Customs warehousing – Tips from an expert:

Learn how to avoid customs tariffs when warehousing imported goods

Reading time: 5 min.
09/05 – 2022

Man using fork lift to move goods in a warehouse

Have you ever tried importing goods only to have them imposed with customs tariffs as soon as they reach your country? It can be frustrating to pay tariffs on goods that are going to be re-exported to a third party-country (a country outside of the European Union). It is therefore interesting to consider the procedure called “customs warehousing”.

We have prepared everything you need to know about customs warehousing. We have, among other things, consulted a customs-expert, Klaus Kalsmose Jakobsen, from BDO – an advisory- and accounting-firm that guides companies on subjects such as customs and taxes.

Have you ever tried importing goods only to have them imposed with customs tariffs as soon as they reach your country? It can be frustrating to pay tariffs on goods that are going to be re-exported to a third party-country (a country outside of the European Union). It is therefore interesting to consider the procedure called “customs warehousing”.

We have prepared everything you need to know about customs warehousing. We have, among other things, consulted a customs-expert, Klaus Kalsmose Jakobsen, from BDO – an advisory- and accounting-firm that guides companies on subjects such as customs and taxes.

What is customs warehousing?

A customs warehouse is a designated area that is approved by the Danish Customs Agency for storage (warehousing) of goods. A customs warehouse can be anything from a single room, an entire building, or an outdoors area. Whatever the type of area, it is important to make sure that the Danish Customs Agency can perform inspections when they deem it necessary. Goods that are stored in a customs warehouse are exempted from customs- and tax-tariffs. Examples could be:

A customs warehouse is a designated area that is approved by the Danish Customs Agency for storage (warehousing) of goods. A customs warehouse can be anything from a single room, an entire building, or an outdoors area. Whatever the type of area, it is important to make sure that the Danish Customs Agency can perform inspections when they deem it necessary. Goods that are stored in a customs warehouse are exempted from customs- and tax-tariffs. Examples could be:

  • If the imported goods are warehoused until they are exported to a third party-country, they are exempted from customs tariffs

  • If the imported goods are warehoused until they are resold within the European Union, a customs tariff must be paid once the goods leave the customs warehouse

  • If the imported goods are warehoused until they are exported to a third party-country, they are exempted from customs tariffs

  • If the imported goods are warehoused until they are resold within the European Union, a customs tariff must be paid once the goods leave the customs warehouse

What that means is, that a company can avoid customs tariffs when importing goods to the EU. The goods just need to be exported to a non-EU country afterwards. As smart as it sounds, it is not a process that you just initiate whenever you feel like it. In order to utilize customs warehousing, an authorization is needed from the Danish Customs Agency. When applying for customs warehousing, there are two types of authorizations:

What that means is, that a company can avoid customs tariffs when importing goods to the EU. The goods just need to be exported to a non-EU country afterwards. As smart as it sounds, it is not a process that you just initiate whenever you feel like it. In order to utilize customs warehousing, an authorization is needed from the Danish Customs Agency. When applying for customs warehousing, there are two types of authorizations:

  • Public: Public customs warehousing allows one authorized company to warehouse for themselves as well as for other companies. When warehousing goods for other companies, an agreement needs to be made between the two parties. The two parties furthermore share the responsibility of making sure that all legal rules are adhered to.

  • Private: In this situation, the authorized company holds all responsibility for the warehoused goods. Private customs warehousing is typically used by companies that want to store their own goods in their own warehouse. Other companies can also store goods in an authorized company’s warehouse, but an agreement needs to be made, and the authorized company holds all responsibility.

  • Public: Public customs warehousing allows one authorized company to warehouse for themselves as well as for other companies. When warehousing goods for other companies, an agreement needs to be made between the two parties. The two parties furthermore share the responsibility of making sure that all legal rules are adhered to.

  • Private: In this situation, the authorized company holds all responsibility for the warehoused goods. Private customs warehousing is typically used by companies that want to store their own goods in their own warehouse. Other companies can also store goods in an authorized company’s warehouse, but an agreement needs to be made, and the authorized company holds all responsibility.

