What are bonded warehouses, and do you need one?
Brexit and Covid have helped create a surge in demand for warehousing.
Many are turning to bonded warehouses because it helps with cashflow and can offer a more efficient business model.
In this article, we’ll discuss every question you have about bonded warehouses such as, if they suit your business and how to choose one.
What is a bonded warehouse?
A bonded or customs warehouse is a place where goods can be stored without paying customs or VAT on items imported from outside the EU until they are sold or removed. The goods stored in the bonded warehouse are called bonded goods.
What is the difference between a bonded warehouse and a non-bonded warehouse?
While in a bonded storage, customs don’t have to be paid until after the products are sold or removed, in a non-bonded warehouse, these taxes must be paid immediately before the goods can be stored.
What are the types of bonded warehouses?
There are two types of customs warehouses, a public or private warehouse. There are different regulations for storing goods in each of these types of warehouses such as needing to be authorised as the warehouse keeper if you have a private warehouse.
A public warehouse is used to store other people’s goods.
A private warehouse is operated by you to store your own goods.
When do you have to pay customs for a bonded warehouse?
If you sell your goods then you need to pay the customs on these as soon as they are removed from the warehouse, however, you can move them to another bonded warehouse or you can export them, in which case, customs do not need to be paid.
How do you use a bonded warehouse?
To use a bonded warehouse, you will still need to declare your goods and they need to be sent to the warehouse you have specified within five days of being cleared by customs. When your items are removed from the warehouse, you need to declare this and then pay any customs. If you are sending the goods to another country, you do not need to pay the customs for the UK but in the country of destination. This saves on double duty payments which is better in your pocket.
Why use a bonded warehouse?
By using a bonded warehouse, you can free up your cashflow by delaying payment of customs until you have sold your goods. The taxes on goods can be up to 33% of an upfront cost of imported goods which is considerable. Cashflow is critical to the success of your business and allows you to invest in your future and grow. After Brexit, UK companies, can still successfully trade with Europe and bonded warehouses are a way to do this.
You can store your goods for any amount of time, whether it is short or long term. This means your goods will be securely stored until they are ready to be sold or removed. Not only can you store the goods, but you can manufacture new ones and a flexible timeframe allows you to do this before paying any expense.
Bonded warehouses are an effective way of storing goods in advance of needing them. If the good is a seasonal product, you may want to wait until there is demand and when that time comes you won’t lose time importing the goods as they are already there.
Better customer service
Already having your goods in a storage facility will mean giving your customers a better service because they don’t have to wait for the item. With consumers increasingly high expectations, it is vital to provide a quick service.
When you store your goods in a bonded warehouse, the warehouse may provide the relevant customs documentation which saves you having to do it.
Connect with many businesses
If you are a warehouse owner, then you want to maximise the amount of goods housed in your warehouse and by using a warehouse exchange you can connect with many potential business partners in Europe.
For long term storage, rates are generally lower when using bonded warehouses. Any way you can reduce your costs will help your business.
What to remember when using a bonded warehouse
If you are unable to sell or remove your goods, then the customs will keep accruing on your goods which could become unmanageable for you. The amount of duty you have to pay once you do remove your goods is more than if the duty had been paid at the beginning.
Bonded warehouses are highly secure for storing your goods. They generally include CCTV, and they must keep detailed information. To be approved to be a customs warehouse, you need to be assessed and regularly audited by HMRC which means the warehouse must comply with certain conditions such as being responsible for the security.
How long can goods stay in a bonded warehouse?
The goods can stay in the customs bonded warehouse for up to five years. After this time the goods can be taken by customs authority and auctioned.
What type of businesses use bonded warehouses?
Any business can use bonded warehouses but typically wine merchants, food businesses, and spirits companies use bonded warehouses. This is because bonded warehouses often have specialised facilities to store these types of goods, such as freezers.
Where are bonded warehouses located?
Bonded warehouses are generally located near ports, making it convenient to store your goods after you’ve imported them. This helps to reduce your transport costs and makes it convenient for removing your goods.
How to find a bonded warehouse?
Logistics services are a good place to help you find bonded warehouses. TIMOCOM’s Marketplace provides access to over 9,000 warehouse spaces across 46 European countries. This means that we can help you store your goods anywhere in Europe without searching multiple sites. It is important, especially in the current unpredictable climate, to not rely on just one partner for your warehousing needs. Having access to many providers means you won’t be caught out.
Should you use a bonded warehouse?
Using a bonded warehouse frees up your cashflow and could mean avoiding customs altogether. Using a logistics service such as the one we have at TIMOCOM can connect you to warehouses all over Europe to help your business become more efficient. If you want to have access to over 9,000 warehouse spaces, then contact us today.