Regime 42 — which sectors benefit and when is it worth applying?

How Regime 42 works — the mechanism and formal requirements

Procedure 42 is based on Article 143(1)(d) of the EU VAT Directive 2006/112/EC, which exempts from VAT the import of goods into an EU member state when those goods are immediately dispatched to another member state as an intra-Community supply. The customs procedure code in the EU customs system is 4200 (import for the purposes of an ICA). Formal requirements: the importer must be VAT-registered in the EU country of destination (e.g. Poland), must hold an EU VAT number active in the VIES system, and must file an intra-Community acquisition return (ICA declaration or Intrastat) in the country of destination. In Poland: the conditions for applying procedure 42 are set out in Articles 33a and 33b of the Polish VAT Act and related ministerial regulations.

Procedure 42 and Brexit — what changed and what no longer applies in the UK

After Brexit the UK is no longer part of the EU's single VAT area. This means that Regime 42, as an EU mechanism, does not apply to imports into Great Britain. An importer bringing goods into the UK uses PVA (Postponed VAT Accounting) or pays VAT at clearance. Procedure 42 remains fully applicable for Polish companies importing goods from third countries — including from the UK after Brexit — via EU ports: Hamburg, Rotterdam, Antwerp, or Gdańsk. A UK→EU route via an EU port works as follows: goods leave the UK (UK export), enter the EU via Rotterdam (where procedure 42 is used — EU import + immediate ICA dispatch to Poland), and the importer accounts for the ICA in Poland. This remains an efficient route for goods produced or stored in the UK and distributed to the EU. Prices quoted are indicative ranges — exact quote after document review.

Documentation requirements for procedure 42 in Poland

A Polish company using procedure 42 (import via an EU country of entry + ICA to Poland) must: (1) hold an active EU VAT number (VIES) in Poland; (2) file an ICA return in Poland in the monthly VAT return (VAT-7 or VAT-7K) and declare the intra-Community acquisition; (3) in the country of entry (e.g. Germany) file a customs declaration with code 4200 — this requires a customs broker operating in that country or a direct representative; (4) file a summary EU VAT declaration (VAT-UE) in Poland for the month of acquisition. If any of these elements is missing, the tax authority can challenge the VAT exemption in the country of entry and assess overdue VAT plus interest. Sources: Article 33a of the Polish VAT Act (Journal of Laws 2004 No. 54 item 535 as amended) and VAT Directive 2006/112/EC Article 143.

Fraud risk and audits under procedure 42 — what HMRC and KAS know

Procedure 42 is one of the most frequently audited customs and tax procedures in the EU because of its history of misuse (VAT carousels). EU tax authorities, including Poland's National Revenue Administration (KAS), have access to customs system data and verify that goods actually reached the declared destination country and that the ICA was properly reported. Practical implications for importers: (1) retain complete transport documentation (CMR, bill of lading, proof of delivery to the buyer in Poland); (2) ensure the EU buyer's VAT number is active in VIES; (3) archive documents for at least five years. The risk is minimal when documentation is correct and the transaction is genuine — your customs broker should advise on how to compile the protective documentation. Prices quoted are indicative ranges — exact quote after document review.

Sectors where Regime 42 provides the greatest benefit

Procedure 42 is most cost-effective in sectors where: (1) goods originate outside the EU (imports from China, India, the USA, Turkey, or post-Brexit from the UK); (2) goods are distributed across the EU from a single logistics hub; (3) the goods value is high relative to weight (electronics, machinery) or clearance volumes are large (furniture, clothing). With 23% VAT in Poland and a monthly customs value of around PLN 500,000, procedure 42 eliminates the need to pay approximately PLN 115,000 of VAT in the country of entry and simplifies the entire logistics and tax structure. Below we analyse three key sectors.