While it is possible for a company to warehouse imported goods on their own grounds, they need to follow a specific set of rules when doing so. The rules are as follows (as described by BDO):

While it is possible for a company to warehouse imported goods on their own grounds, they need to follow a specific set of rules when doing so. The rules are as follows (as described by BDO):

  1. There needs to be kept a strict account on the warehoused goods
  2. Goods with EU-status (goods that are extracted, harvested or produced in the EU or goods that are imported to the EU where customs tariffs are already paid) need to be kept separated from goods with non-EU-status, either physically or in the accounting statements
  3. Goods cannot be processed while warehoused (unless it’s regular processes that serve to secure the conservation of the goods or -prepare them for distribution), unless the company has an authorization for inward- or outward processing
  4. A collateral for the customs debt needs to be provided
  5. The utilized facilities need to be approved by the Danish Customs Agency
  6. The Danish Customs Agency must be able to monitor the goods and the accounting statements
  1. There needs to be kept a strict account on the warehoused goods
  2. Goods with EU-status (goods that are extracted, harvested or produced in the EU or goods that are imported to the EU where customs tariffs are already paid) need to be kept separated from goods with non-EU-status, either physically or in the accounting statements
  3. Goods cannot be processed while warehoused (unless it’s regular processes that serve to secure the conservation of the goods or -prepare them for distribution), unless the company has an authorization for inward- or outward processing
  4. A collateral for the customs debt needs to be provided
  5. The utilized facilities need to be approved by the Danish Customs Agency
  6. The Danish Customs Agency must be able to monitor the goods and the accounting statements

It can be beneficial for companies to find a party that is already authorized to run a customs warehouse. By doing this, you can warehouse your goods without applying for an authorization from the Danish Customs Agency. It is, though, still your responsibility to make sure that your goods are not removed unlawfully from the warehouse – and that the correct rules are followed. Furthermore, you need to give the authorized party access to information on your warehoused goods (type, amount, etc.). This allows the authorized party to register the arrival and departure of goods in the warehouse.
(Customs declarations always need to be sent to the Danish Customs Agency when goods are added or removed from the customs warehouse).

It can also be very convenient for a company to be able to warehouse goods on their own property. It just entails a more comprehensive application- and approval-process.

If you need to process the goods that have been imported from a third party-country, you need yet another type of authorization, namely an authorization for inward processing (don’t worry, explanation follows).

It can be beneficial for companies to find a party that is already authorized to run a customs warehouse. By doing this, you can warehouse your goods without applying for an authorization from the Danish Customs Agency. It is, though, still your responsibility to make sure that your goods are not removed unlawfully from the warehouse – and that the correct rules are followed. Furthermore, you need to give the authorized party access to information on your warehoused goods (type, amount, etc.). This allows the authorized party to register the arrival and departure of goods in the warehouse.
(Customs declarations always need to be sent to the Danish Customs Agency when goods are added or removed from the customs warehouse).

It can also be very convenient for a company to be able to warehouse goods on their own property. It just entails a more comprehensive application- and approval-process.

If you need to process the goods that have been imported from a third party-country, you need yet another type of authorization, namely an authorization for inward processing (don’t worry, explanation follows).

Klaus Kalsmose, BDO:

“The economic gains of using customs warehousing are obviously larger when dealing with goods that have higher customs tariffs. If goods have a low customs tariff, it is typically not beneficial to use a customs warehouse. Clothes have some of the highest customs tariffs – as they can go as high as 12%. Ceramics are also on the list of goods that can be charged with heavy customs tariffs, as they are often filed under anti-dumping-tax – which means that the customs tariffs can be as high as 48%”

Anti-dumping-tax:

When goods are brought into the EU from a third party-country, anti-dumping-tax can be placed on the goods if they are purchased at a price that is significantly cheaper than the average sales price in the given EU-country, or if the government in the exporting country has supplied a direct- or indirect grant for production- or transport of the goods, which would benefit the importing party.

Example: If an EU-company can buy specific goods very cheap from a third party-country, there won’t be an incentive to buy the same product from an EU-manufacturer as it would be significantly more expensive. In order to compete with the third party-countries, the European manufacturers will therefore be forced to lower the prices on their goods, which would hurt their economy. Dumping thereby describes the act of selling goods so cheap that it distorts the internal (European) production- and sales of the given products. For that reason, anti-dumping-taxes can be placed on cheap goods from third party-countries.

