The Netherlands as the Gateway to the European Union

A VAT  framework for non-EU companies importing into the EU

For non-EU companies, importing into the EU is not merely about moving goods across borders. Importing into the EU is a  taxable event governed by harmonized European VAT and customs law that can materially affect capital, margins, and operational flexibility.

Under the EU VAT Directive, goods imported from outside the European Union become subject to VAT at the moment they are released into free circulation.  Import VAT is  calculated not only on the customs value of the goods, but also on transport costs, insurance, customs duties, and other charges incurred up to the first EU destination. In other words, import VAT is calculated on the full landed costs, not merely the product value.

Although the import VAT  can  be recovered by   businesses that sell the products onwards, it needs to be paid upfront at the moment of import. The VAT can be deducted  via the periodic VAT return which is due quarterly or monthly. This timing mismatch creates a structural liquidity problem that grows in direct proportion to import volumes.

For businesses operating high-velocity supply chains, e-commerce fulfillment, or distribution hubs, this turns VAT into a de facto financing requirement rather than a neutral consumption tax.

The Netherlands has designed a legal solution to eliminate this distortion.

Import VAT as a structural capital drain

In most EU Member States, import VAT operates as an interest-free loan to the tax authorities. A company that imports €10 million of goods per month at a 21% VAT rate must pre-finance €2.1 million in tax, often for several months. This has three immediate consequences:

1. Working capital is locked up
2. Debt or equity must be raised to fund VAT
3. Inventory velocity is reduced

In capital-intensive sectors, VAT becomes a hidden barrier to entry into the EU market. The Dutch VAT system neutralizes this effect.

Article 23 of the Dutch VAT Act

The Netherlands has implemented the so called Article 23  License or import VAT deferral license. 

With this license the importing company does not owe VAT at the moment of import, but the import VAT can be deferred to the regular VAT return. In the same VAT return, the import VAT  can be deducted as input tax.

The legal obligation remains, but the cash flow disappears.

This creates what is known as a closed-loop VAT mechanism: VAT is assessed and recovered in the same accounting period, with no financing gap in between, thus better aligning trade- and tax cashflows.

Th Dutch import VAT deferral scheme is unique in the EU and is the foundation of the Netherlands’ position as Europe’s dominant import hub.

Legal presence versus tax  representation

The article 23 or import VAT deferral license is only available for Dutch based entities or non-Dutch businesses that appoint a tax representative. 

Thus, when structuring an EU entry through the Netherlands, non-EU companies face a  choice: establish a legal presence by setting up a Dutch antity, or operate using a  tax  representative.

These two models serve very different strategic purposes.

A Dutch subsidiary or permanent establishment (PE)

A company that establishes a Dutch entity or creates a permanent establishment (PE) in the Netherlands becomes fully taxable in the Netherlands. This means:

• Dutch corporate income tax applies to profits attributable to the Dutch operation
• Transfer pricing and substance requirements become relevant
• Payroll tax, social security, and labor law obligations arise
• Full Dutch accounting and statutory reporting is required

This structure is appropriate when the Netherlands is intended to be a true operating center:
for manufacturing, R&D, regional management, or customer-facing commercial activity.

However, a legal presence is not required merely to import, hold, and distribute goods into the EU.

 Tax representation: market access without establishment

As mentioned earlier Dutch VAT is due at import (at the moment the goods are brought into the Netherlands). By using the article 23-license, import-VAT can be deferred to the periodical VAT return. In the same VAT-return the import-VAT can be offset as input VAT. So, no VAT is payable on the import. 

In order to let a foreign entrepreneur make use of this article 23-license, a tax representative must be appointed. In this respect two types of tax representation can be recognized: with limited and with general license. The features can be summarized as follows: 

Tax representation with a limited license

• Can only be applied for the import and onward supply;
• The represented foreign company has not to register for VAT purposes for those transactions, unless other taxable transactions are performed within the Netherlands (i.e., intra-community and local acquisitions);
• The import and onward supply are to be included in the return of the representative; 
• The representative is unlimited liable for the VAT and obliged to file statistical reports (Intrastat, if applicable);
• This type of tax representation is in practice only uses and offered by freight forwarders / logistic firms.

Tax representation with a general license:

• Can be applied for all transactions;
• The represented company should be registered for Dutch VAT purposes;
• All transactions (including import, local and intra-community acquisitions) should be included in one VAT return (of the represented company);
• The representative is limited liable for VAT and obliged to file statistical reports (Intrastat, if applicable);
• This type of tax representation is offered by VAT consultancy firms. Port Sight Tax offers tax representation with a general license services through Taxander BV.

The tax representative acts solely for VAT and customs purposes.
Commercial activity, inventory ownership, and profit allocation remain with the foreign company.

This makes tax representation the preferred model for:

• Global manufacturers
• International distributors
• E-commerce platforms
• Trading companies
• Market-entry structures

where the Netherlands is used as a gateway, not as a profit center.

Intra-EU distribution without VAT leakage

Once goods are imported into the Netherlands, they can be sold to customers in other EU Member States under the intra-Community supply regime.

These transactions are taxed at 0% VAT in the Netherlands, provided:

• The goods physically leave the Netherlands
• The customer is VAT-registered in another EU country

The tax representative ensures:

• Correct invoicing
• Transport documentation
• EU sales listings

This allows non-EU companies to operate a pan-European distribution model with no Dutch VAT ever becoming a cost.

What happens without Article 23?

If a non-EU company imports without Article 23:

• VAT  is due with customs at the moment of import
• VAT is calculated on freight, insurance, and duties
• Goods are not released until payment or security is provided
• Any customs irregularity leads to immediate VAT exposure

This creates financial risk, operational friction, and capital inefficiency — especially at scale.

How can we help?

Port Sight Tax operates where international VAT law, customs structuring, and  tax representation intersect. We provide:

•  Tax Representation Services with a general license through our special purpose entity Taxander B.V.
• VAT compliance
• Customs coordination
• Risk-controlled EU entry structures

We do not merely process VAT, we design capital-efficient European market access.