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Customs warehousing

Customs warehousing
The procedure of storing of goods in customs warehouses is regulated by virtue of:
  1. Articles 110-117 and 128-142 of the Law on Customs (Official Gazette of the Republic of Serbia 18/10 and 111/12);
  2. Articles 263-299 of the Regulation of allowed custom clearance treatment of goods (Official Gazette of the Republic of Serbia, 93/10 and 63/13, hereinafter referred to as: Regulation on allowed custom clearance procedures), 
while filling in of declaration relevant for this procedure is regulated by the Rulebook on declaration.

Definition and types of custom warehouses

Custom warehouse is a place where goods can be stored in compliance with prescribed conditions, approved by custom authority and under custom’s supervision. Custom warehouse can be a building, one or more rooms inside a building functionally separated from other rooms, fenced open space, silo, pool or other similar facility for storing of goods.
 
Custom authority cannot approve use of the same room as several storage spaces at the same time. It is not allowed to have several simultaneous custom storage spaces in the same storage room; however, it is allowed to have several custom storages in the same building, but custom storage rooms must be clearly separated from each others in order to prevent mixing of goods.
 
Rooms and spaces approved for use as custom storages must be clearly labelled as custom warehouses, stating the name of warehouse keeper and custom warehouse team.
 
Custom warehouse can be public or private warehouse. 
 
Public warehouse is a custom warehouse wherein goods can be stored by a person, and private warehouse is intended for storage of goods owned by the warehouse keeper. 
 
Public custom warehouse can be of different types, such as:
  • Type A – implies that responsibility is held by custom warehouse keeper who must ensure that goods are not left without customs supervision while they are stored in custom warehouse, and must fulfil all obligations related to storing of goods and approval for holding of custom warehouse. In addition, this type of custom warehouse is available to everyone who wants to store their goods which are under customs supervision. Keeper of Type A custom warehouse is responsible for maintenance of business records on stored goods. Type A custom warehouse can be approved for storing and keeping of foodstuffs for ships and aircrafts in international trade and oil rigs in international waters.
  • Type B – with this type of warehouse, every single user is responsible to maintain goods under customs supervision while they are stored in custom warehouse. All obligations resulting from such procedure (according to declaration for storing of goods in custom warehouses) and approvals are responsibility of user. Custom authority shall keep documentation related to stored goods, so it is not required that custom warehouse keeper or user keep such documents, i.e. custom authority shall retain and keep custom declarations stating the placement of goods in the procedure. Removal of goods shall not be allowed if dispatch or destination points are Type B custom warehouses. For example, goods for which a procedure with delay is approved (e.g. active refining, storing in custom warehouses in some other type of custom warehouse) cannot be removed during the procedure or upon the completion of such procedure from the point it is stored to Type B custom warehouse. Type B custom warehouse cannot be approved for storing and keeping of foodstuffs for ships and aircrafts in international trade.
  • Type F – this type of warehouse is managed by custom authority. All the obligations related to this type of warehouse are responsibility of warehouse user, and custom authorities are only responsible for damage or loss of goods due to negligence. This type of warehouse can be used by any stakeholder for storage of goods, and records are maintained pursuant to customs-related regulations. Type F custom warehouse cannot be approved for storing and keeping of foodstuffs for ships and aircrafts in international trade and oil rigs in international waters.
Private custom warehouses can be divided into the following types:
  • Type D – is private custom storage wherein goods are placed into free trade based on bookkeeping reports, which must contain customs value and quantity of goods determined at the moment of placement of goods in custom storing procedure. Therefore, at the moment of goods storing, the following must be known: sort, type of goods, tariff number and origin of goods, since these are vital facts for placement of goods into free trade based on bookkeeping document. Responsibility for maintenance of business records about stored goods in this type of warehouse is on the warehouse keeper.
  • Type E – as for this type of private warehouse, it is not necessary to store goods at the point approved as custom warehouse, and approval of this type of warehouse can imply application of provisions pertaining to Type D warehouse (in terms of methods for collection of charges). This type of warehouse is open for storing of goods which due to their type (e.g. live animals), sensitivity (e.g. medications requiring specific conditions for storing), or dimensions, cannot be stored in approved custom warehouses. This type of warehouse is open for storing of a specific delivery and the procedure for opening of this type of warehouse is urgent. Responsibility for maintenance of business records about stored goods in this type of warehouse is on the warehouse keeper.
  • Type C – is private custom warehouse to which provisions for definition of Type D and E warehouses cannot apply. Accordingly, this type of warehouse is private custom warehouse whereby warehouse keeper is at the same time the user of the warehouse, but not necessarily the owner of stored goods. Type C custom warehouse can be approved for storing and keeping of foodstuffs for ships and aircrafts in international trade. Responsibility for maintenance of business records about stored goods in this type of warehouse is on the warehouse keeper.
Type of goods stored in custom warehouse

