There are different customs procedures that allow companies to import and export to other countries without difficulty. Customs procedure 42 is the most common customs procedure at present.
Principle of the customs procedure 42
This is mainly used in cases where a trader wishes to import goods from a third country into one Member State and immediately make a supply in another Member State.
The purpose of the scheme is to facilitate VAT recovery operations for taxable persons in connection with the building up of a tax credit resulting from the VAT due on an import. At that time, the immediately subsequent intra-Community supply is not subject to VAT payment by the seller. Thus by placing the import under the 42 scheme, VAT in the Member State of customs clearance is suspended.
A scheme subject to various conditions
First of all, it is necessary that the subsequent intra-Community supply is made immediately after the import. Thus, in principle, the only delays tolerated are those related to the transhipment of the goods.
This requirement is accompanied by another concerning the goods which are the subject of the intra-Community supply, which must necessarily be the same as those which were imported exempt from VAT.
Example of Customs procedure 42
Customs procedure 42 is of particular interest in the case of successive sales operations. For example, a supplier in India sells to a company in France, which then sells to a customer in Belgium.
The goods then leave India to be imported into France and immediately delivered to Belgium. The French company can clear its goods through customs with the Indian invoice and then deliver to the Belgian customer who will not be involved in the import operation.
Thus, thanks to the 42 regime, no VAT is advanced.
On the other hand, although the customs 42 regime may be relevant, implementing it in compliance with customs and tax rules may remain rather complicated. This is especially true since tax and customs cooperation between countries facilitates controls on the 42 system.
ASD Group is an international firm specialising in customs procedures and clearance. If you would like more information about Regime 42 and other customs regimes, advice or support for your international operations, contact our experts directly via our contact form.
