Customs Bond Definition | UPS Supply Chain Solutions

What is a Customs Bond?

A legal contract, usually issued through a licensed Customs broker, between an importer, a Surety company, and US Customs and Border Protection (CBP) that guarantees that the importer complies with Customs regulations. It also guarantees payment of additional import duties, taxes, fines, and penalties, allowing CBP to clear the shipment without having to wait for additional payment. In the case where CBP issues a demand for payment, the Surety company may pay CBP, and then seek reimbursement from the importer via the contract/bond.

In the US, commercial shipments valued at over $2,500, including shipments of duty-free items, require customs bonds.

When a bond is required, CBP will not release your goods until the bond is posted or the taxes and duties have been paid in cash up front. Once a bond is posted, you can walk away with your goods and have ten days to pay duties.

There are two types of customs bonds: single-transaction bonds (aka single-entry bonds or SEBs) and continuous bonds. SEBs cover a one-time entry, while continuous bonds are renewable and cover multiple ongoing entries at all US ports of entry until one year from the date they are issued. The cost of an SEB is based on the single shipment, while the fee for a continuous bond is determined based off of 10% of the total taxes, duties and fees paid over the 12 month period (with a minimum of $50,000). For companies importing multiple shipments, continuous bonds are generally faster, more convenient, and more cost-effective.

Also known as a "code 1 bond" or an "activity code 1 import bond".

Note: Though Customs Bonds, as defined here, are US-specific, other countries’ relevant customs authorities may require a similar instrument to guarantee payment of duties. (e.g., Brazil)