Pursuant to Article 128 of the Law on Customs, the procedure of storing goods in customs warehouses can be approved for:
  1. Foreign goods, which in that case are not subject to payment of import duties and measures related to commercial policy;
  2. Domestic goods intended for export, which once placed in customs warehouse becomes subject to measures applicable to export of such goods, in compliance with law.
The goods that are subject to custom storing must be registered as soon as they are brought into customs warehouse. Duration of storing in customs warehouses is not time limited.
 
Exceptionally, when there are justified economic reasons, and when there is no obstacle for implementation of custom supervision, custom authority can approve:
  1. storing of domestic goods not intended for export,
  2. processing of foreign goods on the premises of customs warehouse as a part of processes of active refining, in compliance with conditions for implementation of such procedure;
  3. processing of foreign goods on the premises of customs warehouse as a part of processing under customs supervision, in compliance with conditions for implementation of such procedure.
In these cases, the goods are not subject to custom storing, and competent custom authority can require maintenance of duly records for such goods.
 
Approval for customs warehouse keeping
 
Keeping of customs warehouse is approved at written request made by a person who wants to be a keeper, explaining economic need for storing of goods.
 
Application for the approval of customs warehouse is submitted to customs authority (customs office) competence of which covers the place where customs warehouse is located or where the applicant’s main bookkeeping is maintained.
 
The application for opening and managing of customs warehouse submitted to the competent customs authority shall be corroborated with the following documentation:
  1. certificate of registration in the Business Registry;
  2. certificate on TIN and current account/accounts opened at commercial bank;
  3. proof of legal basis for use of premises, i.e. facilities of customs warehouses (ownership right, lease, etc.);
  4. layout and technical description of relevant premises, i.e. facilities of customs warehouses;
  5. occupancy permit for use of subject premises;
  6. certificate issued by competent authority confirming fulfilment of specific conditions if storing of certain goods requires such specific conditions;
  7. statement on fulfilment of technical conditions, i.e. statement that customs warehouse, open and closed parts thereof, are technically equipped for implementation of measures related to customs supervision and control (check point, searchlights, weighbridge and other appropriate equipment and auxiliary facilities);
  8. statement confirming that premises and inventory needed for work of authorized custom officer are provided;
  9. statement confirming that the applicant is able to fulfil necessary conditions for holding of customs warehouse, if this is required for purposes of customs supervision and control, taking into account type and character of goods that are to be stored in customs warehouse (e.g. control of goods supplies in liquid or bulk form, it is necessary to provide circulating measurement device, weighbridge or other instrument for measurement of goods quantity or weight, which fulfils conditions related to meteorological compliance);
  10. proposed form and contents of records;
  11. bank guarantee as a form of security.
In addition to the above proofs and certificates, the applicant who intends to store goods in customs warehouse with the intention to execute certain contract, shall submit to the competent customs authority that contract as well.

