VAT is due on the import of goods and services by entrepreneurs.  Basically, all VAT paid by entrepreneurs can be refunded by the Tax Office.  If no specific arrangements are made entrepreneurs have to pay 19% VAT which is refunded 3-4 months later.  This will have a negative impact on your cash-flow!

If goods are customs cleared, import duties and VAT are due.  VAT and duties can be paid the moment they enter the EU (port/airport) or when they are shipped from a bonded warehouse.

As described in the matrix above, VAT is due the moment the goods for clients in the EU are customs cleared

The Netherlands has implemented a beneficial system called postponed accounting.  In this system the VAT is not actually paid at the moment of customs clearance, but payment is deferred to the periodical VAT return.  In this periodical return the VAT needs to be declared, but can be deducted in the same return.  Bottom line:  There is no VAT at import.  This results in a considerable cash flow and interest benefit.

Only Dutch entrepreneurs or foreign entrepreneurs with a permanent establishment can apply for the postponed accounting system.  In order to cope with this restriction a foreign entrepreneur can appoint a fiscal representative.

A foreign entrepreneur can appoint a limited fiscal representative (logistics service provider, customs broker) which will take care of the VAT formalities with respect to the customs clearance and onforwarding into the European Union.  In practice a sub VAT number of the limited fiscal representative is used.  Multiple foreign companies can be handled under this VAT number.

If a foreign entrepreneur has vendors in the European Union, a general fiscal representative needs to be appointed.  A logistics service provider can act as general fiscal representative and all shipments will be handled under a unique VAT/ID number which is granted for this general fiscal representative.

For both types of fiscal representation a deposit needs to be placed at the local tax office.  The deposit is related to the annual turnover.

Simplified Procedure for Fiscal Representation

1. Inventory in bonded warehouse
2. Shipping order to logistics service provider
3. Order needs to contain:  Product description, value, currency, bill to and ship to address, VAT/ID number of fiscal representative and client.
4. Logistics service provider will check the validity of the VAT/ID number
5. If the number is correct the order can be shipped out (if the number is not correct then re-check the number)
6. At the end of the month the logistic service provider will prepare a VAT report for the Tax Office (listing) and an Intrastat report for the Central Bureau of Statistics.
7. On a frequent basis the listing and Intrastat reports of shippers and consignees will be matched by the Tax Office.

In case the shipment is destined outside the EU, we suggest to keep the shipment in transit (no customs clearance from the bonded warehouse). From a VAT perspective the supply to the non EU client is zero rated.

Benefits of fiscal representation:

• No negative impact on cash flow due to VAT payments
• VAT deferment programs, to avoid exposure to VAT payments
• Use of the VAT number of the logistics service provider
• Logistics service provider will check VAT numbers
• Logistics service provider is responsible for the Intrastat reports and listings





Will your company benefit from European Distribution?

Contact your local Pilot office to find out!