Explaining the VAT Deferment in The Netherlands

The Netherlands is known for its VAT deferment. It enables companies to import goods from third countries (outside the EU) and pay VAT later with their returns, using a deferment scheme. However, the procedure is not as simple as it could look like as it requires meeting legal conditions and sometimes includes paying a deposit.

The VAT deferment in the Netherlands is applicable to both foreign and local importers.

To use the deferment, domestic businesses must have a fixed establishment in the country and be regular importers of goods originating in countries outside the EU. It is important that the business collect and update their records on the VAT paid on import.

Foreign importers can access the VAT determent by appointing a Dutch fiscal representative, i.e., a logistics company or an independent VAT consultant. The representative then becomes responsible for completing and filing the foreign importer’s VAT returns, sticking to deadlines, completing intra-community declarations, and taking care of the reverse charge mechanism.

Complying with these rules allows companies to receive the Article 23 licence or permit from the Dutch tax authorities required for import deferment. The licence does not have an expiration date. However, it can be withdrawn if a company does not comply with the rules any longer.

The reason for using Article 23 is simple—it allows for a better cash flow as the VAT payments can be delayed. This means that businesses short-term can invest more money in production and other transactions required for business growth. If VAT deferment cannot be accessed, business normally pays VAT at customs and receive a VAT return much later, which can sometimes result in a lack of funds.

Moreover, Article 23 VAT deferment speeds up the importing process as there are no delays in transactions, and goods reach the Netherlands immediately.