In this article we will introduce the concept of customs warehousing since it is of great interest especially in the post-Brexit era. The bonded warehouse allows the owner to hold imported goods. You can use customs warehousing to defer duties and VAT on stored goods. In fact, this system allows you to pay them once your goods have left the facility where they are kept to go into free circulation.
You will not have to pay duties and VAT if the goods are re-exported. Likewise, you will not have to pay duties and VAT if the goods are transferred in a customs procedure other than authorized use. You must be authorized to manage a warehouse as a warehouse worker.
A bonded warehouse can be used to store your goods:
- subject to customs duties, excise duties or VAT upon importation;
- if documents such as licenses are not available when importing the goods;
- originally imported according to a special procedure and stored before being re-exported;
- on which duty is not due, but import VAT is;
- which have been admitted to free circulation;
- already in free circulation, but subject to a complaint under the Rejected Imports arrangements.
Goods can be processed inside a customs warehouse, but only certain types of processing are permitted, better known as “usual forms of handling”. This means that it will be possible to prepare the goods to preserve their warehousing, improve the presentation for future sale and prepare the goods for distribution or resale.
There are 2 types of customs warehouse:
Public Warehouse
Suitable for businesses that want to store goods belonging to other people, also known as depositors.
Private Warehouse
Suitable for companies that want to store their goods. In this case, the holder of the warehouse authorization and the depositor are the same person.
Businesses eligible for a bonded warehouse license will need to be based in the UK and have a UK EORI.
Scenario
The Italian company XXX Srl sells and ships goods to a customs warehouse held by the company YYY Ltd (British company in possession of UK VAT). The company XXX Srl invoices the company YYY ltd without the application of Italian VAT (non-taxable VAT). The company YYY Ltd will then collect the goods from the customs warehouse and proceed with any customs declarations and application of UK VAT on imports.
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By: Michele Ammirati and Sergio Schittone
