Dutch import VAT deferment license or Article 23 license

Import VAT ‘exemption’

The Netherlands has a special import VAT regime for companies importing goods, which results in a cash flow benefit. An application can be made to the Dutch tax authorities for an Import VAT deferment license, also known as an Article 23 license.

Having an Article 23 license gives both resident and non-resident businesses the ability to import goods into the Netherlands without paying import VAT. Formally, it is not an exemption, because the import VAT still needs to be reported at a later date.

Normally, upon entry of goods into the Netherlands from a place outside of the EU the importer of the goods is required to pay a relevant amount of import VAT to the Dutch Customs authorities. Only once the import VAT is paid the goods will be made available for future sale or use in the Netherlands.

If authorization has been granted for a business to import goods under an Article 23 license, it will be able to import goods and, instead of paying the import VAT at the time of importation, it will account for VAT on the Dutch VAT return at the end of the accounting period.

As well as ensuring that the goods are available immediately on entry into the Netherlands, an Article 23 license also ensures that import VAT is accounted for and recovered on the same VAT return. Businesses which do not have an Article 23 license, and pay VAT at the time of import, obtain a repayment usually 3-4 months after the payment and a claim for import VAT recovery is actually made.

Cash flow benefits

The benefit of applying for an Article 23 license is the ability to delay the time at which the import VAT must be accounted for without affecting the transport of the goods.

As mentioned in the above section, import VAT is usually due at the time of import and must be paid to the tax authorities at that time. There is then ordinarily a delay for the repayment of any import VAT (if the company is able to recover the import VAT), this delay can be between 1 – 3 months.

With an Article 23 license the import VAT is accounted for on the periods VAT return and recovered at the same time and therefore, if the business is able to recover all its VAT there is a nil net position for VAT. That is the amount of import VAT payable to the tax authorities mirrors the amount of the import VAT which can be recovered.