A growing number of British firms are seeking to ease the extra customs and tax administration involved in trading with the EU by opening warehouses or using customs warehouses and temporary storage facilities (both customs special procedures) on the Continent.
According to the Guardian, logistics and warehousing companies in the Netherlands are being inundated with requests from British businesses looking to use warehousing to benefit from suspension of import taxes or in the case of re-exports, actual tax savings.
In a recent poll by the IOE&IT – surveyed during a capacity-attended webinar on Rules of Origin on 5 January – more than one fifth of companies said they were interested in exploring customs warehousing as a procedure in the future.
EU warehouse rules
Goods from outside the EU may be stored in customs warehouses located in the bloc for unlimited periods, unless hazardous to health or the environment.
While in EU warehouses, the goods will be under customs supervision and are not subject to import duties or other charges related to the import of goods or to import licences.
Jochem Sanders, a business development manager at the Holland International Distribution Council, which acts as an intermediary for Dutch logistics firms, told the Guardian he has been contacted by more than one British company per day throughout December and January, and he expects the number of requests to continue.
However, since the start of the year, many businesses have been surprised by the increased costs and red tape of servicing customers in Europe. Warehousing and logistics companies, such as KWL, are promoting the business benefits of warehousing in Europe.
The IOE&IT’s courses on customs warehousing and temporary storage facilities outlines how they can provide opportunities for the suspension of import taxes, which can provide huge cashflow savings for importers.
Business Matters reported how sporting goods company Leon Paul is considering opening a European warehouse as a third of its turnover of £7m comes from sales into Europe.
Hard to absorb
Owner Alex Paul said that since the end of the transition period on 31 December, new export levies, courier charges and local VAT had pushed costs beyond what the company could absorb.
“We might save some of the increased costs of doing business in Europe by setting up a warehouse there – and thereby avoid paying charges on every consignment – but we would have to make redundancies in our warehouse here and reduce the size of the business footprint in the UK. We are of course a relatively small business but all exporters will be hit with similar charges.”
Scottish hosiery company Snag Tights made the decision to open a warehouse in the Netherlands to handle all non-UK orders, helped by the Netherlands Foreign Investment Agency, reported the Insider.
The company turns over £24m, fulfilling 21,000 orders a week and CEO Brie Read said: “With one third of current sales coming from within the EU, it would no longer make sense to import our products from Italy to the UK, to then export them back to the EU.”
Larger companies, such as Hornby and JD Sport have also moved to reorganise their warehousing with facilities in Europe.
Some companies are even receiving advice to do so from government advisers, the Daily Mail reports.
Macclesfield-based The Cheshire Cheese Company was advised to seek warehouse space in Europe, after founder Simon Spurrell sought advice on what to do about £30 gift boxes that required certification costing £180 to ship to Europe.
The firm has now scrapped plans to build a new £1m warehouse in the UK.