Possibilities to optimize your Dutch VAT if you are in B2B trade

Background

In most of EU countries acting as an ‘Importer of Record’ means that you will have to register for VAT, charge VAT on sales and submit VAT returns.

Customs duty is levied across the EU at the place where goods are cleared into ‘free circulation’ in the EU. Once duty (if applicable) and VAT has been paid by the importer, the goods are in free circulation and they can then be released for use in the EU market. Unlike other indirect taxes, such as VAT, once customs duty has been paid it is not recoverable by the importer.

Once the goods are cleared into ‘free circulation’ in the EU, it is not possible to obtain a refund of the EU customs duties. Therefore you better plan ahead and make sure that you know what happens with the goods after they enter the EU. For example, if you plan to re-export (part of) the goods, then you have a possibility to place the goods under one of the special customs procedures. Until the goods are not cleared into free circulation, the customs duties are not due. For example, the goods could be placed under T1 procedure and transported to another EU country or a non-EU country. In this way, the payment of the customs duties and VAT can be avoided until the goods reach the destination country. In addition, a so-called Article 42 procedure could be used if the goods are immediately transported to another EU country after releasing the goods into free circulation in the Netherlands. In this way, the payment of the Dutch VAT could be avoided for importers who only occasionally import via the Netherlands.

However, if you are regularly importing goods in the Netherlands, then you may consider applying for Article 23 license which allows to postpone payment of import VAT to the periodic VAT return, hence no cash-flow occurs (referred to as an ‘import VAT deferment’ or ‘the reverse charge VAT on import’).

Import VAT deferral

Depending on the type of goods this import VAT deferment is either obligatory (if certain raw materials are imported) or the importer can make use of a special deferment license (‘an Article 23 license’).

Dutch legal entities and fixed establishments can apply for an Article 23 license to import goods from non-EU countries. With this license, importers avoid payment of VAT at the time of importation. The import VAT is shifted to the VAT return instead.

A taxable person not established in the Netherlands (a ‘non-resident’) will not be able to shift the import VAT to the VAT return unless he appoints a fiscal representative. Please see more details in ‘Take advantage of deferring import VAT in the Netherlands’.

Your options in short:

Option 1

You do not need to register for VAT at all if you appoint a Limited Fiscal Representative (LFR).

• Minimum compliance.
• No VAT on import.
• LFR takes care of everything for you.

Because a LFR has unlimited liability, they are difficult to find.

Due to unlimited liability the LFR may ask a high bank guarantee / bond and fees.

Option 2

You register for VAT as a non-resident business without using a fiscal representative.

• You have everything under your own control.
• You can file VAT returns yourself or you can appoint an agent to do this for you.
• No bank guarantees or bond.

You have to pay VAT upfront on imports and can deduct import VAT on your regular return. In the case you do everything yourself, risk of penalties if you make mistakes in your VAT reporting.

Option 3

• You do not pay any VAT on imports and also can make use of (customs) suspension regimes such as bonded warehousing.
• You are assured of expert assistance and a point of contact for the tax authorities.
• GFR files VAT returns on your behalf.

GFR will ask (limited) bank guarantee/bond.

A fee is payable to GFR.

Summary of the VAT treatment of B2B sales of imported goods

If you only sell to Dutch customers or businesses registered for VAT in other EU countries, then:

• To a Dutch customer: VAT is subject to the reverse charge in the Netherlands.
• To another business with a delivery to another EU country: Intra-EU Supply subject to 0% VAT.
• Your VAT position in case of appointing a fiscal representative: as a rule is nil.
• Your VAT position without appointing a fiscal representative: as a rule, you are in a VAT refund position because VAT should be paid upfront on imports when the goods are released

Engage with VAT advisers to understand the VAT and Customs rules