Free zone
A delimited geographical area within the customs territory where non-Union goods are considered outside the customs territory for the application of duties and taxes.
Definition and legal framework
A free zone is a designated part of the customs territory in which non-Union goods can be introduced without being subject to customs duties, commercial policy measures, or import taxes. The procedure is defined in Articles 243-249 UCC.
Operation in the EU
Since the UCC (2016), EU free zones are of the control type (the former Type I free zones with physical enclosure are no longer mandatory). Goods are tracked through inventory records and customs entries.
Authorised activities
In a free zone, goods may:
- Be stored without time limitation
- Undergo usual forms of handling (as in customs warehousing)
- Be processed under the inward processing procedure (authorisation required)
- Be re-exported outside the EU without paying duties
Advantages for operators
- Cash flow optimisation: deferral of duties and taxes payment
- Logistics flexibility: possibility of redirecting goods according to demand
- Simplification: non-Union goods do not need a customs declaration to enter the free zone
Examples in Europe
Among the most active free zones in Europe: Port of Barcelona, Trieste (Italy), Shannon (Ireland), Madeira, and the Canary Islands (special tax regime).