But some sectors of the art trade are more dependent on frictionless borders than others, say Andreides and Vere-Hodge, who coauthored The Art Trade in a ‘Zero Sum’ World essay in the latest Art Basel and UBS Art Market Report. ‘If international trade further fragments as a result of mercantilist policies, such segments may have to operate in increasingly domestic markets. Clearly, the larger a domestic market, the more attractive it is to sell artworks in such a market. One might expect to see larger domestic markets attract some subsidiaries of galleries and dealers that were previously only present in one or two global or international hubs.’ Such a shift may also result in increased competition within domestic markets or free trade areas, such as competitive tax rates among regional rivals.
Andreides and Vere-Hodge are currently witnessing ‘the first tentative signs of possible geographic shifts’ and a renewed interest in offshoring assets using freeports. This ties in with a trend among their clients, particularly younger buyers, who now ‘frequently ask about possible relocations of assets and ways in which ownership of collections may be structured, including across various jurisdictions.’
Shrewd maneuvering is key in this environment. Ultra-high-net-worth clients tend to have multiple homes and storage facilities around the world, so the point of sale does not really matter, so long as they can ship it to a tax-friendly jurisdiction. Although The Fine Art Group sold nothing out of Asia during the latest New York sales, its Asian clients were still bidding, Hoffman says: ‘Some of them might ship [the artwork] to Switzerland or on to museum shows…they won’t necessarily put it in their house in Hong Kong or China – they’ve got houses in the US, in the UK, in Japan.’ He recalls a few years ago a Brazilian client who, faced with USD 28 million in duties for importing two high-value paintings to Brazil, decided to spend that money on an apartment in New York in which to put those paintings. While this is an extreme example, such behavior is not uncommon.
This post was originally published on this site be sure to check out more of their content
