How to Ship Wine: Know When to Buy Wine Under Bond and When to Buy Out of Bond

buying Wine Under Bond

Buying wine under bond means that you only pay taxes on the bottles after they’re taken out of a secure bonded storage warehouse. Photo Credit: Pixabay CC user skeeze

Wine collector Penelope Wise says she first started buying Bordeaux and Burgundy out of bond because she loved seeing the wine stacked inside her home cellar. When she started traveling more, she wasn’t around to keep an eye on her home cellar as often, so she started buying wine under bond through a London merchant, who stored the wine for her in a bonded warehouse. As the years passed, Wise realized how much she missed having her wines in her own cellar. She explains, “I used to love looking at my bottles, row upon row of them, holding so much promise of future joy. But I can’t say I was ever thrilled by the quite costly quarterly storage reports that came from the merchant.” After seven years in storage, Wise sold off all of her bonded wines. If you’re not sure whether buying wine under bond is right for you, it’s important to think about the goal of your collection. What you plan on doing with your wine long term will determine which shipment method is the best choice.

The Difference Between Buying Wine Under Bond and Out of Bond

Buying wine under bond means that you ship the wine directly from the winery to a secure bonded storage warehouse, without going through customs. First, you pay the merchant for the wine. After this, the merchant marks the wine as a “bonded shipment,” and sends the wine directly to a licensed warehouse. From here, the storage warehouse keeps the wine under ideal conditions until you decide what to do with the bottles. In the meantime, you avoid paying any duty taxes or VAT, meaning that you can buy wine at a cheaper price than if you were to buy it out of bond. When you buy wine under bond, you can pull it from the warehouse when you want to drink it, or sell it off directly from the warehouse.

If you decide to sell the wine under bond, you can make a profit on the bottles without paying taxes, but you’ll have to pay anywhere from $7 to $8 per case in yearly fees charged by the storage warehouse. This fee is typically much cheaper than what you would pay in taxes on your bottles. The Guardian’s Leo Hickman explains, “It’s only when someone decides to take it out of storage that the taxman cometh.” Whoever buys the wine from you will be responsible for paying taxes on those bottles if they take them out of the bonded warehouse.

Alternatively, buying wine out of bond means that you’re responsible for paying taxes on the wine the moment it arrives on your doorstep. You can store the bottles in your home cellar, which might save you money on storage fees, yet in many cases, the taxes you have to pay are much higher than what you would have paid to keep the wine in bonded storage.

Buying Wine Under Bond: Why Consider It

If you consider wine collecting purely a form of investment, you’ll want to consider having your wine shipped under bond to avoid paying hefty taxes. Let’s say you bought a case of wine from Italy, and each bottle sell wholesale for $500. First, you’d spend at least $6,000 on the case of wine itself, and that’s not including Italy’s VAT tax fee, which is 22 percent. VAT adds $1,320 to your bill. When you have the case shipped to the U.S., you’ll have to spend an additional 3 percent on duty taxes. Your $6,000 case of wine has now become a $7,500 case of wine.

Rather than paying that $1,500 upfront, only to resell the wine case years later, you can pay just the original price of $6,000 and ship your wine under bond. Professional storage is also safer for your investment bottles than a home cellar because wine storage keeps your bottles at the perfect temperature and humidity, with less risk of spoilage. Auction houses also like to see that your wines have been stored professionally under bond because it’s easy to show a paper trail of authenticity. They can see that you bought the bottles from the winery directly, and that the bottles have never left the secure warehouse.

Why You Might Buy Out of Bond Instead

There are plenty of benefits to buying wine under bond, but it doesn’t mean that this is the best option for every collector, especially those who plan on drinking the wine they own. If you want to drink your bottles someday, you’ll end up paying more money if you buy under bond due to the bonded warehouse’s storage fees.

Buying out of bond gives you more freedom to decide what to do with your wine later. You can keep the bottles in a home cellar or store them with your preferred warehouse. When you buy under bond, you’re forced to use whatever bonded warehouse the merchant uses, and that warehouse may charge higher fees than other warehouses of similar quality.

Buying wine under bond or out of bond are both great options depending on the type of collector you are. If you believe that profits are the most important reason to collect, go with a bonded sale. If you believe that drinking your wine is the ultimate goal, then an out of bond sale is likely the better fit.

Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buying, selling, and professional storageContact us today to get access to the world’s best wine.

Harley is an Executive Wine Specialist for Vinfolio, helping collectors find the best wines for their collection. He’s a lover of everything outdoors and the proper bottles to go along with it. You can find him at any of the newest cocktail bars and restaurants in SF or on an adventure somewhere in between Lake Tahoe and the California coastline.