Customs Regime 42: Everything You Need to Know About Import VAT Exemption

When a company imports goods from a third country into the European Union, it is in principle required to pay customs duties and VAT in the Member State of entry. But what happens when these goods are not intended to remain in that country? Paying VAT in France for goods immediately delivered to Belgium or Germany makes no economic sense. Customs regime 42 addresses this situation: it allows a VAT exemption on importation, provided the transaction is followed by an intra-Community delivery.

What is customs regime 42?

Regime 42, also designated under code 42 00, corresponds to a release for free circulation with simultaneous VAT exemption. Goods are cleared and released for free circulation in an EU Member State, but VAT is not collected in that country. It will be regularised in the Member State where the goods are actually delivered.

This mechanism is based on Article 291-III-4° of the French General Tax Code (CGI), and on Article 143 of the VAT Directive 2006/112/EC at European level. It constitutes an alternative to classic customs transit via the New Computerised Transit System (NCTS), simplifying procedures for operators.

How does the VAT exemption work under regime 42?

A French company imports electronic components from China. The goods arrive at the port of Le Havre and are cleared in France. Customs duties are paid at that time. These components are destined for a buyer established in Belgium. Thanks to regime 42, French VAT is not due: the Belgian buyer will regularise the VAT in their own country, in accordance with the rules for intra-Community delivery.

The scheme is the same regardless of the port or airport of entry into the EU. The importer can clear goods at Antwerp, Rotterdam or Le Havre, then deliver to any other Member State without advancing VAT in the country of clearance.

The three advantages for the importer

The absence of VAT disbursement on importation avoids tying up cash for a tax that would then need to be recovered through a refund request. On large volumes, the cash flow benefit is significant.

Regime 42 also removes the NCTS transit document. Under the standard regime, goods in customs transit require this document to circulate between the point of entry and the country of destination. This formality disappears with regime 42.

Goods thus circulate freely from the point of entry into the EU to the country of destination, without intermediate transit checks.

What conditions must be met to use regime 42?

Several cumulative conditions must be satisfied. The importation must be immediately followed by an exempt intra-Community delivery. There can be no intermediate storage, transformation or processing between clearance and dispatch to another Member State. Only the time strictly necessary for transhipment is tolerated.

Conditions relating to the goods

The goods declared on the Single Administrative Document (SAD) must correspond exactly to the goods actually delivered to the buyer in the other Member State. Any discrepancy between the customs declaration and the reality of the delivery may result in the exemption being challenged.

Conditions relating to the importer

The importer must be VAT-registered in the Member State where the customs declaration is filed. They must also provide the VAT identification number of the buyer in the Member State of destination, as well as proof that the goods are intended to be dispatched to that State.

Since 1 January 2026, only companies whose registered office is established in the European Union can use regime 42 without additional constraints. Non-EU companies must now obtain their own French VAT number.

What are the declaration obligations?

The SAD must bear the note "VAT exemption, Article 291-III-4° of the CGI". The importer then reports the transaction on their VAT return (CA3) as an intra-Community delivery.

The Statement of Intra-Community Transactions (DEB) is required once the threshold of 460,000 euros of annual intra-Community exchanges is reached. A VAT EC Sales List must be submitted to enable cross-referencing of information between Member States, within the framework of administrative cooperation coordinated by the DGDDI.

On the Customeo platform, regime 42 can be indicated via the instructions field when entering the customs declaration. The declarant then processes the transaction accordingly, without any additional specific form.

What is the difference between regime 40 and regime 42?

Regime 40 corresponds to standard release for free circulation: goods are imported, customs duties and VAT are paid in the country of entry. The importer can then recover the VAT via their CA3 return (reverse charge), but must advance the amount.

Regime 42 grants a direct VAT exemption upon importation, provided an intra-Community delivery immediately follows. The benefit is primarily a cash flow and administrative simplicity gain.

Regime 63 works on the same principle, but applies to reimportations of goods (return after temporary exportation) followed by an intra-Community delivery.

What changes in 2026 for non-EU companies

Until 31 December 2025, non-European companies could use regime 42 through a mechanism known as "one-off fiscal representation". A temporary tax representative, often the freight forwarder themselves, used their own VAT number to clear goods on behalf of the foreign company.

This arrangement was abolished by the Finance Act for 2025, with effect from 1 January 2026. Any non-EU company wishing to import under regime 42 in France must obtain its own French VAT number and file its own tax returns. The registration procedure can take up to 45 days.

This reform addresses a massive fraud issue. The European Court of Auditors had estimated, in its special report No 13/2011, that losses related to regime 42 amounted to approximately 2.2 billion euros across seven Member States in 2009. The alternatives for non-EU companies are now regime 40 with reverse charge or the use of an accredited permanent fiscal representative.

What are the risks in case of non-compliance?

The VAT exemption may be challenged by the administration if the conditions are not met. The importer is then exposed to a reassessment covering the unpaid VAT, along with penalties.

The question of the importer's liability when it is the buyer who commits fraud was settled by the CJEU. In the Vetsch ruling (Case C-531/17, 14 February 2019), the Court confirmed that the importer retains the benefit of the exemption if they did not participate in the recipient's fraudulent scheme. However, if their knowledge or negligence is demonstrated, the exemption may be withdrawn retroactively.

Regime 42 arrangements are sometimes set up without the importer's knowledge, at the request of the supplier in the third country. This type of situation exposes the importer to unforeseeable audits and reassessments.

Customs regime 42 remains a useful tool for companies that import goods destined for another EU Member State. It avoids a potentially significant VAT advance and simplifies transit procedures. But it is strictly governed: immediate intra-Community delivery, VAT registration in both States, multiple declaration obligations. With the abolition of one-off fiscal representation in 2026, non-EU companies must anticipate their compliance. For operators established in the Union, the arrangement continues to function under the same conditions, provided the regulatory framework is respected.