Support Hyperallergic’s independent arts journalism.
Members of European Parliament would like increased transparency when it comes to Luxembourg’s tax shelters for wealthy art collectors.
In a letter earlier this month, German MEP Wolf Klinz asked the European Commission to close loopholes that allow potential financial crimes to occur. In particular, the parliament member singled out Luxembourg’s system of freeports: tax-free warehouses where the rich can store valuable assets like art, cars, wine, and jewelry.
President Jean-Claude Juncker of the European Commission has used his tenure as head of the European Union’s executive branch to boost financial transparency among member states. He joined the body in 2014 after serving as Luxembourg’s prime minister from 1995 to 2013.
Klinz is a member of the EU’s Tax3 committee, which focuses on financial crimes, tax evasion, and tax avoidance. Within his letter, he specifically mentions that Le Freeport Luxembourg is “alleged to be a fertile ground for money laundering and tax evasion” and will have an “impact on the security and reputation of the Union.”
Construction on Le Freeport Luxembourg began during Juncker’s time as prime minister and the storage facility opened in August 2014, only months after he was elected EC president. Falling short of an accusation, Klinz characterizes the freeport situation as a “blind spot” in the leader’s campaign to end tax evasion and money laundering within Europe.
Luxembourg is among a crowd of countries that the EU has investigated for failing to comply with the organization’s vast financial codes. In June 2018, new rules requiring disclosures to prevent money laundering went into effect. The majority of the EU’s 28 member states have received warnings over delays in implementation (exactly 21, or 75% of countries) but only Luxembourg, Ireland, and Romania have been sued in earlier decisions. In 2017, the duchy secretly imposed an 8.9 million euro (~$10.6 million) fine on the Industrial and Commercial Bank of China (IBIC), which has a headquarters in the country, after a Spanish investigation exposed a large money laundering scheme. That same year, the EU ordered Luxembourg to collect $295 million in back taxes from the online retailer Amazon after a three-year investigation found that the country wooed the company with an unfair competitive advantage.
Freeports became the subject of public scrutiny largely thanks to the 2016 release of the Panama Papers, which outlined a secretive global network of wealth circulating undeclared and untaxed. These storage warehouses can house art worth hundreds of millions of dollars, accessible only to a VIP clientele that can visit their collections in temporary showrooms within the facilities. When La Freeport opened in 2014, its first fête included “trays of champagne, an orchestra [playing] an overture written especially for the occasion before an audience that included the Grand Duke of Luxembourg, and top executives at Deloitte.” In the United States, freeports are commonly referred to as Foreign Trade Zones (FTZs), which typically operate without federal customs duties and other taxes. The extent of freedom provided depends on the country offering it, which is why these zones often appear in existing tax havens like Switzerland and Luxembourg.
Today, there are approximately 3,000 freeports in 135 countries, according to a 2010 report by Financial Action Task Force; by comparison, there were only 100 in 1975. Money laundering in the EU is estimated to be worth €110 billion (~$125.9 billion).
Not that Luxembourg has actively encouraged misdeeds within its own borders. In July 2015, the country passed an anti-money laundering law almost five years before similar EU legislation would go into effect in January 2020. The legislation forced freeports to identify the beneficial owner of stored goods without the use of offshore companies, trusts, lawyers, or galleries to shield ownership. In his letter, Klinz admits that the law “significantly diminished Le Freeport’s operative opacity,” though he maintains that a “path to adequate regulation … remains long and fraught with complexities.” The MEP defines Luxembourg’s financial intelligence unit as “painfully understaffed” with only 16 personnel handling 20,000 suspicious activity reports in 2017.
“It is apparent to me that the risk of maintaining a facility of Le Freeport Luxembourg’s reputational profile within the EU customs territory could greatly outweigh the benefits,” Klinz writes at the end of his letter.
Juncker has acknowledged Klinz’s letter and passed the German MEP’s concerns to Pierre Moscovici, the European commissioner for economic and financial affairs. In a statement, a spokesperson for Le Freeport has asserted that the storage facility “is compliant with the anti-money laundering law of Luxembourg and under 100% supervision of Luxembourg customs.”
This week, LA’s new Academy Museum, the intersections of anti-Blackness and anti-fatness, a largely unknown 19th century Black theater in NYC, sign language interpreters, and more.
Titian’s paintings are masterpieces, with all the complications of the term.
Through “Historic Site,” an 8-foot-tall plaque and Historic Sight, a year-long rotating exhibition in Pittsburgh, the Black Cube Fellows investigate how history is constructed, remembered, and retold.
Lawson’s images, and the ways that she has discussed her process, seem to be actively reproducing the kind of big-dick energy power dynamics of White male artists who also claim mastery over their subject matter.
Jenkins’s new short film, the centerpiece of a MoMI exhibit on The Underground Railroad, uses his signature techniques to confront the viewer.
Romanticism to Ruin: Two Lost Works of Sullivan and Wright memorializes Chicago’s Garrick Theatre and Buffalo’s Larkin Building, which were razed to build a parking lot and a truck stop.