Customs Warehouse: What It Is, Requirements and How It Differs from Temporary Storage

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What is a customs warehouse?

A customs warehouse is one of the special procedures provided for in the Union Customs Code (Regulation (EU) No 952/2013, UCC for short). Non-Union goods placed under this procedure are stored in a place approved by the customs authority and under its supervision. As long as the goods remain in the warehouse, no import duty becomes payable and the goods do not enter free circulation – they can later be exported from the EU, placed under another procedure, or released for free circulation, at which point the charges are settled.

For businesses trading between the UK and the EU, a customs warehouse can be a tool for managing cash flow: goods brought in, for example, from the United Kingdom can wait for a buyer without tying up cash in duty and import VAT. Bear in mind, though, that this benefit comes with record-keeping obligations and the need to secure a potential customs debt.

What types of customs warehouse are there?

Article 240 UCC distinguishes two types of warehouse:

• public warehouse – anyone can use the storage services, and goods stored by different parties are kept in one place under the responsibility of the warehousekeeper;
• private warehouse – goods are stored solely by the authorisation holder, for example an importer or manufacturer who has its own warehouse and wants to keep goods under the procedure there.

In both cases an authorisation is needed, and the warehousekeeper (or depositor) is responsible for complying with the conditions of the procedure.

Can goods be processed in a customs warehouse?

Two things need to be distinguished. Article 220 UCC permits usual forms of handling in a customs warehouse – those intended to preserve the goods, improve their appearance or marketable quality, or prepare them for distribution or resale. Actual processing is something different: under Article 241 UCC the authority may allow goods placed under inward processing or end-use to be processed in the warehouse – on the conditions of those procedures, where there is an economic need. Such goods are then not covered by the customs warehousing procedure. If you plan, for example, repackaging, assembly into sets or processing, describe those operations in your application, because changing the scope of the authorisation afterwards means additional formalities.

What obligations does a customs warehouse holder have?

Article 242 UCC imposes two basic obligations on the authorisation holder and the procedure holder, and further ones follow from Articles 211 and 214 UCC and from the content of the authorisation. In practice this translates into several standing tasks:

• ensuring that the goods are not removed from customs supervision (Article 242),
• fulfilling the obligations arising from storing the goods under the procedure (Article 242),
• complying with the conditions set out in the authorisation (Article 211(1)),
• keeping records that enable the customs authority to identify the goods, their customs status and their movements (Article 214 UCC).

In a public warehouse the authorisation may provide that some of these obligations rest solely on the depositor (Article 242(2)).

What are the requirements for obtaining a customs warehouse authorisation in the EU?

An authorisation to operate a storage facility under the customs warehousing procedure is required under Article 211(1)(b) UCC, and the general conditions are set out in Article 211(3). The key ones are:

• established in the EU – the applicant must be established in the territory of the Union,
• guarantee of proper conduct of operations – an AEOC (AEO – customs simplifications) holder meets this condition if its authorisation covers this activity,
• security – where a customs debt or other charges may arise for the goods under the procedure, a guarantee in accordance with Article 89 UCC is required (we discuss this in more detail in our article on the customs guarantee).

The detailed application procedure in Poland, the forms and the competent authorities are described by the National Revenue Administration (KAS) on the podatki.gov.pl portal. Before applying it is also worth checking whether your business already has an EORI number – without one you cannot declare goods (how to get an EORI).

How does a customs warehouse work in the United Kingdom?

Since Brexit the United Kingdom has run its own authorisation system, and HMRC guidance can be found on gov.uk in “Apply to operate a customs warehouse”. According to that guidance, an applicant should meet, among others, the following conditions:

• be established in the United Kingdom,
• hold an EORI number,
• demonstrate financial solvency,
• have a good record of compliance with customs and tax rules,
• demonstrate an economic need to operate the warehouse,
• keep stock records that allow checks to be carried out.

