When goods are imported into the European Union (including the UK), import VAT is charged as a percentage of the value of the imported goods. The company responsible for clearing the goods through customs is responsible for paying this VAT at the time of import – so it can have a big impact on your cash flow and cost of import.
In general, the import VAT paid is fully recoverable by the importing company. When the goods are sold or distributed after import, the importer would usually have to register for VAT in that country. The import VAT can be claimed back through the periodic VAT declaration process. Even though the VAT can be claimed back, there can be a delay from the time of import until the date of refund – this can place a cash flow strain on the importer, especially if the goods being imported are high value.
The EU tax legislation allows Member States to implement an Import VAT Deferment scheme if they desire. When the option is available, an importer can obtain the right to defer the payment of the tax – this means that the import VAT no longer needs to be paid at the time of clearing customs, and simply needs to be declared appropriately in the local VAT return submission. This deferment removes the cash flow impact of importing into Europe.
In the Netherlands, importers can appoint a Fiscal Representative who can apply for an ‘Article 23’ license on their behalf. This licence gives the importer the right to defer the VAT payments.
Under the General Article 23 license, the importer must register for VAT in his own name and adhere to all the usual VAT compliance and reporting requirements in the Netherlands.
There is an option to apply for a Limited Article 23 license where the importer does not have to obtain his own VAT number, but can use the existing registration of his fiscal representative.
In both cases the VAT does not have to be paid at the time of import which results in a positive cash flow impact on the importing business - this can be especially valuable for regular importers or companies who import very high value goods from outside the EU.
VATGlobal is able to act as your Fiscal Representative in the Netherlands and apply for a General Article 23 License on your behalf.