Free port

A free port is a customs free zone. “Free port” is the trade term. The EU’s Union Customs Code calls it a free zone. In the United Kingdom, an area designated as a special area for customs purposes is called a free zone (s. 100A, Customs and Excise Management Act 1979).

Published by ArtisDomus, written by Polina Surina.

It sets when duty and tax fall due. It is not a separate jurisdiction, and it creates no form of ownership. A work inside it stays subject to the law of the country where it stands.

EU Member States may designate parts of the Union’s customs territory as free zones. For each one, the state sets the area covered and the entry and exit points (art. 243(1), Regulation (EU) No 952/2013, the Union Customs Code). A free zone must be enclosed, and customs supervise its perimeter and its entry and exit points (art. 243(3)). People, goods and means of transport going in or out may face customs controls (art. 243(4)). Constructing any building in a free zone needs the prior approval of the customs authorities (art. 244(1)).

In the United Kingdom the Treasury can, by order, designate any UK area as a special area for customs purposes (s. 100A(1), Customs and Excise Management Act 1979). Such an area is called a free zone (s. 100A(2)). The order must appoint one or more responsible authorities (s. 100A(3)(c)). Revocation is allowed where a condition or restriction has not been complied with (s. 100A(3)(e)).

Goods without the customs status of Union goods are called non-Union goods. While they stay in a free zone, they may be released for free circulation or placed under inward processing, temporary admission or end-use (art. 247(1), Union Customs Code). The customs decision is put off, and it still has to be made. Goods taken out of a free zone into another part of the Union’s customs territory, or placed under a customs procedure, count as non-Union goods (art. 249). The exception is where their customs status as Union goods has been proven.

VAT works the same way under a different law. Goods not in free circulation may enter under one of the arrangements or situations listed in article 156 of Council Directive 2006/112/EC. If so, the place of importation is the Member State where they stop being covered by it (art. 61). One listed case is the supply of goods meant to be placed in a free zone or free warehouse (art. 156(1)(b)). Article 156(1) is an option: Member States may exempt those transactions.

Export licences still apply. A free zone is part of the Union’s customs territory, so moving a work into one is not an export (art. 243(1)). Exporting cultural goods outside the customs territory of the Community needs an export licence (art. 2(1), Council Regulation (EC) No 116/2009). The customs rule on taking goods out of a free zone leaves laws outside customs untouched (art. 248(1), Union Customs Code). The licence question arises when the work leaves the customs territory, and the free zone cannot settle it early.

Ownership stays as it was. The Union Customs Code classes goods as Union or non-Union goods for duty. That label says nothing about who owns them. Ownership is decided by the law that governs the sale, wherever the work is stored.

Identity checks still apply. In the UK, a freeport operator counts as an art market participant under the Money Laundering Regulations 2017 (reg. 14). This applies when works of art worth £10,000 or more are stored there for a person or a series of linked persons. In the EU, the money laundering rules cover anyone who stores, trades or brokers cultural goods in free zones and customs warehouses at EUR 10 000 (art. 3(3)(j), Regulation (EU) 2024/1624). Both laws aim identity checks at the free zone itself.

The Gulf regime is a different system under a different name; see storing art in a UAE free zone. For a work brought in for an exhibition, see temporary admission. The identity checks are covered under due diligence.