Security for duty and VAT is required where necessary, unless the applicant has AEO status or meets its conditions. HMRC advises applying at least two months before the planned start of warehouse operations. A UK authorisation is not valid in the EU, and an EU one is not valid in the UK, so a business operating on both sides of the Channel must plan for two independent procedures.

Customs warehouse vs temporary storage facility – what is the difference?

Both concepts concern goods lying “under customs supervision”, but legally they are two different states:

Feature	Temporary storage	Customs warehouse
Nature	transitional state before being placed under a procedure (Articles 147–148 UCC)	special procedure (Articles 240–242 UCC)
Purpose	waiting for a customs procedure declaration	storage with deferral of duty and VAT
Permitted operations	only operations that keep the goods in an unchanged state	storage and usual forms of handling (Article 220); processing only under inward processing or end-use (Article 241)
Time	maximum 90 days (Article 149 UCC)	no limit (Article 238 UCC); exceptionally the authority may set a time limit
Legal status	not a customs procedure – the goods wait for one to be chosen	is a customs procedure, requiring a declaration and an authorisation

We cover the first of these states in detail in a separate article: how a temporary storage facility works. The difference matters in practice – if goods are to lie for months or be packed, temporary storage is not the right tool.

When is a customs warehouse worth using?

The procedure is worth using when non-Union goods are to return to an external market (re-export), when the timing of a sale is uncertain, or when you want to settle duty only when the goods are released for free circulation. If you import goods only occasionally, it is often more convenient to use a public warehouse run by another entity than to build your own infrastructure. The decision is always worth preceding with a calculation of the costs of security and record-keeping obligations.

What does a day with goods in a customs warehouse look like in practice?

Once you have the authorisation, goods are placed in the warehouse on the basis of a customs declaration for that procedure. From that moment each consignment should be identifiable in the records: where it came from, in what quantity, with which tariff code and under which document it was placed under the procedure. The warehousekeeper records every receipt, change of storage location and release. As a result, in the event of an inspection the customs authority can quickly reconcile the physical stock of the warehouse with the stock shown in the records.

The procedure ends when the goods are exported from the EU, placed under another procedure (for example transit or temporary admission), or released for free circulation. Only in the last case does an obligation to pay duty and import VAT arise, calculated under the rules in force at the time of the declaration. Keep this in mind when calculating costs: deferral does not mean exemption, and rates may change while the goods are stored.

What mistakes do businesses most often make with customs warehouses?

• confusing a warehouse with temporary storage – goods taken “into a warehouse” without the proper procedure sit in a transitional state in which only operations preserving their condition are allowed,
• gaps in the records – a missing entry for a transfer or loss raises doubts as to whether the goods have been removed from supervision,
• exceeding the scope of the authorisation – for example operations or processing not covered by the authorisation,
• security that is too low – the value of goods in the warehouse grows faster than the amount of the guarantee,
• no exit plan – no decision on which procedure will end the goods’ stay in the warehouse.

Customs warehouses in UK–EU trade – what to watch out for

Since Brexit, goods moving between the UK and the EU are subject to border controls, and their customs status depends on where and how they were placed under a procedure. If you plan to store goods on one side of the border and sell them on the other, check whether a warehouse in one country is enough or whether two independent authorisations are needed. An EU authorisation does not cover the UK procedure, and vice versa. In both systems the time needed to prepare an application matters – on the UK side HMRC advises applying at least two months before the start, so the timetable for launching a warehouse needs to be planned in advance.

Sources

• Regulation (EU) No 952/2013 – Union Customs Code (EUR-Lex)
• Regulation (EU) No 952/2013 – legislation.gov.uk
• Apply to operate a customs warehouse – gov.uk
• Customs – National Revenue Administration (podatki.gov.pl)

Planning a customs warehouse or storing goods under a procedure between the UK and the EU? Contact us – a customs agency registered with CDS, UK EORI number, will help you choose the right procedure.

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