Furniture sector — imports from Asia via Rotterdam or Hamburg to Poland

Polish furniture manufacturers and importers (HS 9401, 9403) regularly bring goods from China, Malaysia and Vietnam through the ports of Rotterdam or Hamburg. A typical shipment: two to five 40-foot containers per month, customs value EUR 50,000–200,000. Without procedure 42: import VAT paid in Germany or the Netherlands (19% or 21%), then recovered via the 13th Directive VAT refund procedure for non-residents — a process that takes six to twelve months. With procedure 42: no VAT payment in Germany or the Netherlands; goods travel to Poland; ICA VAT accounted for in Poland (self-cancelling). Cash saving of approximately 19–21% of the goods value, released immediately. Requirement: an active EU VAT number in Poland and an ICA return.

Industrial and machinery sector — machines, equipment, components

Importing industrial machinery, CNC equipment and electronic components (HS 84, 85) from countries outside the EU via an EU port is a classic use case for procedure 42. Customs values are typically high (EUR 100,000–2,000,000 per machine), so import VAT in the country of entry would be substantial. Procedure 42 allows the importer to move a machine from Hamburg port to a factory in Poland without paying VAT in Germany — the VAT is accounted for in Poland as an ICA and, because the machine is a capital investment (fixed asset), is fully deductible. Result: PLN 0 of cash expenditure on VAT, with no need to register for VAT in Germany. Easy Clearance service fee for a Regime 42 clearance: from £80 to £200. Prices quoted are indicative ranges — exact quote after document review.

Electronics and e-commerce sector — goods from Asia to a Polish warehouse

E-commerce companies importing consumer electronics (smartphones, tablets, accessories — HS 8517, 8528) from China, Taiwan or South Korea via Rotterdam use procedure 42 when all goods go directly to a warehouse in Poland for distribution to EU customers. Requirement: the importer must have a registered office or fixed place of business in Poland and an active EU VAT number. For e-commerce businesses using dropshipping or fulfilment models (Amazon FBA Poland, Zalando), procedure 42 may apply when goods are physically stored in Poland — but each such case requires individual tax analysis, because tax authorities verify that the Polish distribution centre is a genuine business establishment. We recommend obtaining a formal tax ruling before implementing procedure 42 for e-commerce. Prices quoted are indicative ranges — exact quote after document review.

ROI calculation and when Regime 42 is NOT worth the effort

The decision to implement procedure 42 should be based on a simple calculation: financial benefit (VAT released × cost of capital) minus administrative and compliance costs (customs broker in the country of entry, additional documentation, audit risk). For small importers with monthly VAT below PLN 10,000 the benefit may not cover the costs. For active importers with monthly import VAT above PLN 100,000, procedure 42 is almost always financially justified. Below is a simple calculation template and the conditions under which procedure 42 loses its rationale.

ROI calculation template for procedure 42

Step 1: Calculate monthly import VAT without procedure 42 = customs value of goods × VAT rate in the country of entry (e.g. 19% in Germany, 21% in the Netherlands).Step 2: Calculate the financing cost of that VAT for the period until recovery = monthly VAT × cost of capital (e.g. 6% p.a. = 0.5% per month) × number of months to wait (6–12 for the 13th Directive refund).Step 3: Subtract the cost of procedure 42 = customs broker fee in the country of entry + additional ICA documentation in Poland + any cost of a tax ruling.If the result is positive, procedure 42 is cost-effective. For a typical importer with EUR 200,000 customs value per month and 19% VAT in Germany: financial saving approximately EUR 38,000 × 0.5% × 9 months = approximately EUR 1,710 per month minus broker costs of approximately EUR 200–500 = approximately EUR 1,200–1,500 net gain per month. Prices quoted are indicative ranges — exact quote after document review.

When procedure 42 is NOT cost-effective or applicable

Procedure 42 is not appropriate in the following cases: (1) the company is not VAT-registered in the EU — without an active EU VAT number, an ICA cannot be filed; (2) goods remain in the country of entry (e.g. sold locally in Germany) — there is no ICA to another EU country, so procedure 42 does not apply; (3) the end buyer in the EU is a private individual (B2C) — an ICA requires a B2B transaction; (4) the importer has problems with transport documentation — missing CMR or bill of lading confirming delivery to Poland exposes the ICA to challenge by KAS; (5) for UK→UK shipments (imports into the UK from third countries) — procedure 42 is an EU mechanism and does not apply in the UK; use PVA instead.

