What is the difference between a bonded warehouse and a consignment warehouse?

A bonded warehouse, known in the EU as a customs warehouse, is a facility authorised by customs where non-EU goods can be stored for an unlimited period without paying import duties or import VAT until they are released for free circulation or re-exported, while a consignment warehouse holds a supplier's goods at or near the customer's premises, with ownership only passing when the customer takes the goods out of stock.

Bonded Warehouse vs Consignment Warehouse

Bonded vs Consignment:

In a consignment stock arrangement, the supplier (consignor) keeps ownership of the goods until the customer (consignee) calls them off, and within the EU the call-off stock simplification can avoid the need for the supplier to register for VAT in the customer's country. In a bonded warehouse, by contrast, the goods are under customs supervision: the warehouse must be authorised by customs, and duties and import VAT only become payable when the goods leave the warehouse for the EU market.

The following are some of the differences between a bonded warehouse and a consignment warehouse.

1) In terms of purpose, a bonded warehouse is a customs procedure that suspends duties and import VAT on non-EU goods, whereas consignment stock is a commercial and VAT arrangement for goods that may already be in free circulation.

2) A consignment arrangement involves a supplier and a customer, while a bonded warehouse involves the goods owner and a warehousekeeper authorised and supervised by customs.

3) Goods in a bonded warehouse usually require a customs guarantee covering the suspended duties and VAT, whereas consignment stock of goods already in free circulation needs no customs guarantee.

4) Storage costs depend on the provider in both cases, but bonded warehouses add customs compliance costs such as stock records and customs declarations.

Conclusion:

Hence, the key difference is that a bonded warehouse defers customs duties and import VAT on non-EU goods, while a consignment warehouse determines when ownership, and therefore the sale, passes from supplier to customer. It may happen that in some situations consignment warehousing will be preferable while in others bonded warehousing is more suitable. However, bonded warehousing is especially useful for non-EU goods when an importer wants to delay paying duties and VAT until the goods are sold, or to re-export them without paying EU duties.

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