Tax warehouse

What it means

A tax warehouse is premises where, under a customs office authorisation, goods subject to excise duty, such as spirits, beer, wine, tobacco products or mineral oils, are produced, processed, stored, received or dispatched. Goods there are under a duty suspension arrangement, meaning no duty is paid yet.

Duty becomes due only when the goods leave the tax warehouse and are released for consumption, for example when a brewery sells to a wholesaler in Slovakia. If the goods go to another tax warehouse, including in another EU state, or are exported, they can move without duty under the electronic movement control system.

The operator of a tax warehouse, the authorised warehousekeeper, must lodge security for the duty, keep detailed records and allow customs inspections. Unlike a customs warehouse, which concerns customs duty on goods from third countries, it is an excise instrument.

How it works in practice

Tax warehouses are used mainly by producers such as distilleries, breweries and refineries, and by large distributors wanting to hold and move goods without paying duty up front. Without one, duty would be payable straight after production or import and the money would be tied up until the goods were sold.

In the accounts, excise duty on release for consumption becomes a liability to the customs office and part of the cost of goods sold. Goods held in the tax warehouse are carried in inventory without duty. Stocktaking must also allow for the permitted losses the law recognises for certain products.

Smaller businesses such as craft breweries or fruit distilleries weigh up whether a tax warehouse is worth it, as the security and record-keeping cost money. The law also provides simplified procedures for small producers, which we recommend checking with the tax administrator before production starts.

What to watch out for

Problems most often arise in the records: differences between actual stock and entries, missing documents on movements of goods or movements not correctly closed in the electronic system. Where there are differences, customs assesses duty on the missing quantity, usually with a penalty.

The second risk is selling to a customer not authorised to receive goods under duty suspension. If goods go to the wrong recipient, the warehousekeeper may end up paying the duty without being able to recover it from the buyer. Partners’ authorisations should therefore be checked before every delivery.