Fiscal representative and procedure 42 — when one is required

In some EU member states (e.g. Germany, France, Italy), using procedure 42 as a company without a registered office or fixed place of business in that country requires a fiscal representative. In Germany, a customs agent or Steuerberater can fulfil this role. In Poland, procedure 42 for imports via Polish ports (Gdańsk, Gdynia) does not require a fiscal representative for Polish VAT-registered companies — but it does require a customs broker familiar with the PUESC system and ICA documentation. Easy Clearance handles procedure 42 clearances for imports via UK ports and coordinates with partner agencies in EU countries for UK→EU→Poland routes. Fee: from £80 to £200 per Regime 42 clearance. Prices quoted are indicative ranges — exact quote after document review. Prices quoted are indicative ranges — exact quote after document review.

What the current rules say

Regime 42 (customs procedure code 4200) is an EU mechanism that suspends VAT when goods are imported into the EU via a country of entry other than the country of final destination. After Brexit it does not apply to imports into the UK, but remains fully valid for Polish companies importing from third countries (including from the UK) via EU ports such as Rotterdam, Hamburg and Gdańsk. The greatest benefits are in the furniture, machinery and electronics sectors, where monthly import VAT exceeds PLN 10,000 and the period of frozen capital without procedure 42 is six to twelve months. Implementation requires an active EU VAT number in Poland, correct ICA documentation, and a customs broker in the country of entry. Prices quoted are indicative ranges — exact quote after document review.

FAQ — frequently asked questions

Does Regime 42 apply to imports into the UK after Brexit?

No — Regime 42 (procedure 42, code 4200) is an EU mechanism and does not apply to imports of goods into Great Britain after Brexit. For imports into the UK you use PVA (Postponed VAT Accounting) or pay VAT at the point of clearance. Procedure 42 remains applicable for imports into the EU via an EU port (e.g. Rotterdam, Hamburg, Gdańsk) where goods then travel onward to Poland as an intra-Community acquisition.

Which sectors use procedure 42 most often?

Procedure 42 is most commonly used in the furniture sector (imports from Asia via EU ports to Poland), the industrial and machinery sector (CNC machines and equipment — high customs values), and electronics and e-commerce (goods shipped to a Polish warehouse for EU distribution). The key condition: after entering the EU country of entry, the goods must immediately travel as an intra-Community supply to a buyer in another EU country.

How much does a Regime 42 clearance cost with Easy Clearance?

A customs clearance using Regime 42 costs from £80 to £200. Prices quoted are indicative ranges — exact quote after document review.

What can a tax authority challenge under procedure 42?

KAS or a foreign tax authority can challenge procedure 42 when: transport documentation confirming actual delivery to the EU destination country is missing (CMR, bill of lading); the EU buyer did not have an active VIES VAT number at the time of the transaction; the ICA was not declared in the Polish VAT return; or goods remained in the country of entry rather than being dispatched to Poland.

Is a fiscal representative required for procedure 42?

It depends on the EU country of entry. In Germany and France, companies without a registered office or fixed establishment in that country often need a fiscal representative or a customs agent acting as direct representative. In Poland — where a Polish VAT-registered company imports via Gdańsk or Gdynia — no fiscal representative is required, but a customs broker familiar with the PUESC system is necessary.

Official sources

VAT Directive 2006/112/EC — EUR-Lex
GOV.UK — Customs procedure codes — GOV.UK
Podatki.gov.pl — VAT in international trade — Polish Ministry of Finance
EC TAXUD — Customs procedures online — taxation-customs.ec.europa.eu
GOV.UK — Moving goods from Great Britain to an EU country — GOV.UK
PUESC — Polish Electronic Customs and Tax Services Platform — PUESC

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