Upon realisation of the procedure implemented at the request for opening of customs warehouse and upon the assessment of economic viability for such opening, competent customs office shall make a decision approving the management of customs warehouse. Pursuant to Article 130 of the Law on Customs, the approval is obligatory granted for all types of customs warehouses, except for in cases when customs authority manages the warehouse, i.e. in case of Type F customs warehouse. The approval can be granted only to persons whose head office is located in the Republic of Serbia.

The approval enters into force on the day when such decision is made, or on the day stated in the approval itself. The approval for warehouse management does not contain a provision on validity period thereof.        
                  
Suspension and cancellation of the approval for customs warehouse management

The approval for management of customs warehouse can be suspended if the control of operation of the open customs warehouse proved the existence of any condition referred to in Article 15 of the Law on Customs:
  1. if one or more conditions stipulated for the approval were not fulfilled or have ceased to be fulfilled;
  2. if the persons does not fulfil obligations prescribed by the approval;
The decision on suspension shall be immediately submitted to the subject person.
 
The approval for management of customs warehouse can be cancelled if:
  1. the applicant knew or should have known that provided data is incorrect or incomplete;
  2. such decision could have been made based on true or complete data.
The decision on cancellation shall be immediately submitted to the subject person.
Time period of goods storing

Goods can be stored in the above described procedure for unlimited period of time.
 
In exceptional cases, customs authority can determine a deadline for storing of goods, in which case the customs authority shall make decision on deadline for goods storing in each specific case, taking into account type of goods and specific conditions for storing thereof (medications, perishable goods, foodstuff with expiry date...).

Placement of goods in the procedure of customs storing
 
Storing of goods in customs warehouses shall be allowed only for goods listed in the approval. The goods must be stored in the way to enable easy control of supplies and identification of customs status for each type of goods. If stored goods are of dangerous nature, or if such goods can be harmful for other goods, or requires any specific treatment whatsoever, provision of such conditions is responsibility of the customs warehouse keeper.
 
Foreign goods is notified for customs storing through submission of administrative document (SAD) with declaration stating storing of goods in customs warehouse by entering “UV” in Box 1 of SAD, in the first part thereof, and the second part shall be filled in with code 7 – for customs storing and introduction of goods into free trade zone (hereinafter referred to as: Declaration C7).
 
The following documents shall be submitted along with customs declaration C7 for storing of foreign goods:
  1. for Type D customs warehouse, a bill (invoice) and other commercial documents based on which customs value of goods have been notified, as well as customs declaration on customs value of goods, if this is required based on Article 127 of the Regulation on allowed customs clearing procedures, in compliance with conditions prescribed therein;
  2. for types of warehouses other than Type D: it is not necessary to submit any documents, but pursuant to Article 172, paragraph 2 of the Regulation on allowed customs clearing procedures, these notifications are subject to Article 170, paragraph 2 of the same Regulation, i.e. customs office can require submission of transport documents along with these notifications, or documents related to previous customs procedures (invoice, CMR, pro-forma invoice, etc.). In addition, when one type of goods is notified in two or more deliveries, a list of deliveries may be required, or equivalent documents stating the contents of individual deliveries;
  3. in cases when foreign goods are stored in Type A warehouse, when user is at the same time the keeper of such warehouse, administrative documents C7 shall be accompanied by the approval given by warehouse keeper, confirming the acceptance of goods for storing and security for debt referred to in guarantee submitted for the customs warehouse;
  4. in cases when foreign goods are stored, and when such goods are owned by a foreign person, if goods are stored in Type C warehouse, the administrative documents C7 shall be accompanied by the contract on representation concluded between Type C customs warehouse keeper and foreign owner of the goods, which clearly indicates that customs warehouse keeper is authorised to conduct sale of goods on behalf and for the account of the foreign person. Data related to the contract shall be written in Box 44 of the administrative document C7.
Domestic goods (not intended for export) is stored in customs warehouse (regardless of the type) based on a commercial document (e.g. delivery note, invoice, or similar), or based on records maintained by the customs warehouse keeper, which enables custom supervision over the goods which shall be labelled in the way to clearly show that goods are domestic (e.g. sticker label containing wording “domestic goods”).

