Customs Warehousing – Types of Customs Warehouses and Their Use
What is Customs Warehousing?
Customs warehousing (in English customs warehousing) is a special customs regime that allows temporary storage of goods imported from countries outside the European Union (so-called non-Union goods) in an approved and secured space, without the need to immediately pay import duties, VAT, or other fees. This regime is key to optimizing finances and logistics in international trade.
Customs Warehouse Space
A customs warehouse (customs bonded warehouse) is a physically defined and technically secured space that has undergone an approval process by customs authorities and is permanently under their supervision. These warehouses are often located near ports, airports, railway terminals, and major transport hubs.
Legal Framework
In the European Union, the customs warehousing regime is governed by the Union Customs Code (EU Regulation No. 952/2013), implementing regulations, and relevant national legislation (for example, Act No. 242/2016 Coll., on the Customs Administration of the Czech Republic). The basic legal framework can be found in Articles 98–128 of the Union Customs Code. For international goods flows, knowledge of this legislation is essential.
Key Principles
- Deferral of duty and tax payment: The obligation to pay import duties and VAT is deferred until the moment when goods are released into free circulation (i.e., released onto the EU market).
- Re-export without duties: If goods are exported back to a third country (re-exported), the obligation to pay duties and taxes is completely eliminated.
- Customs supervision: Goods are permanently under the control of the customs administration, which has the right to inspections, audits of records, and physical controls.
Basic Terminology and Principles
| Term | Definition | Note |
|---|---|---|
| Customs regime | Specific conditions under which goods that are not Union goods can be handled. | Customs warehousing is a so-called special regime. |
| Permit holder | A person with permission from customs authorities to operate a customs warehouse. | Responsible for security, record-keeping, and compliance with conditions. |
| Regime holder | A person who submits a customs declaration for the release of goods into the warehousing regime. | May be the same as the permit holder (especially for private warehouses). |
| Customs supervision | Continuous control of goods and premises by the customs administration. | Includes the right to inspections, audits, and physical controls. |
| Securing of customs debt | Obligation of financial security (guarantee) in case of customs debt. | Typically a bank guarantee, insurance, or deposit. |
| Customs warehouse | An approved space for storing goods under customs supervision. | Must meet technical, security, and operational requirements. |
Benefits of Using Customs Warehouses
Deferral of Duty and Tax Payment
- Cash-flow optimization: Payment of duties and VAT is deferred until the moment goods are released onto the EU market. This significantly improves company liquidity.
- Cost savings: Goods that are re-exported are never subject to duties or VAT.
Flexibility and Inventory Management
- Strategic storage: Companies can purchase and import larger volumes of goods, which they then release onto the market according to current demand.
- Avoiding double taxation: If goods are re-exported (e.g., from a warehouse in the Czech Republic directly to Switzerland), they are not subject to duties in any EU country.
Consolidation and Distribution
- Central hub: Customs warehouses serve as consolidation centers – they allow repackaging, sorting, and preparation of shipments for various destinations.
- Transport optimization: They allow consolidation of shipments from various countries and subsequent efficient distribution.
Permitted Goods Handling
- In a customs warehouse, so-called standard handling operations can be performed, which must not change the nature of the goods:
- Aeration, drying, cooling
- Cleaning, pressing, painting
- Repackaging, sorting, grouping, labeling
- Simple assembly, functionality testing
Long-term Storage
- In the EU, storage duration is not time-limited (unlike the USA, where the limit is 5 years).
- Allows long-term planning and storage of goods with slow turnover.
Security and Regulatory Compliance
- Customs warehouses must meet high security standards (camera systems, secured entrances, record of personnel and goods movement).
- Storage of sensitive goods (military material, goods subject to CITES, chemicals, medicines) is governed by special regulations and requires approval from relevant authorities.
Types of Customs Warehouses
Classification According to EU Legislation
| Warehouse Type | Intended For | Responsibility |
|---|---|---|
| Public customs warehouse | Multiple users | Operator and regime holder (depending on type) |
| Private customs warehouse | One operator (goods owner) | Operator = permit holder and regime holder |
Subtypes of Public Warehouses:
- Type I: Joint responsibility of operator and regime holder.
- Type II: Responsibility of regime holder only.
- Type III: Operated directly by customs authorities (now rarely used).
Specific Classification in the USA
In the USA, the customs administration (CBP) distinguishes 11 classes of warehouses according to purpose and type of goods – from government warehouses through duty-free shops, warehouses for heavy and bulky goods, manufacturing customs warehouses, to warehouses for unclaimed shipments.
