How to apply for an Article 23 License: Step-by-step guide for managing import VAT

Understanding the benefits of an Article 23 license for import VAT

An Article 23 license is a critical tool for businesses in the Netherlands engaged in international trade. This license allows you to defer the immediate payment of import VAT, which can significantly improve cash flow for your business. If you're unsure how to apply for this license, this guide breaks down the process into actionable steps, including the documents you need, how to apply, and tips to ensure you're compliant.

Why apply for an Article 23 License?

The Article 23 license, which allows businesses to defer the payment of import VAT, offers several key benefits:

• Improved Cash Flow: You pay VAT later by reporting it in your VAT return instead of upfront.
• Streamlined Process: No immediate payment means less administrative burden at the time of import.
• VAT Deductions: If you have the right to deduct input VAT, you may offset import VAT in your VAT return.

Now that you understand the basics, let's explore the step-by-step process of applying for an Article 23 license.

Detailed instructions to applying for an Article 23 License

Step 1: Verify your eligibility

Before applying for an Article 23 license, make sure your business is eligible. You can apply if:

• You are based in the Netherlands: A Dutch BV (legal entity) is eligible for the license. If you have a sole proprietorship (eenmanszaak), you must have an updated EORI number and meet specific VAT requirements.
• You don’t have a Dutch establishment: Non-EU businesses can apply through a fiscal representative in the Netherlands.

Tip: You must have a good VAT history with no outstanding debts. If you’re unsure about your eligibility, consult with your accountant or tax consultant.

Step 2: Gather required documents

To complete your application, you'll need to submit several documents:

• Company Details: Business name, address, and registration information (Chamber of Commerce, tax number).
• VAT Registration: Your VAT number for tax purposes.
• EORI Number: If applicable, include your EORI number to verify your customs activity.

Do’s:

• Make sure all the documents are up to date.
• Double-check the business details to avoid delays in the application process.

Don’ts:

• Don’t leave out any required documents, as this can delay your application.

Step 3: Apply for the Article 23 License

If you are based in the Netherlands:

• Apply Online: You can apply for the Article 23 license via the Dutch tax authority’s portal (Belastingdienst Application Portal).
• Submit Your Application: Fill out the application form accurately and submit it along with the necessary documents.
• Wait for Approval: After submission, the tax authorities will review your application. Processing can take several weeks, so plan accordingly.

If you're a non-EU business or do not have a Dutch legal entity, apply through a fiscal representative. They will handle the application for you, and once the application is approved, the license will be granted in your name.

Step 4: Review and understand the VAT return process

Once you have your Article 23 license:

• Report VAT in Your VAT Return: You will report the import VAT in Box 4A of your Dutch VAT return.
• Report the Correct Value: Ensure the value reported matches the customs assessment value, not the invoice amount.
• Offset VAT: If you qualify, you can offset the VAT against your other VAT liabilities, so no payment is required.

Example: If you imported goods worth €5,000 with an import VAT of €1,050, the €1,050 should be reported in Box 4A. If your business is VAT-registered, you can reclaim that amount in the same VAT return.

Step 5: Monitor your compliance

To avoid penalties or complications, ensure that:

• You Meet the Conditions: Regularly check that your business still meets the criteria for the Article 23 license.
• Accurate VAT Reporting: Always report import VAT correctly and on time.
• Keep Records: Retain documentation and records of all imports and VAT returns for future audits or checks by tax authorities.

Do’s:

• Keep an accurate VAT ledger to track imports and exports.
• Regularly review your VAT returns to ensure you're compliant with the law.

Don’ts:

• Don’t miss any VAT filing deadlines.
• Avoid incorrect or incomplete information in your VAT returns.

Conclusion: Take advantage of Article 23

The Article 23 license offers significant benefits for businesses looking to optimize cash flow and simplify VAT management. By following this step-by-step guide, you can ensure that your application is successful and that you remain compliant with Dutch VAT regulations.

If you’re still debating whether Article 23 is the right move for your business, check out VAT Deferral in the Netherlands: How Article 23 Works for Importers, where we break down the key advantages and potential challenges.

New to Article 23? Start with our Introduction to Article 23 to understand how VAT deferral works before proceeding with your application.