Filling in the administrative document C7

The manner and procedure for filling in of these boxes is prescribed in Article 13 and 14 of the Rulebook on declaration. Box 1, actually its first part, is labelled with “UV”, and the second part contains code 7 – for customs storing and introduction of goods into free trade zone. In addition to Box 1, the following boxes are also filled in for storing of goods in customs warehouse:  2, 3, 5, 6, 7, 8, 14, 15, 15a, 16, 19, 22, 31, 32, 34a, 35, 37, 38, 40, 42, 44, 48, 49 and 54. 

Box 8 of C7 administrative document for storing of foreign goods into Type C customs warehouse contains data about the keeper of the approval for holding of such warehouse. In the procedure of storing of goods into public customs warehouses, this box contains data about the user (holder) of goods.
 
Obligations related to maintenance of records for goods stored in customs warehouses
 
All goods in the procedure of customs storing, except for the case of Type B warehouse, shall be registered in relevant records immediately upon the introduction of such goods into customs warehouse.
 
The goods stored in customs warehouse are recorded in warehouse records or files with data from warehouse records (hereinafter referred to as: records); these records can be maintained electronically.
 
Recording of goods stored in customs warehouse shall be maintained by:
  1. in customs warehouses of A, C, D and E types – warehouse holder (administrator),
  2. in customs warehouses of F type – customs authority appointed for customs supervision over the warehouse shall maintain records in compliance with customs-related regulations instead of keeping records for goods supplies,
  3. in customs warehouses of B type, instead of keeping records for goods supplies, the supervising customs authority shall retain and keep customs declarations related to placement of goods in the procedure of customs storing, as well as declarations related to closing of customs storing procedure.
Usual procedures of treatment, i.e. handling of goods in the procedure of customs storing
 
Foreign goods placed in the procedure of customs storing can be subject of usual treatment necessary for conservation of goods, improvement of goods appearance or quality, i.e. preparation for market or further sale. Such treatment cannot be prevailing compared to the procedure of customs storing. If this is anyhow the case, then the approval for customs warehouse keeping cannot be granted.
 
Usual treatment includes all the actions prescribed in Appendix 24 of the Regulation on allowed customs treatment, which makes inseparable part thereof.
 
Temporary removal of goods from customs warehouses
 
Goods can be temporarily removed from customs warehouse for the period not longer than three months. This period can be extended in justified cases (testing, displaying on fairs, exhibitions, demonstrations), if this is required by specific circumstances. 
 
The request for the approval of usual treatment or removal of goods from customs warehouse shall be submitted to supervising customs authority in written form and individually for each specific case. The approvals for usual treatment or temporary removal of goods from customs warehouse can be listed in the approval for the procedure of customs storing. Supervising customs authority in such case should be informed in the manner determined by the authority, before exposing the goods to usual forms of treatment or temporary removal from the warehouse.
 
Transfer of goods from one to another customs warehouse
 
Customs authority can approve transfer of goods that had been placed into the procedure of customs storing from one customs warehouse to another. The customs authority decides in the approval whether and under which conditions the goods or products stored in customs warehouses can be transferred between different places or premises of different users of the approval without discontinuing the procedure. The customs authority shall also decide about maintenance of required records.
 
Transfer of goods shall not possible if dispatch or delivery point of goods is customs warehouse of B Type.
 
The procedure of customs storing can be closed by placing foreign goods in the same procedure in another customs warehouse by the same user.
 
When transferring goods from one to another customs warehouse, the owner of goods must not be changed. The owner of goods shall remain the same, the procedure of customs storing shall continue using the same data about goods and user (person receiving the goods), only in another warehouse due to conditions, pricing of the storing and similar reasons.
 
