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The Dutch VAT system, a cashflow advantage for non-resident companies, but how does it work? Regulation in the European Union states that at the time of the import declaration, you must pay import duties and VAT (21%) on the value of the goods on the customs declaration.
You can reclaim this, but this requires registration in the Netherlands and the reclaim is paid after several months. In the Netherlands, fiscal representation refers to a situation where a non-resident company or an individual who is not a resident of the Netherlands appoints a fiscal representative to represent the company or individual for tax purposes in the Netherlands. The fiscal representative is responsible for filing the company or individual’s Dutch tax returns and liaising with the Dutch tax authorities.
In the Netherlands, it is possible to use an authorisation called Article 23 to transfer the VAT payment to the moment of the VAT declaration. This means that the import VAT does not have to be paid at the time of the import declaration but at the time Neele-Vat will fill in the VAT declaration. You can also deduct it at the same time so that the amount becomes €0.00.
This is usually only granted for an established company in the importing country, but the Dutch tax authorities have decided to issue a licence for Dutch companies called ‘fiscal representation’.
Fiscal representation is often required when a non-resident company or individual has business activities in the Netherlands, but does not have a permanent establishment (such as an office or branch) in the country. In such cases, the non-resident company or individual must appoint a fiscal representative to comply with Dutch tax laws. Tax representation can also be useful for non-residents who have limited knowledge of Dutch tax laws and procedures, as they can then rely on the expertise of the tax representative to ensure that their tax affairs in the Netherlands are in order.
Read more on the Neele-Vat website: Fiscal Representation