Customs warehousing, or setting up and managing a customs warehouse, is a procedure that enables companies to suspend their import duties and/or value-added tax (VAT) until goods are released from the warehouse.

This procedure can be set up for goods that enter the customs territory of the European Union (EU) from outside the EU, so called “non-community” goods. The goods will have to be stored in a bonded warehouse, or customs warehouse, in a location or under an inventory system that is authorized and supervised by the applicable customs authority.

In other words, it allows you to hold imported non-community goods in the EU and choose when to clear the goods and pay the duties or re-export the goods outside the EU. While the goods are stored in a customs warehouse, there are usual forms of handling allowed, limited essentially to keeping them preserved with a view to subsequent distribution. It is possible to clear goods directly in the premises of a customs warehouse.

Community goods may also be put in customs warehouses in order to benefit from EU legislation governing export refunds or the repayment of import duties.

Types of Warehouses

There are two kinds of customs warehouses: public and private. Depending on your type of organization, you choose the type that suits you best. In case of a public warehouse, organizations pay a third party to store the goods in a defined location. In case of a private warehouse, companies store the goods at their own defined location and use their inventory system to control the goods.

 

What are the Potential Benefits?

  • Store goods in transit until re-exportation - physically store goods in-transit that are destined for re-exportation, without having to pay duties on them.
  • Cash flow optimization - suspend the payment of import duty and/or VAT, without time restrictions, allowing you to choose when you take the goods into the free market.
  • Exceptions on policies - certain trade policy and agricultural policy measures, import bans and import restrictions do not apply to goods stored in a customs warehouse.
  • Less customs interference - if you are intensively screened and defined as a bona fide organization before getting the certificate as a customs warehouse owner, you may have less customs interference afterwards.
  • Usual forms of handling  - goods may undergo the necessary handling to ensure preservation, market quality, prepare them for distribution or resale, or use them for temporary exhibitions, all without payment of import duty and VAT.
  • Transfers - provisions exist for processing (declaration and presentation of) goods at import, export, entry for free circulation, in a customs warehouse and on transfer of goods between warehouses
  • Smart Picking - smart picking in a customs warehouse means that the stock and country of destination will influence the order of picking, and those duty payments.
 

Automating Customs Warehouses

A customs warehouse management solution allows one to manage the goods that are stored under the customs warehouse procedure. The system stores information about the imported goods and accounts for all movements made in the stock. The information can be downloaded from a commercial system or, eventually, entered manually. The system provides a declaration to Customs containing data related to the duty and VAT calculations and statistical information for all movements.

While integrating with core business systems, a customs warehouse management solution increases efficiency, reduces manual tasks, generates Stock Records automatically, gives a clear overview of the balance of goods and costs, and provides multi-level data checks.

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Written by Jonathan Wasserman

Senior Vice President, Global Trade Compliance at Descartes