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Tax Representation (VAT Rep)

The Netherlands applies favourable tax regulations regarding cross-border trade and transactions. This applies in particular to imports (i.e. goods from non-EU countries). This means that the Netherlands is an attractive gateway to other EU countries for businesses aiming to supply the European market via the Netherlands. This applies to businesses established outside the EU, but in particular also to businesses established in other EU countries.

Imports without acute VAT levies via the Netherlands

Goods can be imported into the EU via the Netherlands without incurring acute VAT levies thanks to the import licence system: the so-called ‘Section 23 licence’ precludes having to pay VAT on imports at the border, instead delaying payment to a later stage via the VAT return. This prevents companies having to ‘prefinance’ the VAT on imports (also see the questions and answers below).

Both companies established in the Netherlands and abroad may apply for the required Section 23 licence to make use of these schemes. In order to acquire such a licence, the foreign company is required to appoint a so-called tax representative in the Netherlands. This is also referred to as a VAT Rep.

The tax representative represents the interests of the principal, organising all VAT issues. The representative is actually responsible for certain issues and therefore goes far beyond merely being a post address for the Tax Department. Bol International has many years of experience and expertise in tax representation, which is an activity of a separate business unit, Bol VAT Rep BV.

» Read more regarding tax representation by Bol VAT Rep

FAQ

What is the actual benefit of a Section 23 licence?

Normally, import VAT must be paid ‘at the border’ on imports into the EU. These import VAT can, in principle, be settled or refunded, but this mostly happens at a much later stage. As a consequence, the company is required to prefinance the amount of this VAT. As this often concerns large amounts, advancing such import VAT can form a serious obstruction. Using the Section 23 licence prevents a company from having to advance the VAT on imports. With such a licence, the import VAT can be included on the VAT return, where, in most cases, the same amount can simultaneously be deducted on the same VAT return. The Netherlands is one of the few EU countries providing this facility, which makes the Netherlands an excellent import country - in combination with its strategic geographical position.

What are the key characteristics of a tax representative?

The representative should have plenty of knowledge, experience and integrity, and most importantly, he or she should have a pro-active attitude. In general, foreign businesses do not have extensive internal knowledge of the Dutch VAT legislation. A tax representative giving advice on request as well as providing information and issuing warnings about possible traps and bottlenecks at his/her own initiative, based on practical experience, will be a great benefit to the company concerned. Bol International has extensive experience and expertise and maintains an excellent relationship with the Tax Department.