Tax and tariff advantages of Santander Free Trade Zone

The introduction of goods into the Santander Free Trade Zone (ZFS) has special advantages applicable to the products of the companies operating in the zone.

The Consorcio de la Zona Franca de Santander (CZFS) is the Public Law Entity whose objective is to manage the Santander Free Trade Zone. Independently of this, it may have other enclosures to promote economic development in its area of influence (industrial estates, business centers, entrepreneurship workshops, etc.) that are not Free Trade Zone.

First, companies can take advantage of the services offered by the Consorcio de la Zona Franca de Santander (CZFS) for storage, handling, maintenance of goods, loading, unloading, consolidation and other operations of various kinds, and just a few meters from the quay within the port of Santander.

In addition, to such services, it offers a number of tariff, financial and tax advantages, arising from its status as a Customs Regime established under the UCC (Regulation (EU) No. 952/2013 of the European Parliament and of the Council of 9 October 2013 establishing the Customs Code of the Union), in particular in Articles 237 – 239 and 243-249, without having been developed in the Implementing and Delegated Regulation of the UCC.

It is worth noting the advantage of importing capital goods to be installed in the SFZ.

The Order of December 2, 1992, which establishes rules on Free Trade Zones (and warehouses) (the latter no longer exist) is applicable at the national level (insofar as it does not contradict the CAU).



The current CAU and its Delegated Regulation do not contemplate the free zone operators in Annex A where all the authorizations appear (as it was previously the case). However, three aspects that are required in the regulations in relation to Free Trade Zones are included:

  • Prior notification to Customs of the exercise of activities in such zones (art. 244 CAU) although art. 244.2 states that “any activity shall be authorized,…”.
  • Requires authorization for the construction of real estate.
  • The keeping of records in the form approved by the customs authorities (art. 214 CAU and 178 RDCAU). In addition, Provision 3 of the Order of December 2, 1992 requires that those who are going to carry out storage, processing, transformation, etc., activities within a Free Trade Zone must have a customs authorization in relation to their stock accounting. within a Free Trade Zone must have a customs authorization in relation to their stock accounting.
    In the FTZ, any type of industrial, commercial or service rendering activity can be carried out in general, with the only requirement of keeping stock accounts with a previously approved system.

In conclusion, the operator requires an “authorization” as explained above, supplemented by the provisions of the CZFS Statutes and the Internal Regulations in force.



The advantages or benefits that can be obtained for goods introduced into the FTZ, depending on their origin, are as follows:

Non-EU Goods:

They will not be subject to import duties, commercial policy measures or internal taxes (VAT) during their stay there.

According to article 24 of the Law 37/1992 of the Value Added Tax, the exemption of goods linked to the free zone regime appears (Art. 24. One. 1º.a) LIVA):

“The following shall be exempt from the Tax: (…): (paragraph) 1.º The supplies of the goods indicated below: a) Those destined to be linked to the free zone regime and those that are linked to said regime”.

For example, when a trader brings a quantity of imported goods into the FTZ, he does not pay customs duties and VAT, so that:

    • Customs clearance (free circulation) and the payment of indirect taxes (VAT and Excise Duties) is settled sequentially as it enters the European Union (leaves the FTZ), as it is used or consumed, with the consequent financial savings.
    • The services rendered by the FTZ to these products are not subject to VAT either, as long as they have not been definitively imported into Community territory (Art.24.Uno 2º and Art.24.Uno 3º a) of LIVA):
      “They shall be exempt from the Tax, (…):
      2.º The rendering of services directly related to the supplies described (…linked to the free zone regime…).
      3.º The rendering of services directly related to (…) a) Imports of goods that are linked to the free zone regime”.
    • Re-export to a third country. You pay neither duties nor VAT. Otherwise you would have to pay and wait for its restitution on export. Very important financial savings.
    • The goods can be sold to your customer at ZF without VAT and duty. The operator at ZF offers his customer an additional advantage. In other words, your customer does not advance the VAT on his purchase, which also saves him money.
    • Another advantage: Community agricultural goods can benefit from early payment of the refunds fixed for such goods.

