Paintings listed in Belgian art gallery Vedovi’s 2017 catalogue were worth over €15 million, but they were registered in an offshore location in Hong Kong, as were the millions made from their sale, so they were thus totally tax-free, three Belgian newspapers disclosed on Saturday.
The revelation was the latest disclosure by Le Soir, De Tijd and Knack, the Belgian participants in an investigation by an international consortium of journalists into tax havens, known as the Pandora Papers. The Belga News Agency reported this.
About 20 years after the Brussels-based Vedovi gallery was inaugurated, Belgian businessman Paolo Vedovi registered a ‘letter-box company, Global Art Portfolio Limited, in Hong Kong, with the sole mission of buying and selling the modern and contemporary works that the art dealer loves.
None were stocked in Hong Kong since, as documents extracted from the Pandora Papers explicitly state, Global Art has no activity, stores, and employees there.
A draft response to the income tax department in Hong Kong explained that although the company was registered in Hong Kong, it had never done business there. All its operations, including the acquisition, maintenance, and sale of art, were done from Europe. Consequently, the company’s income was not taxable in Hong Kong, according to the document.
It added that Vedovi, who was resident in Belgium, was the sole employee in charge of selling works of art for the company, and that, while he travelled in Europe and the United States, he never went to Hong Kong in the years concerned.
A letter sent by the Swiss director of Global Art to an auditor in Hong Kong stated that the company made a non-taxable profit of $1.9 million (€1.64 million) at the end of the April 2016 – March 2017 fiscal year, and $5.5 million in the preceding tax year.
Five years after its creation, the company had a cumulative profit of over $9.1 million (€7.9 million).
The Brussels Times