Bonded Warehouse
Also: Customs warehouse, Free warehouse, Bonded storage
A bonded warehouse is a state-approved facility in which goods can be stored outside the duty point, so that no import duty or import VAT falls due while the goods remain there.
A bonded warehouse (also customs warehouse) makes it possible to store goods - including physical precious metals such as gold and silver - as if they were still outside the customs territory. As long as the metals remain in the warehouse, no import duties and no import VAT arise. These charges only become due when the goods are released into free circulation - that is, on the actual import into the UK.
Legal basis
In the UK, customs warehousing is operated under HMRC authorisation. A warehouse keeper needs a corresponding authorisation and is obliged to keep proper records of all goods stored. The regime allows non-UK goods to be held with import duty and import VAT suspended until the goods leave the warehouse.
Warehouse types at a glance
| Type | Kind | Liability for obligations | Typical use |
|---|---|---|---|
| Public | Public customs warehouse | Warehouse keeper | Precious metal dealers, specialist vaults |
| Public | Public customs warehouse | Depositor | Banks, institutional users |
| Private | Private customs warehouse (keeper only) | Warehouse keeper | Refineries, wholesalers |
For private investors, above all the public customs warehouse is relevant, operated by specialist precious metal dealers or banks.
Advantages for precious metal investors
- Deferred tax: import VAT (20% on silver, platinum and palladium) only falls due on withdrawal from the warehouse - not on purchase.
- Flexibility: precious metals can be traded, repacked or reassigned within the warehouse without changing the customs situation.
- International tradability: bars can be sold to other buyers who may re-export the metal to another country - in which case the import charges disappear entirely.
- Secure custody: professional bonded warehouses are usually equipped with high-security vaults, insurance cover and complete inventory documentation.
Distinction from home storage
Unlike home storage, physical control lies with the warehouse keeper, not the investor. The investor holds a documented claim to a specific quantity of precious metal (with allocated storage to identifiable, individually numbered pieces). With unallocated storage there is merely a contractual claim, which represents an increased risk in the event of the operator's insolvency.
Tax particulars
Investment gold is already VAT-exempt in the UK under HMRC rules - so the bonded warehouse offers no additional VAT advantage on purchase within the UK. Its benefit unfolds above all with physical silver, platinum and palladium, which are subject to the full VAT rate, as well as with metals imported from abroad. Gains on the sale of privately held precious metal remain subject to UK Capital Gains Tax rules: UK legal-tender coins such as the Sovereign or Britannia are CGT-exempt, whereas bars and non-legal-tender coins are subject to CGT above the annual allowance. The bonded warehouse changes nothing about this.
Note: This entry does not constitute tax or investment advice. Individual tax questions should be clarified with a tax adviser. You can follow the current gold price and silver price on this page at any time; the tax calculator estimates the tax effect on sale.
Well-known locations and providers
Leading locations for precious metal bonded storage in Europe are Zurich (Switzerland, outside the EU customs territory), Singapore and London. In the UK, specialist precious metal dealers and vaulting providers operate authorised customs warehouses, particularly around London.
In brief
The bonded warehouse is a proven instrument for institutional and wealthy private investors who wish to store larger quantities of physical precious metals cost-efficiently and with legal certainty, without paying import charges immediately. Anyone holding smaller quantities or valuing direct access, by contrast, is often better served by home storage or a safe-deposit box.