When Article 23 Is Beneficial for Managing Import VAT in the Netherlands

When is Article 23 beneficial?

Article 23 is particularly beneficial in certain scenarios related to managing import VAT. Here’s when it makes sense for businesses to utilize this provision:

1. Cash Flow Management

• Benefit: Article 23 allows businesses to improve cash flow by deferring the immediate payment of import VAT.
• Scenario: Businesses can allocate funds to more urgent operational needs upfront and settle VAT obligations later, during the regular VAT return filing.

2. Frequent Imports

• Benefit: If your business frequently imports goods from non-EU countries, Article 23 can streamline the VAT process.
• Scenario: Instead of making immediate VAT payments for each individual shipment, you can consolidate and report all import VAT on your regular VAT return.

3. Input VAT Deduction

• Benefit: If your business is eligible to deduct input VAT (common for businesses that sell taxable goods or services), Article 23 provides a simple method for reclaiming VAT.
• Scenario: By using Article 23, businesses can reclaim the import VAT in the same VAT return, effectively offsetting it against output VAT.

4. Simplified Administration

• Benefit: Article 23 helps businesses simplify administrative processes by eliminating the need for immediate VAT payments.
• Scenario: With this provision, businesses avoid complex paperwork related to import VAT and reduce the need for immediate financial transactions.

Conclusion

Article 23 provides significant advantages, especially in managing cash flow, simplifying VAT administration, and supporting businesses with regular imports. However, it’s important to evaluate whether it fits your business’s specific needs. Consult with tax professionals to determine whether applying for an Article 23 license is the right decision for your business.

VAT deferral can significantly benefit cash flow-heavy businesses. Learn more about how Article 23 works for importers and why it’s a strategic tool for frequent importers.

If you’re convinced that Article 23 is right for your business, check out our Step-by-step guide to applying for detailed instructions.