Importing goods into the Netherlands from outside the European Union comes with a direct tax obligation: VAT must ordinarily be paid at the moment of customs clearance. For businesses that import frequently or in large volumes, this upfront payment can place a significant strain on working capital. The Dutch tax system offers a practical solution through the reverse-charge mechanism on import, governed by Article 23 of the Dutch VAT Act (Wet op de omzetbelasting 1968). Understanding how this mechanism works and how to obtain the associated licence is essential for any company doing business through the Netherlands. 

What Is the Article 23 VAT Licence? 

When goods arrive in the Netherlands from a non-EU country, import VAT at the standard rate of 21% is normally due at the border. Without any special arrangement, a business must pay this amount upfront to Dutch Customs and then reclaim it in its subsequent VAT return, effectively bridging the gap with its own funds. 

The Article 23 licence changes this dynamic entirely. Under this mechanism, the obligation to pay VAT at importation is deferred to the importer's periodic VAT return. Rather than making an immediate cash payment at customs, the importer declares the import VAT as output tax in its VAT return and simultaneously deducts it as input tax in the same return. For a fully taxable business, the liability and the deduction cancel each other out in a single filing, meaning no VAT is actually transferred. 

Key Benefits 

Who Is Eligible? 

Not every business is automatically eligible. The Dutch Tax and Customs Administration (Belastingdienst) requires that the applicant has a demonstrable presence and taxable activity in the Netherlands. 

Dutch-established businesses must be registered for VAT in the Netherlands, either as a Dutch legal entity (such as a BV) or as a foreign entity with a registered branch or permanent establishment in the country. 

Foreign entrepreneurs without a Dutch presence cannot apply for an Article 23 licence directly. They must instead appoint a qualified fiscal representative (a Dutch-based intermediary authorised by the Tax Administration) who assumes joint and several liability for any VAT that may become due. The fiscal representative must post financial security with the Tax Administration, typically through a bank guarantee, calculated as a percentage of the maximum anticipated VAT exposure. 

It is worth noting that a VAT registration number alone may not be sufficient. The Tax Administration has become increasingly rigorous about verifying genuine business activity before issuing the licence. 

The Role of the Fiscal Representative 

For foreign companies without a Dutch permanent establishment, the fiscal representative is not just a formality; they play an active, legally responsible role. A fiscal representative may hold either a general licence or a restricted licence, depending on the scope of transactions they are authorised to handle. 

The representative files the periodic VAT return, declares the import VAT, and simultaneously deducts it as input tax. As a result, the foreign entrepreneur generally does not need to register independently with the Dutch Tax Administration, provided no other taxable activities are conducted in the Netherlands. 

Selecting the right fiscal representative is therefore a decision with real legal and financial consequences. Businesses should verify that their representative holds the appropriate licence and has the capacity to provide the required financial guarantee. 

What is the Application Process?

The application for an Article 23 licence is submitted to the Dutch Tax Administration. The precise procedure depends on whether the applicant is Dutch-established or a foreign business applying through a representative. 

Once the licence is granted, the Article 23 number is included on the customs declaration at the time of import. Dutch Customs clears the goods without requiring upfront VAT, and the import VAT is declared and offset in the next VAT return. 

Processing times can vary. Applicants should account for potential delays, particularly where the Tax Administration requests additional documentation on business activities or financial guarantees. 

Key Considerations 

• Ongoing compliance: The Article 23 licence defers and reorganises VAT obligations rather than removing them. VAT returns must be filed accurately and on time. Errors or late filings can trigger penalties and may put the licence at risk. 
   
• Licence reviews: The Tax Administration can withdraw a licence if the eligibility conditions are no longer met. Businesses should monitor their VAT status, business activities, and the fiscal representative's guarantee arrangements on an ongoing basis. 
   
• Partial deduction: The mechanism works most cleanly for fully taxable businesses. Where a company also carries out VAT-exempt activities, such as certain financial services, input VAT recovery may be limited, reducing the practical cash flow benefit. 
   
• Scope: Article 23 applies specifically to imports from outside the EU. Goods moving between EU member states fall under the intra-community acquisition rules and are handled differently. 

The Article 23 VAT licence is one of the most commercially useful tools available to businesses importing goods into the Netherlands from third countries. By deferring import VAT to the periodic return and enabling simultaneous deduction, it eliminates the cash burden at customs and strengthens the Netherlands' position as a preferred EU entry point. 

Whether you are a Dutch entity importing regularly or a foreign company exploring market entry through the Netherlands, understanding Article 23 is essential. Given the legal responsibilities involved (especially for foreign entrepreneurs relying on a fiscal representative) professional guidance from a qualified tax adviser or law firm with Dutch VAT expertise is strongly recommended.

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