What is a bonded warehouse?
A bonded warehouse is a secured building or area approved and supervised by customs, where imported goods can be stored without paying import duty and VAT. Goods stored there are called bonded goods. Duty becomes payable only when goods leave the warehouse for the domestic market.
Core principle: A bonded warehouse separates storage from tax: goods can sit close to customers without duty being paid until they are sold locally.
Types of customs warehouse in the EU
In the EU, bonded warehouses are known as customs warehouses under the Union Customs Code special procedure for customs warehousing.
| Type | Who uses it |
|---|---|
| Public customs warehouse (types I, II and III) | Available to any person storing goods, operated by a warehouse keeper or the customs authority |
| Private customs warehouse | Reserved for the authorisation holder’s own goods |
What you can and cannot do
- Allowed: storage, usual forms of handling such as repacking, labelling and quality checks, and temporary removal with customs approval.
- Required: an authorisation, a guarantee in many cases, and stock records that customs can audit.
- Not allowed without other authorisations: manufacturing or processing that changes the goods (that falls under inward processing).
Bonded warehouse vs standard fulfilment warehouse
Duty suspended vs duty paid
In a standard fulfilment warehouse, goods have already been cleared and are in free circulation, so they can be picked and shipped to any EU customer immediately. A bonded warehouse suits stock with an uncertain destination or high duty rates, but every release for sale needs a customs declaration. Many brands combine both: duty-suspended bulk stock plus a duty-paid pick-face for daily orders.
Example: A spirits brand imports US whiskey into an EU customs warehouse. Pallets are released weekly to a duty-paid fulfilment centre for online orders, while export orders to Switzerland leave the warehouse without EU duty.
Bonded warehouses in the United States
In the US, bonded warehouses are authorised and supervised by CBP under the Tariff Act of 1930. Imported goods can be stored, manipulated or, in certain warehouse classes, manufactured without paying duty for up to five years from the date of importation. Duty is paid when the goods are withdrawn for consumption, and goods withdrawn for export pay no US duty.
- Warehouse classes: CBP authorises different classes for different uses, for example importers’ private warehouses, public warehouses, manipulation warehouses, manufacturing warehouses and duty-free stores.
- Entry: goods arrive under a warehouse entry instead of a consumption customs entry, and each withdrawal is declared separately.
- Records: the proprietor keeps inventory records that CBP can audit, and a customs bond covers the duty at stake.
Bonded warehouse vs Foreign Trade Zone
A US bonded warehouse suspends duty for up to five years. A Foreign Trade Zone has no time limit, allows a wider range of processing and is treated as outside US customs territory. FTZs also offer weekly entry, which reduces the Merchandise Processing Fee.
Frequently asked questions
How long can goods stay in a US bonded warehouse?
Up to five years from the date of importation, unless CBP grants a longer period on request.
Is there a time limit for storing goods in a bonded warehouse?
In the EU there is no general time limit for the customs warehousing procedure, although customs can set conditions in individual cases.
Who can run a bonded warehouse?
Any business that obtains a customs warehousing authorisation from its national customs authority and meets the conditions, such as record-keeping and, often, a guarantee.
Is a bonded warehouse the same as a free zone?
No. Both suspend duty, but free zones are designated areas with their own rules, while customs warehouses are individually authorised premises.
UK procedure code reference: Procedure 71: entry to a customs warehouse (GOV.UK).
