The free-trade zones in Germany are geographic areas were the government authority provides economic incentives to companies operating in the region. Foreign and domestic merchandise can be brought in and sold without being subject to taxation.
Germany`s free trade zones are also called foreign free zones, free ports or bonded warehouses. Given their tax regime, free trade zones attract investments in the German economy. The Community Customs Code regulates the activity within the free trade zones of Germany. A complete guide on Germany`s free trade zones can be provided to you by our German company incorporation specialists.
Where are the free trade zones located in Germany?
There are two free trade zones in Germany, the Freeport of Cuxhaven and the Freeport of Bremerhaven. The Port of Hamburg used to function as a free trade zone for 125 years, before its closure at the end of 2012.
These zones are situated within ports and process and manufacture value-added products for EU external markets. Both German and foreign companies can do business in these free trade zones.
Liberal rules replace the normal customs regime for import and export, promoting economic development and generating more employment. Germany`s free-trade zones offer a broader set of incentives, such as further tax exemptions, simplified administrative procedures and the provision of infrastructure.
Our company formation experts in Germany can give you a detailed presentation of the financial advantages of the free trade zones in the country.
What is the typology of the free trade zones?
Germany`s free trade zones have a fixed perimeter with entry and exit points that are subject to customs supervision. The way in which Community and non-Community goods and merchandise are dealt upon import and export is the main criteria of free trade zones classification. There are two types of free trade zones in Germany:
- • Control type I free zones – they operate like free warehouses and the free zones are not buildings but geographical locations. The zone is protected by walls or fences. The goods fall under the free zone regime and are checked by customs authorities upon entry and exit;
- • Control type II free zones – physical control of goods and merchandise does not take place at entry and exit. The companies operating in the free trade zones have to declare their goods in order to benefit from the different incentives promoted by these areas.
What are the main characteristics of the German free Zones?
Both the Bremerhaven Free Zone and the Cuxhaven Freeport have defining traits, that make these designated areas attractive to foreign companies. Below, our team of agents who specialize in company formation in Germany details their main traits.
The Freeport or Free Zone of Bremerhaven:
- - area: around 4,000,000 square meters, after several expansions in the region.
- - separation: a clear distinction is made between the area and the rest of the customs territory through a fence running for ten kilometers.
- - companies: they operate in diverse business sectors, such as cargo or handling, cold storage, vehicle preparation, mineral oil storage, and trading, handling companies and many others.
- - capacity: the area has a large capacity, an example being fifteen large container ships that can be loaded and/or unloaded at the same time.
- - additional area: the zone has an approximate area of 1 million square meter cargo handling area.
- - surveillance: the area benefits from surveillance services provided by three customs offices.
The Freeport of Cuxhaven:
- - area: the covered area is of about 147,800 square meters, smaller than the previous one.
- - separation: this area is also separated from the rest of the customs territory through a 600-meter fence.
- - companies: the area is primarily used by a company in the field of storing and transporting of frozen fish products.
- - surveillance: provided by a competent customs office that also allows clearance through the zone.
One of our German company formation agents can give investors more information about the characteristics of the two free trade zones and how they can commence the incorporation process for a company.
What are the conditions for moving goods in and out of a free zone in Germany?
When transferring goods into the free trade zone, a customs declaration is not always required. An exception occurs when the goods are moved directly outside of the customs territory into a free zone, and in several other vases that concern the payment or remittance of import duties as well as for certain categories of goods for which the legislation is different.
When the goods are introduced into the free zone, they are accompanied by a transport document, such as a dispatch note, a manifest, delivery note or consignment note. During the time in which they are within the free zone, the goods are usually considered non-Union goods.
Union goods will generally be subject to a two-phase export procedure which starts within the free trade zone. The customs office of the zone is the one that will monitor the actual, physical exit of the goods from the customs territory.
The storage of goods within a free zone may be restricted or prohibited when the goods are of a certain nature (for example, explosives) or when the storage conditions are not appropriate or when the sale of goods to end consumers needs to take place according to a certain procedure.
Free trade zones are specially designated and, in general, they can be included into four distinct groups: for the single purpose of the re-export of traded goods, for the export of value-added goods as well as according to any specific economic activity that may be underway in the territory.
Our agents who specialize in company registration in Germany highlight once more the main advantages of the free trade zones: unlimited storage, non-restricted activities, generally lighter requirements for companies incorporated in the area and a large space, adequate and equipped for the good functioning of a large number of companies in a variety of business fields.
Investors who open a company in Germany in a particular business sector that may be advantaged by being present in a free trade zone, such as a cargo or logistics company, can further explore the advantages present in these areas.
Germany has a developed economy, as reflected by the following statistics:
- - foreign direct investment increased in April 2019 by 12085.48 million euros.
- - the imports value was 91700.00;
- - the exports value 109700.00.
As far as company creation is concerned, according to the economic development agency of Germany, there have been some 2,062 recorded foreign direct investment projects, with these companies reporting that they will create at least 24,000 new jobs. The United States had the largest percentage of projects, with 345 greenfield and expansion projects.
If you want to start a business in a free trade zone, don`t hesitate to contact our company registration specialists in Germany for a personalized offer.