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Fiscal clearance means importing goods into free circulation in one EU country with an immediate intra-Community supply to the country of destination, where the buyer accounts for VAT. You pay customs duty at the country of entry, but import VAT does not hit the border. It is often handled by a tax representative acting for the importer. Confirm the details and conditions with a tax adviser.
How the fiscal mechanism works
Classic import runs like this: goods from outside the EU enter the Union, are released for free circulation, and at the border both customs duty and import VAT are charged. The VAT must be paid or secured before the goods move on. On large consignments that is cash frozen in the tens of thousands per delivery, recovered only in a later return.
Fiscal clearance separates the two taxes. You settle customs duty normally in the country of entry, because it is due to the Union as a whole. Import VAT, however, is not levied at the border, because the goods move straight on as an intra-Community supply to a buyer in another EU state. The tax surfaces at the end, in the country of destination, where the buyer reports an intra-Community acquisition and accounts for VAT in its own return, usually under the reverse-charge mechanism. The result: goods cross the border with no cash tied up in import VAT. We describe the procedure 42 mechanism in more depth in our article on regime 42, and we work through the payback case in when procedure 42 is worth it.
The role of the tax representative
This is where the tax representative comes in. If the importer is not established and not VAT-registered in the state where clearance takes place, that state's law may require an appointed tax representative (also called a fiscal representative) to discharge its VAT obligations. It is a specialised entity that acts on the importer's behalf and takes on the VAT side of the operation.
- Representation before the authorities. The representative appears as the party accounting for the VAT of an importer not established in the country of clearance and mediates contact with the tax office.
- Returns and recapitulative statements. It reports the intra-Community supply in the VAT return and in the recapitulative (EC Sales) statement, making the transaction visible to the authorities of both countries.
- Documentation and proof of dispatch. It gathers and keeps evidence that the goods genuinely left the country of clearance and reached another EU state, because without it the zero rate on the intra-Community supply can be challenged.
- Liability. In many jurisdictions the representative is jointly liable for the VAT obligations of the operations it handles, which is why it weighs the client's reliability and the completeness of the paperwork.
The scope of authority, the form of appointment and even the need to appoint a representative depend on the law of the specific member state and on whether the importer is established inside or outside the EU. These are not decisions to make from memory: confirm them with a tax adviser and the local authority.
Conditions the procedure cannot survive without
Fiscal clearance is a preferential procedure, so authorities police its conditions. The import VAT exemption applies only where the intra-Community supply that follows the import actually takes place and is itself exempt (zero-rated). The key elements:
- Valid EU VAT numbers. The importer or its representative and the buyer in the country of destination must hold active identification numbers for intra-Union transactions. The buyer's number is checked in the VIES system, and a wrong or inactive number undermines the exemption.
- Number stated in the customs declaration. The import declaration must state the identification number of the buyer in the other EU state to which the goods are delivered.
- Proof of dispatch. You must prove the goods left the country of clearance and reached another member state: the CMR (the Convention on the contract for international carriage of goods by road) transport document, a proof of delivery, commercial correspondence, transport documents.
- Recapitulative statement. The intra-Community supply must be reported in the recapitulative statement so both countries' authorities can reconcile it.
Gaps anywhere in this chain have one shared consequence: the office can demand the import VAT the procedure was meant to avoid, plus interest. Formal requirements and thresholds vary by country, so confirm the detail in an official source, for example the European Commission's Taxation and Customs portal and the national customs system.
Fiscal clearance versus ordinary import clearance
| Element | Ordinary import clearance | Fiscal clearance (procedure 42) |
|---|---|---|
| Customs duty | charged in the country of entry | charged in the country of entry |
| Import VAT at the border | levied or secured | not levied |
| Where VAT is accounted for | in the country of import | in the country of destination, as an intra-Community acquisition |
| Who accounts for VAT | the importer in the country of entry | the buyer in the country of destination |
| Extra condition | none | a direct intra-Community supply and proof of dispatch |
| When a tax representative may be needed | usually not | when the importer is not established or registered in the country of clearance |
The difference comes down to one question: where and when the VAT is paid. Ordinary clearance loads the border; fiscal clearance moves the settlement to the buyer's country. For a company importing from outside the EU goods that are destined for another member state anyway, the second route is often the more natural one. It is worth comparing with other cash-flow tools, such as the UK's Postponed VAT Accounting, which defers import VAT on imports into the United Kingdom.
The cash-flow benefit and what to keep in mind
The biggest advantage is a cash one. You do not freeze funds on import VAT with every delivery, and you do not wait to recover it in a later period. On regular imports into the EU with a buyer in another member state, this frees working capital that would otherwise circle between the border and the tax office.
The price of that benefit is documentary discipline. The procedure works only with a complete evidence chain and correct EU VAT numbers; a slip on proof of dispatch removes the exemption. On top of that sits the question of VAT on the transport itself, which follows its own place-of-supply rules and which we cover in the article on VAT on international transport invoices. Always confirm the specific scenario, the rates, the obligation to appoint a representative and the settlement form with a tax adviser and the official source for the country of clearance.
The OTSL role
As an international freight forwarder we arrange road transport and customs clearance so that the documentation for fiscal clearance holds together: we keep the CMR consignment note and proof of dispatch in order, we coordinate carriage between the country of entry and the country of destination, and we work with the client's customs agency and tax representative. We run traffic between Poland, the United Kingdom, Switzerland and the rest of Europe, with warehouses in Kielce, Legnica and Milton Keynes. We do not replace a tax adviser: the VAT side is confirmed by them and the local authority. More sits in our knowledge base, and you can discuss a specific delivery through the contact form.
Who settles the import VAT under fiscal clearance?
The buyer in the final destination country settles the import VAT by reporting the transaction as an intra-Community acquisition in their local VAT return.
Step by step
- Document preparation. You gather the commercial invoice, transport document and proof of the buyer's active EU VAT number.
- Customs declaration. The appointed tax representative submits the import entry at the customs office of entry into the EU.
- Duty payment. You pay customs duty at the border or port of entry while import VAT remains deferred.
- Cross-border transport. You move the goods directly to the recipient located in another EU member state.
- Local VAT accounting. The buyer declares and accounts for VAT in their local tax return in the destination country.
Definitions
- Fiscal clearance: The release of imported goods for free circulation in one EU (European Union) member state with an immediate transfer to another EU country.
- Procedure 42: A customs regime allowing the deferral of import VAT (Value Added Tax) at the point of entry into the European Union.
- Tax representative: An entity acting on behalf of a non-resident importer to fulfil local VAT obligations during customs processes.
- Intra-Community supply: The dispatch or transport of goods from one EU member state to another as part of a commercial transaction.
When does this rule not apply?
This rule does not apply if the country where goods enter the European Union is also their final destination. In that scenario, import VAT must be settled at the border of entry.
