Inward Processing procedure – how to avoid paying customs during production? [2026]

If your company imports raw materials or semi-finished products from outside the EU (e.g. steel from China, electronics from the USA), processes them in Poland, and then sells the finished product back outside the EU (e.g. to the UK or Switzerland) – paying duty on import is a waste of money.

The solution is Inward Processing Procedure (Inward Processing - IP). It allows the import of non-EU goods for processing without paying customs duty and VAT at import.

What does it involve? Cost mitigation

Standard procedure: 1. Import of raw material -> Pay Customs Duty + VAT. 2. Production. 3. Export -> Recover VAT (after some time), but customs duty is a non-refundable cost (unless you apply for a refund, which is difficult).

With the IP procedure: 1. Import of raw material -> Duty and VAT suspended (£0). 2. Production (under customs supervision). 3. Export of compensating product (finished good) -> Closed procedure, duty is never paid.

Who is this procedure for?

It is ideal for companies that:

• They produce goods for third markets (e.g. the UK).
• They repair or service equipment from outside the EU.
• They package goods (e.g. repackaging).

How to obtain a permit for Inward Processing?

There are two paths:

1. Permanent authorisation (Full)

For companies regularly using the procedure. You submit an application via PUESC (CDS/AES system). Requires a financial guarantee covering potential customs debt.

• Advantages: Permanent procedure, simplifications.
• Disadvantages: Requires material accounting for customs and bank/insurance guarantee.

2. Simplified authorisation (In the customs declaration)

For occasional users. The permit application is submitted within the import customs declaration.

• Advantages: Fewer formalities at the start.
• Disadvantages: Also requires securing the amount due for the duration of the procedure.

Procedure settlement (Closure)

The key to IP is settlement. You must demonstrate to the Customs Office that "what entered, left in a different form". You create the so-called settlement report, in which you show:

• How much raw material was used to produce one unit of product (consumption standards).
• Import declaration numbers (raw material import).
• Export declaration numbers (product export).

If everything is correct – the customs debt expires. You pay no duty.

What if the goods remain in the EU?

If you change plans and sell the finished product in Poland (instead of exporting it), you must release the goods for free circulation. Then you will pay outstanding duty and VAT (plus interest if the payment deadline has passed, although current UCC regulations are more flexible under certain conditions).

Processing under inward processing and trade with the UK

After Brexit, many Polish companies became subcontractors for British firms. The British send materials to Poland, assembly occurs in Poland, and the goods return to the UK. Without the IP procedure, the Polish company would have to pay duty on materials entering from the UK (if they lack EU origin or origin rules are unmet). IP completely eliminates this cost.

Summary: Is it worth it?

• YES, if you regularly export products made from imported raw materials. Duty savings can range from several to over ten percent of the raw material value.
• NO, if the scale is microscopic, as accounting and guarantee costs may exceed customs savings.

What the current official guidance means in practice

For operational work, the current procedural rules, declaration fields and relief conditions should be checked directly against the official guidance. For this topic, the core reference points are European Commission, GOV.UK / HMRC.

Official sources

• EU Commission (Customs procedures) — European Commission, 2026-03-04
• UK GOV (Importing into the UK) — GOV.UK / HMRC, 2026-03-04
• GOV.UK: Customs Declaration Service — GOV.UK / HMRC, 2026-03-04