Ceasing of the procedure of customs storing of goods
 
The procedure of customs storing shall be closed once such foreign goods are placed under other allowed treatment or use, such as:
  1. re-export of goods,
  2. release of goods into free trade,
  3. placement of goods in the procedure with economic effect,
  4. placement of goods into free trade zone or free warehouse,
  5. destruction of goods under customs supervision,
  6. cession of goods to customs authority,
  7. transit procedure.
Entering data into relevant records related to closing of custom storing procedure shall be conducted when goods leave customs warehouse latest. On the occasion, pursuant to Article 286 of the Regulation of allowed customs procedures, such imported goods, notified under prior administrative document C7 or other administrative document, is discharged from the records, so as to enable lower number of administrative documents and more transparent records, thus ensuring that data must correspond to data provided for in Box 40 of the administrative document used for discharge of customs storing. Application of the described procedure cannot reduce the amount of customs debt.

Booking of data on closing of customs procedure in the relevant records shall be conducted when goods leave customs warehouse or keeper’s storing premises latest.
 
Taxation aspect of customs storing of goods
 
Taxation of goods in the procedure of customs storing is stimulated in taxation terms. Introduction of goods, and the entire duration of customs storing procedure are not subject to VAT calculation and collection. Possible taxation in terms of VAT calculation and collection can occur in the event of closing of customs storing, depending on future customs procedure upon the completion of customs storing procedure. However, in these cases as well, most of the future customs procedures are exempted from taxes.
 
Tax exemptions related to customs storing procedures are regulated by virtue of Articles 24 and 26 of the Law on Value Added Taxes, and the manner and procedure for such tax exemption are regulated by virtue of the Rulebook on the manner and procedure for exercise of tax exemptions in VAT procedures, with right on deduction of previous tax (Official Gazette of RS, number 120/12, 40/15, 82/15 and 86/15) (hereinafter referred to as: Rulebook on tax exemptions).
 
From the taxation aspect, customs storing procedure can be divided into:
  1. import of goods for the purposes of customs storing, which is exempted from VAT;
  2. trade of goods in customs warehouse, which is exempted from VAT;
  3. closing of customs storing procedure that can be subject to taxation or exempted from VAT.
Tax exemption based on import of goods for the purposes of customs storing
 
Pursuant to Article 26, paragraph 1, item 6) of the Law on Value Added Taxes, the value added tax shall not be paid for goods which are approved for customs storing within a specific customs procedure.
 
Tax exemption based on this provision shall be exercised through direct application of Article 26, paragraph 1, item 6) of the Law on Value Added Taxes, and it shall be implemented by competent customs authority at the moment of approval of customs storing. 
 
Tax exemption based on trade in goods in customs warehouse during the customs storing procedure
 
In principle, during the customs storing procedure, the goods stored in customs warehouse are exempted from taxation as long as the goods are under customs supervision as a part of customs storing procedure. 
 
In compliance with customs-related regulations, the goods under customs storing procedure can:
  1. be temporarily removed from the customs warehouse;
  2. be moved from one to another warehouse; 
  3. undergo change in ownership.
In all the listed cases, VAT is neither calculated, not collected. Temporary removal from the warehouse and moving of goods from one warehouse to another shall not be subject to VAT because in these cases there is no change in ownership, i.e. the owner in all these cases remains the same. Just to remind, one the main principles of VAT is that the subject of VAT can be the transfer of rights on disposal of physical goods to a person who can dispose of such goods as the owner.
 
When it comes to trade in goods under the customs storing procedure which includes change of the goods owner, such trade is subject to VAT, but is exempted from VAT based on Article 24, paragraph 1, items 6) of the Law on Value Added Taxes, through the right on deduction of previously paid tax.
 
Exercise of right on exemption from taxation for trade in goods under the customs storing procedure
 
There is a common case in practice that goods that are stored in customs warehouse undergo transfer of ownership rights, with no changes in status of goods, i.e. the goods still remain in customs storing procedure, under supervision, only with change in owner of such goods. In these cases, VAT used to be calculated and collected for goods undergoing change in ownership in customs warehouse until 1 January 2013.
 
