 billion for the Geneva freeport alone. The SFAO has reviewed the movement of goods at Swiss customs warehouses and noticed that there is often little activity at customs warehouses focussing on artworks. This has led the SFAO to believe that these customs warehouses no longer fulfil the initial goal of the law – reduce technical barriers in trade – but are instead used for tax optimisation. Taking into account the economic importance of customs warehouses for Switzerland, the SFAO has developed eight recommendations to reduce intentional misuse. The Swiss Federal Department of Finance plans to develop a strategy by yearend 2015 to implement these recommendations.


To learn more, come to the IAL event hosted by Maurice Turnor Garnder LLP in London on 13th May 2015. Tim Sutton (Managing Director, Constantine) and Kristian Hitchinson (Gallery & Collectors, Constantine) will cover the topics of freeports and customs warehousing from a UK perspective. For more information visit our website.