The Benefits of Duty-free Warehousing

The category of duty-free warehouses is extremely attractive for obvious reasons. But it is fascinating that for many, these warehouses are not attractive for economic reasons, but for the quality of service and storage conditions.

First of all, let’s look at the concept of duty-free warehousing. This is a warehouse where all kinds of goods can be stored without payment of import duties, internal taxes and other trade policy measures.

This is an area that is not part of the EU in terms of customs control. (Like the Duty-Free shops between state borders). Therefore, such warehouses are not subject to any import or export duties.

Under what conditions do these warehouses function?

Goods may be stored in a duty-free warehouse for an unlimited period of time (until the business entity decides to ship them), regardless of the quantity, type, origin and destination of the same goods, as well as legal restrictions in the area. But if the goods pose a threat to the environment, public order or public health, they may be subject to any prohibitions.

Customs authorities are responsible for controlling duty-free warehouses in free economic zones and warehouses owners are liable to them in any case.

The company that owns the duty-free warehouse is responsible for the management of all administrative and port procedures for the goods. Periodically submits a report to the customs (form and frequency are agreed with the customs). It may also conduct classification, handling, maintenance, loading, unloading and constant control of goods.

The undisputed advantage of such warehouses is that they can store the goods (with unlimited or long shelf life, of course) until the optimal moment of sale. Because VAT also does not apply to operations through the duty-free warehouse.

For example, any type of goods can be stored at Luxembourg freeport. A maximum security centre for the super-rich to store art, fine wine, vintage cars, and other high-worth collectibles

History of duty-free warehouses

The first such warehouses appeared at the end of the 19th century. The main task was to facilitate international trade (development of national production exports).  Many regional companies became leading players in the market and turned into the main competitors for central monopolists, which gave rise to a new round of economic development.

It is amazing how much these warehouses have changed in our days. Indeed, many of them are used by national producers and large private businesses. But there are many examples of influential businessmen storing their savings and pieces of art under the guise of transportation. After all, protection is provided at the highest level by the state itself. Because of this, there is a lot of debate and discussion about the rational use of warehouses and cargo inspection.

The services currently provided at the duty-free warehouses and their management differ significantly from the previous ones, which is in line with the development of international trade and customs legislation. However, they continue to be a catalyst for competitive and foreign trade.