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Article 23 VAT permit for a cash flow advantage with import

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Article 23 Permit: Liquidity Advantage for Importers

When importing goods from countries outside the European Union, in addition to customs duties, VAT is also payable on import. The VAT payable on import and any customs duties must be paid to Customs when the so-called import declaration is submitted. The VAT paid on import can be claimed back as input tax at a later date through the regular VAT return (if you are entitled to deduct VAT). This means that this VAT is actually paid in advance and is only received back at a later date. This creates a liquidity disadvantage. An Article 23 license can help to solve this problem.

What is an Article 23 license?

With an issued Article 23 permit, it is possible to defer the payment of VAT payable on import to the time of the VAT return. If you are entitled to deduct VAT, this VAT can be deducted immediately in the same return as input tax. This means that you do not have to pay any VAT in advance. This is of interest, among other things, for entrepreneurs who regularly import goods from countries outside the European Union. The license must be applied for in writing.

Conditions

There are a number of conditions that must be met in order to be eligible for an Article 23 license:

  • You must be resident in or established in the Netherlands;
  • You must regularly import goods from countries outside the European Union;
  • You must maintain a separate administration from which it is easy to determine how much VAT you must pay on import.

If you do not meet the first condition, it does not mean that you cannot obtain a license. As a foreign entrepreneur, you can also apply for an Article 23 license through a tax representative.

Liquidity advantage

An Article 23 license can provide a liquidity advantage for entrepreneurs who import goods from countries outside the European Union. The entrepreneur does not have to pay the VAT on import in advance, but can instead deduct it in the VAT return. This means that the entrepreneur only has to pay the VAT when he sells the goods.

Processing in the VAT return

If an entrepreneur has an issued Article 23 license, the VAT payable on import can be declared in the regular VAT return under item 4a (purchases from countries outside the EU). The VAT payable, as stated in item 4a, can then be deducted again in item 5b (input tax). Of course, this only applies if you are generally entitled to deduct input tax.

Applying for an Article 23 license

The application for an Article 23 license can be submitted in writing to the tax office. The application must contain the following information:

  • Company name
  • VAT number
  • Type of goods
  • Value of the goods
  • Frequency of import
  • Countries of origin

The Tax Authorities will assess the application within eight weeks.

Fiscal Substance

From experience, we know that obtaining a VAT number can be difficult for foreign entrepreneurs. In principle, it is only possible to obtain a VAT number if you are a Dutch entrepreneur or have a Dutch fiscal representative. However, we have previously managed to secure a VAT number for foreign entrepreneurs without a fiscal representative. Would you like to know more about what we can do for you? Click on the contact form at the bottom of this article.

Conclusion

An Article 23 license can be an interesting option for entrepreneurs who regularly import goods from countries outside the European Union. The license can provide a liquidity advantage, as the entrepreneur does not have to pay the VAT on import in advance.

Do you need help applying for an Article 23? Contact TaxAble