When is Procedure 42 worth it? A decision guide | OTSL

Procedure 42 is worth it when you import goods into one EU country but the final buyer sits in another member state and the goods move there almost immediately. You release the goods for free circulation without paying import VAT at the border, because the buyer accounts for it in the country of destination as an intra-Community acquisition.

How does it work?

The goods enter the Union through one country (for example a port or border crossing), where you declare them for release for free circulation. Instead of paying import VAT on the spot, you declare that the goods are about to leave that country under an intra-Community supply. The VAT due shifts to the buyer in the country of destination, who reports it as an intra-Community acquisition. Customs formalities are handled at the point of entry, while VAT is settled further down the chain.

When is it worth it?

Choose Procedure 42 when:

• imported goods have their final buyer in an EU country other than the country of entry,
• you want to avoid tying up cash in import VAT that you would later have to reclaim,
• your logistics route the goods through a convenient port or border, but they are ultimately bound elsewhere in the Union,
• you hold complete party data: valid EU VAT and EORI (Economic Operators Registration and Identification) numbers for both importer and buyer.

It makes no sense when the buyer is in the same country where the goods enter the EU. There is no intra-Community supply, so the procedure does not apply.

Conditions and evidence

For the procedure to hold, formal conditions must be met. The key elements are:

• a valid EORI number and a valid EU VAT number for both importer and buyer,
• credible evidence that the goods actually left the country of entry and reached another EU country (transport documents, proof of delivery),
• correct and consistent data in the customs declaration and the VAT return.

Compile and keep the documentation from the outset. It decides whether the authority accepts the import VAT exemption when questions arise. You will find the definition in our glossary.

Risks

Mistakes are expensive. If the buyer's VAT number turns out to be invalid, the export evidence is incomplete, or the documentation is inconsistent, the authority can challenge the procedure and demand payment of import VAT. The risk grows with unverified partners and with chains where the goods do not move straight to the declared buyer.

The OTSL role

As a forwarder handling customs clearance in-house, we set up Procedure 42 on the operational side: we verify the numbers, keep the customs declaration aligned with the transport, and assemble the evidence of movement to the other EU country. You confirm the tax decisions with your adviser, and we tie up the logistics and documents. Contact us if you import with delivery to another EU country, or browse our knowledge base. See also: Can a small business with no experience ship a pallet to England? A plain-language guide from first message to delivery and Trailer seals and the sealing protocol: seal types, ISO 17712, the CMR entry and the breach procedure.

Step by step

1. Arrival in the European Union. The cargo arrives at the first seaport or border crossing within the EU.
2. Customs declaration. The broker submits a declaration for release into free circulation under Procedure 42.
3. VAT verification. Customs officials confirm the active EU VAT numbers of both trading parties.
4. Immediate dispatch. The goods move directly toward the destination member state without delay.
5. Tax accounting. The final buyer reports an intra-Community acquisition in their home VAT return.

Definitions

• Procedure 42: A customs mechanism allowing goods imported into one European Union country to be released for free circulation without paying import VAT, provided they are sent to a buyer in another member state.
• VAT (Value Added Tax): A consumption tax deferred at the port of entry under Procedure 42 and settled later by the recipient in the country of destination.
• EU (European Union): The economic and political union of European states forming a single market without internal customs borders.
• Release for free circulation: The legal process that grants non-EU goods the status of Union goods upon clearing border customs formalities.

Sources

European Commission, Taxation and Customs Union (ec.europa.eu)