Major changes to France’s Regime 42: What UK businesses need to know from January 2026

From 1 January 2026, France will implement significant changes to its Customs Procedure 42 (Regime 42), impacting UK businesses engaged in cross-border trade with the EU. These alterations derive from the French Finance Act 2025, which repeals Article 289 A III of the French General Tax Code, effectively ending the “one-off fiscal representation” mechanism previously available to non-EU companies.

Regime 42 has historically allowed non-EU businesses, including the UK, to import goods into France without paying import VAT or registering for VAT in France, where those goods were to then be transported to other EU member states.  The onward movement of goods qualified for zero-rating as an intra-EU supply of goods.

The provision that allowed non-EU companies to appoint a “one-off fiscal representative” to handle VAT-free imports into France is being abolished. This change means that UK businesses can no longer use a third party’s French VAT number for customs declarations under Regime 42. 

From 1 January 2026, UK businesses wishing to continue importing goods into France under a DDP Incoterm using Regime 42 must:

• Register directly with the French tax authorities to obtain a French VAT number

• File their own French VAT returns, taking on full responsibility for tax compliance

France operate automatic “reverse charge of VAT on import”, similar to the UK’s postponed VAT accounting scheme.  This means that any VAT due on importation into France will be deferred and paid via the VAT return.  The same amount is recoverable (subject to the usual rules) on the same VAT return.

HMRC have recently published several updates to Customs Special Procedures.

Outward Processing 

Outward Processing is a method of duty and VAT management that allows for the provision of goods exported for repair or processing to be reimported, with duty and VAT payable only on the costs of the repair or processing.  For example, without employing an OP authorisation for an export for repair or processing, and with no compliance evidence to support the subsequent re-import, HMRC would consider that the goods on re-import are home-use imports, subject to duty and VAT on the full value of the goods. 

Outward Processing Authorisation falls into four types: 

Full authorisation:  The importer applies to HMRC for an OP authorisation.  This authorisation number must be quoted on all declarations where goods for return are to be re-imported, with duty and VAT payable only on the processing or repair costs. 

Retrospective Authorisation: In exceptional circumstances, retrospective authorisation can be applied for after goods have been exported.  This authorisation can only be used if it has not been used in the previous 3 years.  HMRC would expect that a full OP Authorisation should cover frequent use. 

Authorisation by Declaration: To be used for export for repair only, the declaration serves as the authorisation, identified by the procedure coding on the declaration.  AbD may only be used under specific circumstances, for example, when the goods value is less than £500,000, or if importing using a simplified declaration. 

An Authorisation that covers Northern Ireland and the EU: 

If an authorisation is required for both GB and NI, two applications will be necessary to enable adequate provision. 

What’s the change? 

The number of times a business can apply for Authorisation by Declaration has been increased from 3 times in a rolling 12-month period to 10 times in a rolling 12-month period. 

Inward Processing 

Inward Processing allows importers to suspend Customs duty and import VAT on goods they import for processing or repair from outside the UK.  This is particularly important for traders who have no intention of owning the imported goods. For example, when goods are imported for repair and return, or the importing business specialises in the repair of imported goods for reexport.   

Postponed or Deferred VAT Accounting cannot be used as a mechanism for managing import VAT where there is no intention for the importing business to own the goods.  Therefore, without using IP, goods imported for repair or processing and re-export would be subject to non-recoverable import VAT and duty on the full value of the goods at the time of import. 

Inward Processing authorisations fall into the same four categories as Outward Processing, namely: Full Authorisation, Retrospective Authorisation, Authorisation by Declaration, and an Authorisation that covers Northern Ireland and the EU. 

What’s the change?   

The number of times you can apply for IP authorisation by declaration in your import declaration has been changed from 3 times to 10 times in a rolling 12-month period. 

WTO updates outlook for world trade in 2025 and 2026

The World Trade Organization (WTO) has updated its forecast for world merchandise trade and services trade. The commercial services export volume is now expected to grow 4.6% in 2025 and 4.4% in 2026, increasing slightly from the previous estimates in April. The WTO’s forecast for world merchandise trade volume growth in 2025 has risen to 2.4% (up from the estimate of 0.9% in the interim outlook in August) while the outlook for 2026 has fallen to 0.5% (down from the August estimate of 1.8%).

In its October update of the Global Trade Outlook and Statistics report, the WTO also suggests that trade growth will likely be weaker in 2026 as the impact of the cooling global economy and new tariffs set in. Already, it notes, rising input prices and a slowdown in trade shipments indicate inflation could increase in late 2025 as inventories shrink in tariff-affected, highly exposed sectors.

WTO Director-General, Ngozi Okonjo-Iweala, highlighted the beneficial impact of emerging economies with South-South trade having grown 8% year-on-year, in value terms, in the first half of 2025 (see Global trade could hit record highs in 2025). However, she said: “Today’s disruptions to the global trade system are a call to action for nations to reimagine trade and together lay a stronger foundation that delivers greater prosperity for people everywhere.”

WTO economists highlight that the key downside risk to the forecast is the spread of trade-restrictive measures and policy uncertainty to more economies and sectors.

The WTO forecasts have varied during 2025, with pessimism being alleviated by the possible positive influence of artificial intelligence.