What is article 23 and how does it simplify import VAT in the Netherlands?

What is Article 23?

Article 23 refers to an import VAT deferment license in the Netherlands. It allows businesses to postpone the payment of import VAT on goods brought into the Netherlands from non-EU countries. Instead of paying VAT upfront, it is reported in the business's regular Dutch VAT return.

Why is Article 23 important?

Cash Flow Management

• Deferring VAT payments improves cash flow, enabling businesses to allocate funds to other operational needs.
• It acts as a short-term financial relief by delaying VAT obligations.

Simplified Administrative Processes

• Import VAT is handled through regular VAT returns rather than immediate payments, reducing administrative complexity and paperwork.

Reclaiming Import VAT

• Eligible businesses can reclaim the import VAT in the same VAT return, effectively nullifying the payable amount on balance.

How does Article 23 work?

1. Eligibility
   • Businesses must apply for an Article 23 license and meet specific criteria, including being entitled to deduct input VAT.
2. Reporting in VAT Returns
   • Import VAT is reported in box 4a of the Dutch VAT return using the value from the customs assessment form rather than the invoice value.
3. Deferred VAT Payment
   • The license shifts the VAT liability from the point of import to the next VAT return, streamlining cash flow.

Steps to take

1. Apply for the Article 23 License
   • Businesses with a registered office, central headquarters, or permanent establishment in the Netherlands can apply.
2. Understand VAT Reporting
   • Report import VAT accurately using the customs assessment form value, not the invoice value, in box 4a of the VAT return.
3. Ensure Compliance
   • Maintain accurate records, follow Dutch tax regulations, and comply with the requirements for using Article 23.

Conclusion

Article 23 is a valuable tool for businesses importing goods into the Netherlands. By deferring import VAT, it enhances cash flow, simplifies processes, and reduces administrative burdens. For businesses handling regular imports, the Article 23 license is an essential asset in managing financial obligations effectively.

If you’re considering whether Article 23 is the right choice for your business, check out our guide on VAT Deferral in the Netherlands: How Article 23 Works for Importers, where we explore who benefits most and key considerations before applying.

Ready to apply? Follow our Step-by-step guide to applying for an Article 23 license for a smooth process.