Free zones are physical areas that - although located within the European Union - for customs are considered to be located outside the Union.
The main administrative difference between warehouses and free zones is that a customs warehouse is located within the customs territory of the Union, and hence bringing goods in and taking goods out of the warehouse involves a range of different declarations and authorizations. Placing goods in a free zone and removing them from this free zone, however, is far simpler.
A free zone typically is a larger area - often a port area - where the main advantage to the economic operator is the application of simplified processes when goods need to be further processed or reworked by different companies. In the event that all these companies are located within the same zone, no customs formalities are required.
Under the provisions of UCC Article 245, goods brought into a free zone must be presented to customs and undergo the prescribed customs formalities in any of the following cases:
(a) where they are brought into the free zone directly from outside the customs territory of the Union;
(b) where they have been placed under a customs procedure which is ended or discharged when they are placed under the free zone procedure;
(c) where they are placed under the free zone procedure in order to benefit from a decision granting repayment or remission of import duty;
(d) where legislation other than the customs legislation provides for such formalities.
Once again, the customs formalities are much simpler than any other special customs procedure.
Location and authorized activities
A list of free zones is published and updated at regular intervals in the Official Journal. The current list can be found HERE. It is to be noted that not all EU member states have a free zone. Austria, Belgium, The Netherlands, Sweden, the United Kingdom, Ireland are some of the countries that do not have a free zone.
The construction of any building in a free zone requires the prior approval of the customs authorities. In principle, any industrial, commercial or service activity is permitted in a free zone. However, the carrying on of such activities shall be subject to notification, in advance, to the customs authorities.