Anti-dumping-tax:

When goods are brought into the EU from a third party-country, anti-dumping-tax can be placed on the goods if they are purchased at a price that is significantly cheaper than the average sales price in the given EU-country, or if the government in the exporting country has supplied a direct- or indirect grant for production- or transport of the goods, which would benefit the importing party.

Example: If an EU-company can buy specific goods very cheap from a third party-country, there won’t be an incentive to buy the same product from an EU-manufacturer as it would be significantly more expensive. In order to compete with the third party-countries, the European manufacturers will therefore be forced to lower the prices on their goods, which would hurt their economy. Dumping thereby describes the act of selling goods so cheap that it distorts the internal (European) production- and sales of the given products. For that reason, anti-dumping-taxes can be placed on cheap goods from third party-countries.

Customs warehousing example:

Let’s imagine that a Danish company imports stoneware cups and -plates for 1 million Euro. There might be 5,5% in customs tariffs on the stoneware as well as 36% in anti-dumping-tax – which adds up to 41,5% in customs tariffs.

0,4 million of the import is going to be sold in Denmark, and the company is therefore forced to pay customs tariffs for this amount of the import. They can, however, still store this part of the goods in the customs warehouse, and the tariffs are not applied until the goods are moved from the warehouse.

The last 0,6 million is going to be sold in Norway (who are not members of the European Union), which means that this part of the import can enter the country without being met with customs tariffs. What that means is, that the Danish company avoids paying 41,5% in tariffs on the 0,6 million – which results in a saving of 249.000 Euro. The company still needs to pay tariffs in Norway, but the Danish customs tariffs are avoided by using a customs warehouse.

Customs warehousing example:

Let’s imagine that a Danish company imports stoneware cups and -plates for 1 million Euro. There might be 5,5% in customs tariffs on the stoneware as well as 36% in anti-dumping-tax – which adds up to 41,5% in customs tariffs.

0,4 million of the import is going to be sold in Denmark, and the company is therefore forced to pay customs tariffs for this amount of the import. They can, however, still store this part of the goods in the customs warehouse, and the tariffs are not applied until the goods are moved from the warehouse.

The last 0,6 million is going to be sold in Norway (who are not members of the European Union), which means that this part of the import can enter the country without being met with customs tariffs. What that means is, that the Danish company avoids paying 41,5% in tariffs on the 0,6 million – which results in a saving of 249.000 Euro. The company still needs to pay tariffs in Norway, but the Danish customs tariffs are avoided by using a customs warehouse.

Customs warehousing can lead to huge savings when importing goods
Customs warehousing can lead to huge savings when importing goods

Inward- and outward processing

When you want to store your imported goods, you need an authorization for customs warehousing. You are, however, not allowed to process the goods while they are being warehoused. If you want to start processing the goods while they are sitting in the warehouse, you need a permission for inward processing if it takes place in the EU, or outward processing if it takes place outside the EU.

Furthermore, you always need to send customs declarations to the Danish Customs Agency when you wish to add- or remove goods under the processes inward- and outward processing.

Inward processing

You can avoid customs tariffs when you import goods from a third party-country with the intention of processing, repairing, or handling the goods while they are warehoused– as long as they are reexported to a non-EU-country when finished. This procedure is called inward processing.

If the goods are sold within the European Union after being processed, customs tariffs are put on hold until the goods leave the warehouse. Furthermore, if the goods are sold within the EU, you only need to pay tariffs on the added value on the goods.

Outward processing

Outward processing allows a company to export their goods to a third party-country to have them processed, whereafter they are reimported to the original country. When a given company is authorized to perform outward processing, this can be done without paying customs tariffs.

Inward- and outward processing

When you want to store your imported goods, you need an authorization for customs warehousing. You are, however, not allowed to process the goods while they are being warehoused. If you want to start processing the goods while they are sitting in the warehouse, you need a permission for inward processing if it takes place in the EU, or outward processing if it takes place outside the EU.

Furthermore, you always need to send customs declarations to the Danish Customs Agency when you wish to add- or remove goods under the processes inward- and outward processing.