The Law on Amendments of the Law on Value Added Taxes (Official Gazette of RS, no. 93/12) entered into force as of 1 January 2013, introducing tax exemption for this type of trade according to novel provisions of Article 24, paragraph 1, item 6) of the Law on Value Added Taxes, which has been in force since 1 January 2013, VAT is not paid for trade in goods stored in customs warehouse under the customs procedure. This tax exemption pertains only to trade in goods stored in customs warehouse, not to trade in services in customs warehouse, for example, charges for storing of goods in customs warehouses are subject to calculation and collection of VAT.
 
Manner and procedure applied to tax exemption cases is regulated through Article 9 of the Rulebook on tax exemptions. Pursuant to Article 9, paragraph 1 of the Rulebook on tax exemptions, a VAT obligor involved in trade in goods stored in customs warehouse can be exempted from taxes if he has: 
  1. declaration, i.e. certified copy of declaration which proves that goods are stored in customs warehouse in compliance with customs-related regulations;
  2. invoice for delivery of goods verified by competent customs authority.
Declaration as a proof used in the procedure of tax exemption is filled in by adding “UV” and C7 in Box 1 of SAD in compliance with the Rulebook on declaration.
 
The invoice issued by a supplier of goods that are stored in customs warehouse, as a proof used in the procedure of tax exemption must contain required data referred to in Article 7 of the Rulebook on determination of cases in which invoice does not have to be issued and on invoices in which certain data can be omitted (Official Gazette of RS, no. 123/12 and 86/15), shall include:
  1. name and address of VAT obligor, supplier of goods, i.e. user of customs warehouse;
  2. place and date of issuance and ordinal number of invoice;
  3. name, address and TIN of the obligor – receiving party, i.e. user of customs warehouse;
  4. type and quantity of delivered goods;
  5. date of trade in goods;
  6. total amount invoiced for delivery of goods;
  7. note on tax exemption: “VAT is not included pursuant to Article 24, paragraph 1, item 6) of the Law on Value Added Taxes”.
Tax exemption based on this provision can be exercised only if goods, at the moment of trade, are stored in customs warehouse, which is confirmed by customs authority by verifying the invoice for trade in goods.
 
If a VAT obligor, supplier of goods, has received advanced payment before the trade, the obligor involved in trade of goods can be exempted from taxes if he has a declaration, i.e. certified copy of declaration which proves that goods are stored in customs warehouse in compliance with customs regulations.
 
Tax report pertaining to taxation period in which the trade is conducted, submitted by VAT obligor, shall contain data about subject trade inserted under number 1 in Box 001. In case of advanced payment, the obligor does not state data about advanced payment.
 
Taxation for cessation of customs storing procedure

 It was stated above that goods stored in customs warehouse are not subject to VAT, and that they are in the regime of tax exemption as long as the goods are under customs supervision in customs storing procedure. Further taxation of these goods depends on future customs procedure pertaining to goods upon the cessation of customs storing. 
 
Pursuant to customs-related regulations, the procedure of customs storing is closed when goods are approved for other allowed treatment or use, such as:
  1. re-export of goods,
  2. placement of goods into free trade,
  3. placement of goods in a procedure with economic effect,
  4. placement of goods in the free zone or free warehouse,
  5. destruction of goods under customs supervision,
  6. cession of goods to customs authority,
  7. transit.
The above listed customs procedures are stimulated in taxation terms, i.e. VAT is not calculated and collected for such procedures based on Articles 24 and 26 of the Law on Value Added Taxes. The only customs procedure that is subject to VAT calculation and collection is the procedure of placement of goods into free trade, with the exception of goods that are to be placed in free trade for which exemption from taxes is prescribed by relevant regulations (e.g. donations, humanitarian aid, diplomatic representation offices, etc.).

Exercise of rights on tax exemption is described in the text below.

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