Customs Procedures
How to legally defer VAT on imports (procedure 42), suspend duties for processing (IP/OP), and move goods duty-free (T1/T2). Practical guide with numerical examples.
EU customs procedures 42, inward/outward processing, and T1/T2 transit are tools that allow companies to legally defer or reduce customs and tax burdens on imports. Cash flow is a key challenge for companies importing goods from outside the EU. Capital frozen in duties and VAT at the border can significantly slow business growth — especially when turnover increases and cash is needed for new orders.
Procedure 42 allows you to clear goods in Poland (or another entry country), pay only customs duty, and settle VAT later in the destination country — as an intra-Community acquisition of goods. For electronics worth EUR 50,000, that's over EUR 10,000 you don't have to freeze at the border.
Inward Processing (IP) enables importing components from China or the USA without paying duties and VAT, processing them in the EU, and exporting the finished product. If most of your production goes for export, the savings are double: you don't freeze cash and don't pay charges that wouldn't have been due anyway.
Outward Processing (OP) works the other way: you send EU materials for repair or processing outside the EU, and upon return you pay duty only on the value of the service — not the entire goods.
T1/T2 Transit allows you to transport cargo from a port to a warehouse in another city or country without paying charges en route. Settlement only happens at the destination, during customs clearance under the release for free circulation procedure.
Before planning optimization, make sure you know the correct CN code for your goods — the duty rate depends on it.
Customs procedure 42 is a mechanism enabling VAT exemption on import when goods are subsequently transported to another EU Member State.
Change from 1 January 2026: France has definitively ended the transitional period for simplified fiscal representation (one-off fiscal representation). Non-EU importers must have their own VAT-FR number or establish full fiscal representation to use Procedure 42 in France.
You pay duty in the country of entry, and settle VAT later as an intra-Community acquisition (ICA) in the destination state. It works for companies with regular B2B turnover in the EU who want better cash flow.
Inward processing (IP) is a special procedure enabling import of goods from a third country into the EU with suspension of duties and VAT for processing purposes. Subsequently: re-export outside the EU means discharge of the suspended debt, while release for free circulation in the EU requires payment of charges on compensating products.
Requires IP authorization, processing plan and consumption records.
Outward processing (OP) allows you to export EU goods outside the EU customs territory for processing or repair, then reimport them with duty calculated only on the added value. You pay duty on the cost of the service outside the EU, not on the full value of the goods.
Check the CN code of the product in TARIFF FINDER.
Transit is a procedure enabling movement of goods without payment of charges to the destination for clearance.
Official status (January 2026): In 2025, the following countries fully joined the Common Transit Convention (CTC): Georgia (1 February 2025), Moldova and Montenegro (both 1 November 2025).
Note: Since 1 September 2025, NCTS Phase 5/6 has been integrated with ICS2 Release 3 for road and rail transport. This means ENS (Entry Summary Declaration) can be filed together with the transit declaration in NCTS-P6.
Assumptions: goods value = EUR 50,000, freight = EUR 2,000, duty rate = 5%, VAT in DE = 19%.
| Item | Calculation | Amount |
|---|---|---|
| Customs duty | (50,000 + 2,000) × 5% | EUR 2,600 |
| VAT in PL | None (procedure 42) | EUR 0 |
| VAT in DE (ICA) | (2,600 + 50,000 + 2,000) × 19% | EUR 10,374 |
Result: you save freezing ~EUR 10,000 at the border.
Assumptions: components value = EUR 30,000, freight = EUR 1,500, duty rate = 4%, VAT in PL = 23%. Final product goes for re-export.
| Scenario | Duty | VAT | Total |
|---|---|---|---|
| Standard import | EUR 1,260 | EUR 7,535 | EUR 8,795 |
| IP + re-export | EUR 0 | EUR 0 | EUR 0 |
Result: ~EUR 8,800 cash flow savings.
Don't calculate manually — check with CALCULATOR.
| Procedure | When to use | Key documents | Common mistakes |
|---|---|---|---|
| Procedure 42 | Entry country ≠ destination country | Active EU VAT numbers, invoice, CMR, proof of dispatch | Missing proof of dispatch, inactive buyer VAT |
| IP | Goods processed in EU and re-exported | IP authorization, processing plan, consumption records | Exceeded deadlines, wrong CN code |
| OP | EU goods for processing/repair outside EU | OP authorization, process description, export/import proofs | Incorrect added value calculation |
| T1 | Non-Union goods going to another EU office | NCTS/MRN, TAD, guarantee, CMR | Unclosed transit, broken seal |
| T2 | Union goods in transit through third country | NCTS/MRN, TAD, CMR, seals | Loss of Union status |
Yes, proof of dispatch is mandatory. You must confirm that goods left the entry country and reached the destination (CMR with confirmation, warehouse documents). Without this, authorities will charge VAT with interest.
Choose IP when raw materials are from a third country, you process them in the EU and plan to re-export. Choose OP when goods are EU-origin but you want to reduce charges by processing outside the EU.
The principal (usually forwarder/agent) submits the declaration in NCTS, provides the guarantee and is responsible for closing the transit. The carrier is responsible for seal integrity.
Yes, AEO provides tangible benefits: fewer controls, priority treatment, lower guarantee amounts, faster releases. AEO-C covers customs simplifications, AEO-S security.
AEO-C certificate significantly speeds up obtaining permits for special procedures (IP/OP) and enables reduction of the comprehensive guarantee amount in the NCTS system (even to 0%).
No. Procedure 42 does not apply — authorities will demand VAT payment in the entry country and declaration corrections.
| Legal act | Scope |
|---|---|
| Regulation (EU) 952/2013 | Union Customs Code (UCC) |
| Regulation (EU) 2015/2446 | UCC Delegated Regulation |
| Regulation (EU) 2015/2447 | UCC Implementing Regulation |
| VAT Directive 2006/112/EC | Art. 138, 143 — VAT exemptions |
| Common Transit Convention (20.05.1987) | Transit between EU and CTC countries |
Official sources:
This article is for informational purposes only and does not constitute legal or tax advice. Legal status as of January 2026.
