February 11, 2022
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Import procedure 42: VAT-exempt supply in EU

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What is customs procedure 42?

Customs procedure 42 is a mechanism that an EU importer can use to obtain a VAT exemption. It is applied when goods imported from outside the EU into a Member State will be transported to another EU Member State. In such cases, the VAT is due in the latter - the Member State of destination.

The customs procedure 42 consists of two parts:

  • the importation of the goods from a non-EU State to a Member State 1, which is VAT exempt; and 
  • the subsequent intra-Community supply of the goods from Member State 1 to Member State 2, which is taxed at a 0% VAT rate.

Consequently, the import of goods to Member State 1 (country of import) is VAT neutral.

What are the conditions?

To apply for VAT exemption under customs procedure 42 the importer has to provide the competent authorities of Member State 1 with at least the following information:

  • their VAT identification number issued in the Member State 1 or the VAT identification number of their tax representative (fiscal agent), liable for payment of the VAT, issued in the Member State 1;
  • the VAT identification number of the customer (to whom the goods are supplied), issued in Member State2, or their own VAT identification number issued in the Member State 2;
  • the evidence that the imported goods are intended to be transported or dispatched from Member State 1 to Member State 2.

What are the advantages of customs procedure 42?

Under customs procedure 42, VAT obligation does not arise at the time of importing into the EU. Instead, VAT is accounted for by the purchaser in Member State 2 under the national VAT rules. That improves the importer’s cash flow.

What is the legal title for ‘customs procedure 42’?

‘Customs procedure 42’ title comes in colloquial speech from the first digits of the code to be entered in the customs declaration. The legal title is ‘Simultaneous release for free circulation and home use of goods which are the subject of a VAT-exempt supply to another Member State and, when applicable, an excise duty suspension’.

What is the legal background for applying customs procedure 42?

Such a supply might be VAT exempted under certain conditions, which are regulated by the EU VAT Directive (Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax), national law and extensive court practice.

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For more information see video course Exemption from import VAT under the 'Customs Procedure 42'

Comments ()

en
Transport services VAT exempt because already in import tax base? You will need to prove it!
24-09-2023

The Romanian company provides transportation services. It transported goods from the port of Rotterdam (the Netherlands) to Cluj-Napoca (Romania) under transit procedure. Goods were released into free circulation in Romania. It treated transportation service as VAT exempt because it assumed that transportation cost was included into the import VAT taxable base. Tax authorities claimed otherwise: the taxpayer failed to provide documents confirming that the transportation cost was included into the import VAT taxable base. Consequently, they denied the exemption. The dispute between the company and the tax authorities reached as far as the Court of Justice of the EU (CJEU), which recently issued clarifications on the application of the provisions of the VAT Directive in this case.

Mark Rowbotham

duties, taxes, import
en
Transport services VAT exempt because already in import tax base? You will need to prove it!
24-09-2023

The Romanian company provides transportation services. It transported goods from the port of Rotterdam (the Netherlands) to Cluj-Napoca (Romania) under transit procedure. Goods were released into free circulation in Romania. It treated transportation service as VAT exempt because it assumed that transportation cost was included into the import VAT taxable base. Tax authorities claimed otherwise: the taxpayer failed to provide documents confirming that the transportation cost was included into the import VAT taxable base. Consequently, they denied the exemption. The dispute between the company and the tax authorities reached as far as the Court of Justice of the EU (CJEU), which recently issued clarifications on the application of the provisions of the VAT Directive in this case.

Mark Rowbotham

duties, taxes, import
lt
Apgavikai tiekimo grandinėje: kas moka mokesčius dėl apgaulės būdu užbaigtų formalumų?
24-09-2023

Kaltumo prezumpcija - sakysite, kad taip nebūna. Deja - mokesčių teisėje laikoma, kad dėl mokesčio įstatymo pažeidimo kaltas mokesčių mokėtojas, jeigu jis neįrodo priešingai. Tik klausimas, ar net ir įrodžius savo nekaltumą, mokesčių mokėtojui neteks susimokėti mokesčius. Aktualiu sprendimu Europos Sąjungos Teisingumo Teismas (ESTT) išaiškino, ar akcizinio sandėlio savininkui (kurio kaltė neįrodyta) teks sumokėti suspenduotus mokesčius (šioje byloje - beveik 3 mln. Eur) tuo atveju, kai formalumų užbaigimo įrodymai buvo suklastoti, o prekės nugabentos nežinia kur. Išaiškinimai svarbūs ne tik akcizinių sandėlių savininkams, bet ir visiems suspenduotų mokesčių režimų – tranzito, muitinės sandėlio, laikinojo įvežimo perdirbti ir kitų – naudotojams, siekiantiems kuo geriau suprasti, įsivertinti ir valdyti susijusią riziką. ESTT taip pat išaiškino, kuomet prekės laikomos „prarastomis“ ir mokesčių nereikia mokėti.