Community Goods

Community goods may enter the FTZ without being placed under the Free Zone Customs Regime, but benefit from the financial savings:

    • No duty is applied on intra-Community acquisitions.
      Intra-Community acquisitions and deliveries of internal goods (the latter are also EU goods) cannot be included in the free zone customs procedure. This is stated in art 246.1 CAU: “Union goods may be introduced, stored, moved, used, processed or consumed in a free zone. In such cases, the goods shall not be considered to be placed under the free zone procedure”.
    • There is no VAT affectation due to the application of the general regulation of intra-community acquisitions because there is a self-refunding and simultaneous deduction of the tax in the same VAT return (monthly or quarterly).
      If there is a subsequent internal sale or delivery (in the country), VAT will be charged and the purchasing company will bear it, being able to deduct this amount in its VAT self-assessment form (monthly or quarterly).
    • Community products subject to II.EE. in authorized bonded warehouses would be suspended from these excise duties, when they do not remain for more than 120 days and are destined for export, according to article 14.3 of the II.EE. regulation.

Interior Operations:

The free zone operator in the deliveries (purchases) of domestic goods (within the country) bears the VAT. In this way, it does anticipate the tax because only later, it will be able to deduct this amount in the monthly or quarterly self-assessment form, as appropriate.



Machinery investment:

Any operator or company that sets up in the Free Trade Zone and needs to invest in capital goods, machinery and other fixed assets has a special advantage in the Free Trade Zone of Santander:

The import of these investment goods from a third country is exempt from the payment of duties and VAT, as long as the machine remains in use in the FTZ. Only machinery with non-EU status can be in free zone regime. At the end of its useful life, it will pay duties for the residual value of the asset. That is to say, it does not advance tariffs or VAT, which it will pay only for the final value of use.

In these cases, and depending on the value of the investment, it represents significant initial savings. A VAT refund, based on a deduction of output VAT, can take a long time to offset.

In the case of an intra-community acquisition, the investment will be subject to the general rules that, regardless of being located in a Free Trade Zone: there is no initial disbursement for VAT.

Usual manipulations:

Goods during their stay in the FTZ may, without any essential modification, and in order to ensure their preservation, improve their presentation or commercial quality, or prepare their distribution or resale, be subjected to a multitude of manipulations, without the need for express authorization, unless they modify the eight-digit CN code or the customs authority sees a risk of fraud.

There are 22 types of classified manipulations, which are listed in Annex 71-03 of the EU Customs Code Delegated Regulation (EUCCR), intended to ensure their preservation, improve their presentation or commercial quality or prepare their distribution or resale (art.220 and 86 CAU). For example: change of containers and packaging, mixing of goods of the same type with different quality without changing the nature of the goods, affixing and/or removal of marks, seals, etc., packaging, unpacking, bagging, … as well as wastes, sweepings, losses, breakages, evaporation, cleaning,…

These usual manipulations are not taken into consideration when calculating the Customs Value of the merchandise to be imported, on which the respective tariff is applied.

In practice, these authorized operations can result in significant economic savings for operators.

Inward Processing Regime. Other manipulations.

Non-EU goods that are in the Free Zone may be subsequently released for free circulation or included in the temporary import, final destination, or inward processing regime (thus leaving the free zone regime).

In the event that another process or manipulation not included in the previous section is applied to the goods, the Inward Processing Regime (RPA) is applicable for the goods introduced in the Free Trade Zone. The goods under the free zone regime would leave it to be subject to the RPA regulations (art. 247 CAU).
This regime is aimed at stimulating exports, by allowing imports of goods from a third country, with total exemption from import duties and/or commercial policy measures, provided that the products obtained in the processing of these goods, are re-exported outside the customs territory of the Union, in the form of compensating products.

Therefore, any transformation that goes beyond a mere usual manipulation, must be carried out under the inward processing regime, requiring that the free zone operator has such authorization, according to the general conditions or requirements that are required in any authorization of special regime, which are those contained in Article 211 of the CAU.

This regime is subject to prior authorization with the following conditions:

      • that it is possible to identify the import goods in the compensating products, or the equivalent goods, as the case may be.
      • that the regime may contribute to create the most favorable conditions for export (due to the unavailability of goods of the same quality and technical characteristics as the goods to be imported or due to the price difference between the produced and imported goods).
        E.g. An importer of wheat, buys product in Ukraine, does not pay duties and VAT under RPA. He transforms it into packaged flour, for which he buys paper bags on the domestic market without VAT, as he can benefit from art. 23.1 1st exemption of the VAT Law. It uses external personnel who invoice it for their work, also without VAT, and finally exports the product.


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