Inward processing

You can avoid customs tariffs when you import goods from a third party-country with the intention of processing, repairing, or handling the goods while they are warehoused– as long as they are reexported to a non-EU-country when finished. This procedure is called inward processing.

If the goods are sold within the European Union after being processed, customs tariffs are put on hold until the goods leave the warehouse. Furthermore, if the goods are sold within the EU, you only need to pay tariffs on the added value on the goods.

Outward processing

Outward processing allows a company to export their goods to a third party-country to have them processed, whereafter they are reimported to the original country. When a given company is authorized to perform outward processing, this can be done without paying customs tariffs.

Klaus Kalsmose, BDO:

“Using customs warehousing, you are allowed to perform a light repackaging of the goods that are imported – which means that you are allowed to remove items from boxes and export them separately, if necessary. You are, though, in no way allowed to process the products, and you are similarly not allowed to repackage the goods to other detail-sizes, etc. – this would require a permit for inward processing”

Example of inward processing:

A Danish furniture manufacturer is offered to sell their furniture in America, which is a huge business opportunity for the Danish company, as the American market is significantly larger than the Danish market. The American furniture-company only demands one thing, namely that the furniture needs to be made from American wood – wood that needs to be imported to Denmark before the furniture can be produced. The Danish manufacturer is suddenly forced to pay customs tariffs for the imported materials, which diminishes an otherwise lucrative business opportunity. This is where inward processing becomes an interesting process to consider. When you are authorized to process the imported materials, the business opportunity doesn’t lose its potential.

With an authorization for inward processing, the Danish furniture manufacturer can safely import the American wood and turn it into furniture, which can then be exported to America without seeing a single customs tariff in the process. This way, the Danish company is allowed to import- and reexport goods without paying tariffs. Inward processing is therefore an important procedure to consider when importing and exporting – and it may just open the doors to a couple of otherwise improbable business opportunities.

(Thank you to the Danish Customs Agency for inspiring the example)

Example of inward processing:

A Danish furniture manufacturer is offered to sell their furniture in America, which is a huge business opportunity for the Danish company, as the American market is significantly larger than the Danish market. The American furniture-company only demands one thing, namely that the furniture needs to be made from American wood – wood that needs to be imported to Denmark before the furniture can be produced. The Danish manufacturer is suddenly forced to pay customs tariffs for the imported materials, which diminishes an otherwise lucrative business opportunity. This is where inward processing becomes an interesting process to consider. When you are authorized to process the imported materials, the business opportunity doesn’t lose its potential.

With an authorization for inward processing, the Danish furniture manufacturer can safely import the American wood and turn it into furniture, which can then be exported to America without seeing a single customs tariff in the process. This way, the Danish company is allowed to import- and reexport goods without paying tariffs. Inward processing is therefore an important procedure to consider when importing and exporting – and it may just open the doors to a couple of otherwise improbable business opportunities.

(Thank you to the Danish Customs Agency for inspiring the example)

Illustration of inward processing and customs warehousing
Illustration of inward processing and customs warehousing

The benefits of customs warehousing – is it relevant for your company?

When importing goods to the EU, there are several benefits to using customs warehousing. The most obvious benefit is the exemption from customs tariffs as it leads to significant savings for many companies. Some companies import large quantities of goods and others import goods with high customs rates, which makes customs warehousing very beneficial.

The procedure can also be profitable for companies that choose to resell the imported goods within the EU. They must pay a customs tariff when the goods leave the warehouse – the keyword in that sentence being “when”. Using customs warehousing, you don’t pay tariffs when goods are imported to the EU nor while the goods are standing still in the warehouse. The tariffs are not charged until the goods are moved from the warehouse and exported to another EU-country. This gives the company a lot of freedom in deciding when to move the goods, and thereby when to pay the tariffs.

The benefits of customs warehousing – is it relevant for your company?

When importing goods to the EU, there are several benefits to using customs warehousing. The most obvious benefit is the exemption from customs tariffs as it leads to significant savings for many companies. Some companies import large quantities of goods and others import goods with high customs rates, which makes customs warehousing very beneficial.

The procedure can also be profitable for companies that choose to resell the imported goods within the EU. They must pay a customs tariff when the goods leave the warehouse – the keyword in that sentence being “when”. Using customs warehousing, you don’t pay tariffs when goods are imported to the EU nor while the goods are standing still in the warehouse. The tariffs are not charged until the goods are moved from the warehouse and exported to another EU-country. This gives the company a lot of freedom in deciding when to move the goods, and thereby when to pay the tariffs.