Ingrida Kemežienė

duties, taxes
lt
Apgavikai tiekimo grandinėje: kas moka mokesčius dėl apgaulės būdu užbaigtų formalumų?
24-09-2023

Kaltumo prezumpcija - sakysite, kad taip nebūna. Deja - mokesčių teisėje laikoma, kad dėl mokesčio įstatymo pažeidimo kaltas mokesčių mokėtojas, jeigu jis neįrodo priešingai. Tik klausimas, ar net ir įrodžius savo nekaltumą, mokesčių mokėtojui neteks susimokėti mokesčius. Aktualiu sprendimu Europos Sąjungos Teisingumo Teismas (ESTT) išaiškino, ar akcizinio sandėlio savininkui (kurio kaltė neįrodyta) teks sumokėti suspenduotus mokesčius (šioje byloje - beveik 3 mln. Eur) tuo atveju, kai formalumų užbaigimo įrodymai buvo suklastoti, o prekės nugabentos nežinia kur. Išaiškinimai svarbūs ne tik akcizinių sandėlių savininkams, bet ir visiems suspenduotų mokesčių režimų – tranzito, muitinės sandėlio, laikinojo įvežimo perdirbti ir kitų – naudotojams, siekiantiems kuo geriau suprasti, įsivertinti ir valdyti susijusią riziką. ESTT taip pat išaiškino, kuomet prekės laikomos „prarastomis“ ir mokesčių nereikia mokėti.

Ingrida Kemežienė

duties, taxes
image en
Carbon Border Adjustment Mechanism (CBAM): The Law
17-09-2023

Arne Mielken

duties, taxes, import
image en
Carbon Border Adjustment Mechanism (CBAM): The Law
17-09-2023

Arne Mielken

duties, taxes, import
en, lt
Who is responsible for CBAM in the company?
17-09-2023

If you import aluminium, steel and iron products, cement, fertilisers, hydrogen or electricity, you should already have answered the question of who in your company speaks the language of the Carbon Border Adjustment Mechanism (CBAM), i.e. is knowledgeable in this area and responsible for compliance. And not just you, but also your suppliers from outside the EU, as they will provide you with information on the carbon emissions generated in the production of goods. So who in your supplier company speaks the CBAM language? In this article we look at the links between CBAM and customs, as well as other areas, to help you answer the question of whether the primary responsibility for CBAM compliance should lie with the person responsible for customs matters.

Enrika Naujokė

duties, taxes, import
en, lt
Who is responsible for CBAM in the company?
17-09-2023

If you import aluminium, steel and iron products, cement, fertilisers, hydrogen or electricity, you should already have answered the question of who in your company speaks the language of the Carbon Border Adjustment Mechanism (CBAM), i.e. is knowledgeable in this area and responsible for compliance. And not just you, but also your suppliers from outside the EU, as they will provide you with information on the carbon emissions generated in the production of goods. So who in your supplier company speaks the CBAM language? In this article we look at the links between CBAM and customs, as well as other areas, to help you answer the question of whether the primary responsibility for CBAM compliance should lie with the person responsible for customs matters.

Enrika Naujokė

duties, taxes, import
lt
PADKM pereinamasis laikotarpis: koks yra muitinės ir kitų asmenų vaidmuo?
17-09-2023

Skaitytojo klausimas: Koks bus muitinės vaidmuo pereinamuoju laikotarpiu (2023 m. spalis – 2025 m. gruodis) įgyvendinant pasienio anglies dioksido kontrolės mechanizmą (PADKM)? Atsakydami į klausimą ne tik apžvelgiame muitinės vaidmenį, bet ir atkreipiame dėmesį į visų susijusių asmenų vaidmenis ir pabrėžiame ataskaitas teikiančio deklaranto atsakomybę.

duties, taxes, import
lt
PADKM pereinamasis laikotarpis: koks yra muitinės ir kitų asmenų vaidmuo?
17-09-2023

Skaitytojo klausimas: Koks bus muitinės vaidmuo pereinamuoju laikotarpiu (2023 m. spalis – 2025 m. gruodis) įgyvendinant pasienio anglies dioksido kontrolės mechanizmą (PADKM)? Atsakydami į klausimą ne tik apžvelgiame muitinės vaidmenį, bet ir atkreipiame dėmesį į visų susijusių asmenų vaidmenis ir pabrėžiame ataskaitas teikiančio deklaranto atsakomybę.

duties, taxes, import
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