Overview of Classes (Selection):
- Class 2: Private warehouses of importers (for own goods only)
- Class 3: Public warehouses for various clients
- Class 4: Warehouses for specific goods (e.g., animals, liquids)
- Class 6: Manufacturing warehouses (import of materials, manufacturing, subsequent export)
- Class 9: Duty-free warehouses (sales to travelers leaving the USA)
Extended Table of Customs Warehouse Types in the EU
| Warehouse Type | Description | Suitable For | Responsibility |
|---|---|---|---|
| Public I | Operator and regime holder are responsible | Logistics companies, smaller importers | Joint |
| Public II | Regime holder is responsible | Larger importers using warehouse services | Regime holder |
| Public III | Operated by customs administration | Exceptional cases | Customs administration |
| Private | For operator’s own use only | Large companies with regular imports | Operator |
Permitted Operations in a Customs Warehouse
In a customs warehouse, only operations that do not change the customs classification of goods (their nature) can be performed. These operations are defined in Annex 71-03 of the implementing regulation to the Union Customs Code:
- Goods preservation (aeration, drying, cooling, cleaning)
- Improvement of commercial quality (pressing, painting, defect removal)
- Preparation for distribution (dilution, repackaging, sorting, grouping, assembly and disassembly of simple parts, labeling with labels or marks)
- Testing and functionality control
- Storage of selected goods subject to special measures (military material, CITES, chemical substances, etc.), see chapters on non-tariff measures in specialized literature.
In case of need for more complex operations (for example, manufacturing, assembly, or processing), it is necessary to request permission for a combination with the active processing or processing under customs supervision regime.
Process of Warehousing and Removal of Goods
Warehousing (Entry of Goods into the Regime)
- Arrival of goods on EU territory: Goods are declared for entry customs procedure.
- Customs declaration: The regime holder submits electronically a customs declaration with a proposal for storage in a customs warehouse (assignment of regime code 71).
- Physical receipt: Goods are transported to the approved warehouse and recorded in the warehouse record system (must be maintained according to customs administration requirements).
- Customs supervision: The warehouse keeper is responsible for securing the goods and their movement in the record system, which must be accessible for inspection at any time.
Removal (Termination of the Regime)
- Release into free circulation: Goods are released onto the EU market, the appropriate customs declaration is submitted, duties and VAT are calculated and paid.
- Re-export: Goods are exported outside the customs territory of the EU – without the obligation to pay duties and VAT.
- Transfer to another regime: For example, active processing (processing), transit (further transport under supervision).
- Destruction under supervision: Unusable or damaged goods may be destroyed under the supervision of customs authorities.
Establishment and Operation of a Customs Warehouse
Permit
Operating a customs warehouse is only possible on the basis of a permit issued by customs authorities (in the Czech Republic, the Customs Administration of the Czech Republic). The application must contain:
- Detailed description of premises and their security (physical barriers, electronic protection, camera systems)
- Economic justification (necessity of storage in the given regime)
- Securing of customs debt (bank guarantee, insurance, deposit)
- Proposal of a system for recording goods movement (must meet requirements for auditability, accessibility, and data integrity)
- Obligation to maintain accurate and complete records (all movements, descriptions, quantities, customs status, etc.)
Security and Technical Requirements
- Protection against unauthorized entry and tampering
- Provision of handling spaces according to requirements for goods control (including possibility for customs administration to conduct inspections)
- Fire and safety certification
- Separate spaces for goods subject to special regimes (military material, chemicals, medicines, etc.)
- Possibility of electronic record-keeping and digitalization (the trend is the use of WMS, ERP, and online connection to customs administration systems)
Operator Obligations
- Accessibility of records at any time for customs authorities
- Responsibility for accuracy of data and physical security of goods
- Obligation to report any discrepancies or incidents
- Compliance with legal deadlines and requirements for storage of specific commodities
Control and Audit
The customs administration conducts regular and random inspections of records, physical audit of goods, security inspections, and verification of compliance with legislation. Violation of obligations may result in revocation of the permit, fines, or criminal prosecution.
Special Cases and Limitations
Non-Tariff Measures
Some commodities are subject to special regimes and restrictions that are independent of customs warehousing. These include, for example:
- Dual-use goods (civilian and military use)
- Chemical substances (subject to European and national chemical legislation)
- Medicines, medical devices, foodstuffs (require special certifications and permits)
- CITES goods (protected animal and plant species, require permits from the Ministry of the Environment)
- Cultural heritage, paintings, antiques (necessity of special permits for export or import)
Combination of Regimes
Customs warehousing can be combined with other special regimes, for example:
- Active processing: Processing of imported goods under customs supervision without payment of duties and VAT, subsequently export or release into circulation after taxation.
- Transit: Transport of goods between warehouses in various EU states under customs supervision.
Practical Examples of Customs Warehousing Use
- E-commerce and dropshipping: Companies import larger volumes of goods, which they store in a central customs warehouse and release individual shipments according to end customer demand.
- Manufacturing companies: They import components from third countries, store them in a customs warehouse, and use them according to current production needs.
- Logistics companies: They offer services of public customs warehouses to smaller importers or distributors who do not want to invest in their own warehouse capacity.
- Goods re-export: A company imports goods from Asia to a customs warehouse in the Czech Republic, but based on current market conditions, subsequently sells them, for example, to Switzerland, without the need to pay duties in the EU.
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