Bonded warehouse in The Netherlands - Crowe Peak (2024)

The European Union (EU) forms one single area for Value Added Tax (VAT) as well as a customs union (the latter is formed together with several non-EU countries, such as Turkey). When goods are imported from outside of the EU into the territory of one of its Member States, VAT and customs duties are due immediately upon arrival. However, when the goods are shipped to a ‘bonded warehouse’, the payment of these duties can be deferred. This can give companies benefits in terms of liquidity. In addition, it is a great solution when it is not clear where the goods will be shipped to afterwards. The Netherlands offers several possibilities to make use of bonded warehouses. The options depend on the type of goods stored, as well as the duration, location and security of the storage.

Types of bonded warehouses

A bonded warehouse is a site where imported goods can be stored before customs process them. Bonded warehouses are divided into public and private warehouses. Public warehouses can be used by anyone to store goods and private warehouses are only open for those that obtained a permit from the Dutch Customs Authorities. Goods stored in private warehouses, however, do not necessarily have to be owned by the permit-owner.

Within the category of private warehouses, there are several subtypes that each differ in terms of type of goods, liabilities and administrative obligations. A special type of private warehouse is a so-called “type E warehouse”, which creates a non-physical – or administrative – warehouse. It allows the permit obtainer to store its goods wherever in the Netherlands. Although for this particular permit high administrative standards and a high level of organization are required.

Bonded warehouse rules

To store goods in a bonded warehouse (public or private), a permit must be obtained from the Dutch Customs Authorities. This permit is not to be confused with the above mentioned permit for private warehouses, that allow the owner to host a warehouse. Not all types of goods are eligible for such a permit and for some goods additional rules apply.

With a permit, the goods can be stored under a ‘bonded warehouse customs procedure’. Under the procedure, goods may be stored indefinitely until the goods:

• are placed under another customs procedure;
• are destroyed; or
• leave the customs territory of the Union.

While goods are under the bonded warehouse procedure, the payment of VAT and customs duties is deferred. Additionally, also political trade measures, such as anti-dumping duties, can be disregarded under the procedure. However this applies only insofar they do not prohibit the goods from actually entering or leaving the customs territory.

Having goods stored also carries administrative responsibilities and other obligations with it. At any moment, it should be clear to the permit holder what goods are stored in the bonded warehouse, including details such as the goods code, customs value, country of origination, weight and measurements. Audits can be carried out by the Dutch Customs Authority.

Usual forms

In principle, it is not permitted to process or alter goods that are stored in a bonded warehouse or any other activities that lead to ‘manufacturing’. However, certain value added services called usual forms (or “gebruikelijke handelingen” in Dutch) are permitted. These are activities that are done in order to:

• keep the goods in good condition;
• improve presentation or merchantable quality; or
• in preparation for distribution or resale.

This can involve activities such as repacking products, quality control or labeling. Examples of such activities are:

• repackaging one bag of 25 kg to 5 bags of 5 kg in preparation of distribution;
• watering plants or trees to keep them in good condition;
• treating fruit against parasites to keep them in good condition; and
• adjusting and fine tuning a machine – provided this concerns simple actions – in preparation for resale.

VAT and excise duties liability

VAT and excise duties are due once the goods leave the bonded warehouse and are ‘set free in circulation in the EU’. This happens for example when the goods are sold and leave the warehouse. Goods are also set free in circulation when the permit holder fails to meet the requirements for holding a permit (e.g. failed to meet administrative requirements) or when the goods have been stolen from the warehouse.

The deferred VAT and excise duties become due in the country where the goods leave the bonded warehouse. However, when the goods are shipped from the warehouse to another EU country for its final destination, a customs transport permit (T1 document) can be obtained so that only VAT and excise duties are due in the country of destination. When the goods in the warehouse are sold to a non EU country (e.g. the United States, the United Kingdom, Switzerland or Norway), a T1 document can be obtained so that no VAT or excise duties are due. In such a case, a T1 document will be granted, but only when the Dutch Customs Authorities receive a guarantee that these levies will be paid abroad. For this, the authorities may demand a bank guarantee or a month’s credit.

A bonded warehouse is different from a ‘VAT warehouse’. VAT warehouses are special warehouses exclusively for staple goods. These goods can be things such as grain or oil, which tend to stay in warehouses for long periods of time. Typical for the goods in these warehouses is that ownership can change multiple times while the goods are in the same place. Goods that are traded within a VAT warehouse can be sold against 0% VAT.

Benefits

There are several benefits of using a bonded warehouse with regard to VAT and excise duties.

• Deferment can provide breathing room and space to carry out additional pre-sale activities. Otherwise, a liquidity problem can arise, as VAT is due directly upon import and can only be asked back, insofar a right to deduct VAT exists, months later in the VAT return. (This can be avoided, however, with a VAT deferment license, or Article 23-license in the Netherlands).
• Making use of a bonded warehouse can be useful when you do not know in advance what the final destination of their imported goods is. The goods might remain in the EU, but they might also be sold outside the EU. As has been demonstrated above, when goods are stored in a bonded warehouse it does not have to be clear yet what the final destination of the goods is. Import duties and VAT are only due when the goods are released. If the goods are exported out of the EU, these levies can be avoided entirely.
• In case a vendor has two suppliers of the same item, one of which located inside and one of which located outside the EU, a bonded warehouse makes it possible to choose smartly which products are sold to EU customers and which are sold to non-EU customers. By selling only goods to non-EU customers that are in the bonded warehouse from the non-EU supplier, any unnecessary VAT and excise duties (or export duties) can be avoided.

If you would like to know if it would be useful for your company to make use of a bonded warehouse or if you want to know more about the VAT consequences of making use of one, please come into contact with one of our VAT experts.

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