The benefits of using customs warehousing are easy to spot and might be a helpful addition to your existing import processes. It is, however, difficult to talk about all the positives without also mentioning the challenges that are part of the process. There are undeniably a couple of considerations that need to be made before deciding to chase this specific opportunity.

The benefits of using customs warehousing are easy to spot and might be a helpful addition to your existing import processes. It is, however, difficult to talk about all the positives without also mentioning the challenges that are part of the process. There are undeniably a couple of considerations that need to be made before deciding to chase this specific opportunity.

Klaus Kalsmose, BDO:

“Without customs warehousing, you are going to be charged for your goods when they are imported into the EU, and you are also going to be charged when exporting the goods to the final destination (the consumer). This way, the goods are charged two times – which can be avoided through customs warehousing”

What to keep in mind when considering customs warehousing

If you are considering using customs warehousing or inward processing, there is especially one factor that needs to be measured next to the potential profits – and that factor is time.
Acquiring an authorization for either procedure is a lengthy process, and even if your company is approved, you will have to factor in a lot of extra work while warehousing your goods: There needs to be kept a strict account on the warehoused goods, you are most likely going to spend money on warehouse facilities, the Danish Customs Agency need regular updates, etc. You are going to spend a lot of time on the process, regardless of using private- or public customs warehousing, and you ultimately have to compare all of the work, time and money with the expected savings.

What to keep in mind when considering customs warehousing

If you are considering using customs warehousing or inward processing, there is especially one factor that needs to be measured next to the potential profits – and that factor is time.
Acquiring an authorization for either procedure is a lengthy process, and even if your company is approved, you will have to factor in a lot of extra work while warehousing your goods: There needs to be kept a strict account on the warehoused goods, you are most likely going to spend money on warehouse facilities, the Danish Customs Agency need regular updates, etc. You are going to spend a lot of time on the process, regardless of using private- or public customs warehousing, and you ultimately have to compare all of the work, time and money with the expected savings.

We can help you with the process

At ClearView Trade, we help make sure that all customs-documents are managed as smoothly as possible. All of your import- and export documents can furthermore be created digitally on our platform – quick and easy. You can use the platform to create digital Certificates of Origin, -Health Certificates, -Customs Documents, and many other types of official documents and certificates. This way, you save both time and money, while also minimizing your heavy, manual processes and eliminating typing errors.

Our talented partners at BDO are specialized in customs and taxes. They are always ready to offer their guidance when you have questions about customs-processes. They can also help you get started with customs warehousing and inward-/outward processing.

Read more about the ClearView Trade platform here, and visit BDO’s website to read more about customs, taxes, and many other subjects.

We can help you with the process

At ClearView Trade, we help make sure that all customs-documents are managed as smoothly as possible. All of your import- and export documents can furthermore be created digitally on our platform – quick and easy. You can use the platform to create digital Certificates of Origin, -Health Certificates, -Customs Documents, and many other types of official documents and certificates. This way, you save both time and money, while also minimizing your heavy, manual processes and eliminating typing errors.

Our talented partners at BDO are specialized in customs and taxes. They are always ready to offer their guidance when you have questions about customs-processes. They can also help you get started with customs warehousing and inward-/outward processing.

Read more about the ClearView Trade platform here, and visit BDO’s website to read more about customs, taxes, and many other subjects.

Klaus Kalsmose, BDO:

“We can help the companies apply for the permit in a structured and orderly fashion. To make sure that the organization can support the process, we also help implement the necessary procedures for using customs warehousing. Naturally, we also check up on the process regularly to make sure that everything is running smoothly. The same services are offered when dealing with inward- and outward processing, where we also handle the required quarterly- and yearly statements that are needed for the financial accounts”

About ClearView Trade

  • We help some of Denmark’s biggest food production companies: Danish Crown, Chr. Hansen, Palsgaard, FF Skagen, etc.

  • We assist 85% of the Danish export

  • We have more than 6.000 active users on our platform

  • We help more than 4.000 export companies deliver goods all over the world

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