Importing Means Paying Tax
When you import goods into the Netherlands to sell them to your customers in the Netherlands you have to pay Value Added Tax (VAT). On most products, the VAT is 21 percent.
Postpone Paying VAT When Importing
VAT needs to be paid when goods are imported. Non-Dutch companies can redeem the VAT they paid from their own Tax Authority. Unfortunately, it can take up to 5 months before you receive that money.
This cash flow disadvantage can be avoided by appointing a so-called fiscal representative. If you authorize fiscal representation, you can use a scheme called “article 23”. Dutch VAT law holds the possibility to postpone the charging of VAT upon import. The liability to account for VAT is shifted from customs to the importer on record. That importer “self imposes” VAT due upon importation when filing its periodical VAT return. The self computed and self-imposed VAT may be deducted as input VAT in the same VAT return, avoiding any cash flow.
Registering Your Company in the Netherlands
Registering a company in the Netherlands means a lot of administrative hassle. In most cases, this is not strictly necessary, because there is an alternative solution: Fiscal Representation.
What is Fiscal Representation?
Fiscal representation means that a company registered in the Netherlands acts as a representative of your company when it comes to filing taxes and maintaining the administration of the VAT. A special permit is needed for representing foreign companies for tax purposes. Customs Support Group has such a permit.
What are the advantages?
- You don’t have to register your company in the Netherlands
- You don’t have to set up and maintain a VAT administration
- You don’t have to pay the VAT directly when importing. The VAT is transferred to your representative. This is better for your cash flow.
If you want to know more about Fiscal Representation and what the options are, then please see our Fiscal Representation page, or contact one of our experts.