A tax-free hub for high-value assets
The Luxembourg Freeport opened its doors in September of last year. It is a 22,000m² high-tech logistic platform for storing valuable goods, located at the international airport. It is used by corporate and private collectors, investors, banks, museums, family offices, investment funds and others, who benefit from the Freeport's storage and related-services.
The Luxembourg Freeport is unique in the European Union, and it enhances the attractiveness of Luxembourg as a wealth-management centre. Customers from Luxembourg's financial centre are now able to source services in Luxembourg in respect of their valuable collections.
A work of art
Luxembourg continually diversifies its financial centre, particularly the range of products it offers. In these turbulent financial times investors are increasingly choosing art, which tends to maintain or increase its value. The Freeport gives investors the option to fly into Luxembourg, browse the high-value goods on offer and trade in a single location.
The highly secured Freeport complements Luxembourg's fund industry. Funds that can invest in a broad range of assets, such as the Luxembourg Specialised Investment Fund (SIF), are able to trade in art, precious metals, diamonds, jewellery, wine and other collectables as alternative investments in Luxembourg's tax-friendly environment.
Benefit to the funds industry
Luxembourg's excellent reputation for funds makes it the second largest market for investment funds after the United States. Luxembourg's financial centre also enjoys a steady growth in the domiciliation and administration of alternative investment vehicles.
The presence of the Freeport promises to change the landscape of the Luxembourg funds industry, with an increasing focus on valuable tangible assets as investors draw on the expertise and long-term experience of specialised service providers. Financial institutions may also be involved, for example by providing credit lines against tangible assets held in the Freeport.
What is the meaning of 'free' in Freeport?
A new law was introduced in Luxembourg during 2011, whereby VAT and customs duties on goods entering into a free zone from third countries are suspended. This special regime applies as long as the goods remain in storage in the Freeport, which can be for an unlimited time.
VAT and customs duties are also suspended on storage and other value-added services while the goods remain in custody at the Freeport. VAT becomes due by a person removing the goods from the Freeport unless the goods are exported outside the EU, in which case the suspension of VAT becomes final.
No VAT applies and no withholding tax is due on the capital gain when the goods change owner in the Freeport.
Under the new law, the Freeport is operated under the supervision of the Luxembourg custom authorities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
