The Council of Ministers of the Republic of Cyprus decided on 9 June 2011 the abolition of Larnaca Free Zone (Control Type II).
The decision was published in the official Gazette of the Republic with no. 4500 on 17 June 2011.

1. Introduction
2. Legal Provisions
3. Definition
4. Types of Free Zones
5. Activities that can take place in a Free Zone
6. Issue of a licence to commence business in the Larnaca Free Zone and secure approval of the stock-records
7. Guarantee
8. Entry, stay and exit of goods from a Free Zone
9. Information


1. Introduction
Free Zones constitute a Customs institution which is used to facilitate external trade, by giving incentives for the gathering and distribution of goods, thus contributing to the development of transit trade.

The facilitation of external trade is based on the fact that no import duties and taxes are levied on imported goods and that no commercial policy import measures are implemented.

2. Legal Provisions

The basic legal provisions on which the institution of Free Zones is based are included in the following:

• Articles 166 – 181 of the Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code·
• Articles 799 – 814 of the Commission Regulation (EEC) No. 2454/93·
• Articles 59 – 60 of the Cyprus Customs Code No. 94(I)/2004 and Public Instruments Nos. 310/2010 and 388/2004 (only in greek).

Apart from the above provisions, all other provisions of the community and national legislation relating to the institution of Free Zones are taken into consideration.

3. Definition

Free Zones form parts of the customs territory of the Community or premises situated in that territory and separated from the rest of it in which:

• non-Community goods are considered, for the purpose of import duties and commercial policy import measures, as not being on Community customs territory, provided they are not released for free circulation or placed under another customs procedure or used or consumed under conditions other than those provided for in customs regulations;
• Community goods for which such provision is made under Community Legislation governing specific fields qualify, by virtue of being placed in a Free Zone, for measures normally attaching to the export of goods.

4. Types of Free Zones

There are the following two types:

• “Control type I” Free Zone, in which controls are principally based on the existence of a fence;
• “Control type II” Free Zone, in which controls are principally based on the formalities carried out in accordance with the requirements of the customs warehousing procedure.

In Cyprus, the Larnaca Free Zone and the Free Port Areas of Limassol and Larnaca operate as “control type II” Free Zones.

5. Activities that can take place in a Free Zone

Any industrial, commercial or service activity shall be authorised in a Free Zone. The carrying on of such activities shall be notified in advance to the customs authorities, which may impose certain prohibitions or restrictions, having regard to the nature of the goods concerned or the requirements of customs supervision.

The customs authorities may prohibit persons who do not provide the necessary guarantees of compliance with the provisions laid down in the Customs legislation from carrying on an activity in a Free Zone.

6. Issue of a licence to commence business in the Larnaca Free Zone and secure approval of the stock-records

Before submitting the relevant application to the Department of Customs & Excise, the interested person shall apply to the Ministry of Commerce, Industry and Tourism, which is the owner of the land designated as the Larnaca Free Zone in order to secure a plot of land in the Free Zone.

Having secured a plot of land, the interested person shall submit an application to the Director, through Larnaca customs office, for an authorisation to carry on activities within the Free Zone and approval of stock-records. Authorisation is granted in cases where the application of customs rules would not be impeded.

The issue of the authorisation secures an effective customs control on the goods and imposes certain conditions that must be observed during the entry, stay and exit of the goods. In order to secure a licence to operate in the Free Zone, it is imperative for the interested person to secure approval by the customs authorities of his stock-records. The application for approval of the stock-records shall be submitted in writing and shall include the following:

• a detailed description of the stock-records to be kept;
• the nature and customs status of the goods to which these activities relate;
• where applicable, the customs procedure under which the activities are to be carried out;
• any other information needed by the customs authorities in order to ensure the proper application of the provisions.

It shall be noted that the construction or modification of any building in the Free Zone is subject to authorisation by the competent customs authorities.

Furthermore, it shall be noted that for the implementation of the Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market and the harmonised legislation (Law 76(I)/2010 concerning Freedom of Establishment of Service Providers and the Free Movement of Services - only in greek), the Department of Customs & Excise for the purpose of simplifying the procedures and administrative cooperation required for the evaluation of the above application, may, through the IMI system, request and obtain information concerning the applicant from the competent authority of another Member State, in which the applicant has declared that is a registered member.
For any further information concerning IMI system you may visit the website http://ec.europa.eu/imi-net or obtain access through the website of the Ministry of Commerce, Industry and Tourism http://www.mcit.gov.cy.

7. Guarantee

The person to whom a licence is issued shall deposit to customs a security bond for an amount as deemed necessary by the Director with surety either an approved bank or insurance company in order to secure the amount of import duties, taxes and other charges liable on the warehoused/deposited goods.

8. Entry, stay and exit of goods from a Free Zone

Both Community and non-Community goods may be placed in a Free Zone. Imported non-Community goods entering the Larnaca Free Zone shall be placed under warehousing procedure by presenting to customs a warehousing entry bearing the words “F.Z. Type II” Larnaca. Community goods after their arrival in the Republic and provided their Community status has been proven, are released immediately without any customs procedure. All goods (non-Community and Community) are entered in the stock-records kept by the company stationed in the Free Zone.

There is no time limit for the stay of goods in Free Zones. However, for certain goods, which are covered by the common agricultural policy, specific time limits may be imposed.

Non-Community goods placed in a Free Zone may, while they remain in a Free Zone:

• be released for free circulation under the conditions laid down by that procedure;
• undergo the usual forms of handling;
• be placed under the inward processing procedure under the conditions laid down by that procedure;
• be placed under the procedure for processing under customs control under the conditions laid down by that procedure;
• be placed under the temporary importation procedure under the conditions laid down by that procedure;
• be transferred to a customs warehouse;
• be abandoned;
• be destroyed.

Goods leaving a Free Zone may:

• be exported or re-exported from the customs territory of the Community;
• be brought into another part of the customs territory of the Community

9. Information
For more information, you may write to the following address.
E-mail: headquarters@customs.mof.gov.cy