The Netherlands is one of Europe’s most important gateways for goods. The Port of Rotterdam and Schiphol Airport process enormous volumes of import shipments daily for companies from outside the EU.
But many foreign companies importing via the Netherlands run into the same problem: 21% import VAT must be paid at the border on every shipment. Fiscal representation offers a solution to this.
A fiscal representative is a company established in the Netherlands that handles VAT obligations in the Netherlands on behalf of a foreign company. More importantly, it is often the gateway to the article 23 scheme for the deferral of import VAT.
With this scheme, import VAT changes from a direct payment at the border into an administrative entry in the VAT return. For non-EU companies, this can mean the difference between a heavy cash-flow burden and a financially neutral import structure.
In this article we discuss what fiscal representation means, when foreign companies need it, how the article 23 scheme works, and what benefits and risks this arrangement offers international businesses using the Netherlands as a gateway to the European market.
What is fiscal representation in the Netherlands?
Fiscal representation in the Netherlands means that a company established in the Netherlands acts as the official VAT representative of a foreign business towards the Dutch Tax Authority.
The fiscal representative handles Dutch VAT registrations, files VAT returns and maintains all communication with the Tax Authority on behalf of the foreign company. In English this is called VAT representation.
A fiscal representative can be, for example, a tax advisor, accountant, lawyer, customs broker, freight forwarder or a specialized VAT compliance provider.
The representative must be established in the Netherlands and provide financial security to the Tax Authority. This is because the representative can be held liable for unpaid VAT obligations of the foreign company they represent.
Fiscal representation is not automatically mandatory for every foreign company wanting to operate in the Netherlands. Both EU and non-EU companies can, in many cases, register directly for Dutch VAT without appointing a fiscal representative.
However, for non-EU companies wanting to use the article 23 scheme for import VAT, a fiscal representative is usually required.
The problem without fiscal representation: import VAT at the border
Without an article 23 permit, the main rule is straightforward. When goods from outside the EU enter the Netherlands, 21% VAT must be paid immediately on the customs value of the shipment.
The importer pays this VAT to Dutch Customs when the goods are released. The VAT can later be reclaimed via the Dutch VAT return, but often only weeks or months later.
For companies with large import volumes, this creates two major problems.
First, there is the impact on cash flow. The company must pre-finance 21% VAT for every shipment before any revenue from those goods is even realized.
Second, there are time delays. It can take weeks before the VAT is refunded through the filing and refund procedure. In 2023, the Netherlands collected around €75.6 billion in VAT. For importers, having to pre-finance even a small share of that already creates significant pressure on working capital.
What is the article 23 scheme and how does it work?
Article 23 is a Dutch VAT facility that allows companies to shift import VAT from the moment of import to the periodic VAT return.
Instead of paying 21% import VAT to Dutch Customs when goods arrive, the importer declares the VAT in the Dutch VAT return and deducts the same amount in the same return as input tax.
The net effect on cash flow is zero. Import VAT thus becomes an accounting entry rather than an actual outgoing payment.
Under the article 23 scheme, customs issues a payment notice upon arrival of the goods, known as the UTB (Uitnodiging Tot Betaling, or “Invitation to Pay”). This UTB shows a VAT amount of zero euros, since no VAT is paid at the border.
The customs value stated on the UTB forms the correct basis for calculating VAT in the return. This is therefore not the supplier’s invoice value. Customs duties and excise taxes must still be paid at the border. Article 23 applies exclusively to import VAT.
Because no VAT payment needs to be processed through customs, goods can also often be released faster. This reduces the risk of demurrage and detention costs while goods wait in port.
The Netherlands holds a unique position within Europe with this scheme. No AEO status is required, quarterly returns are permitted, and the minimum financial security is only €5,000.
This combination of strong logistics infrastructure and VAT efficiency is an important reason why many non-EU companies use Dutch ports as a gateway to the European market.
Two types of fiscal representation in the Netherlands
The Netherlands has two officially recognized forms of fiscal representation. Which form is most suitable depends entirely on the business model, such as what you sell, to whom you sell and how you use Dutch warehouses and logistics infrastructure.
General Fiscal Representation (AFV)
General Fiscal Representation (AFV) is the most extensive form of fiscal representation. The foreign company receives its own Dutch VAT number, and the fiscal representative handles all VAT returns on behalf of the company.
AFV is required when a foreign company wants to apply for an article 23 permit.
AFV covers, among other things:
- All Dutch VAT obligations of the foreign company
- B2B and B2C sales in the Netherlands
- Intra-Community acquisitions and supplies
- Applications for article 23 deferral of import VAT
- All communication with the Tax Authority
AFV requires financial security. The representative is liable for the VAT debts of the foreign company they represent.
Limited Fiscal Representation (BFV)
Limited Fiscal Representation (BFV) applies exclusively to specific import transactions and the immediately following supply of goods. The foreign company does not need its own Dutch VAT number for this.
The representative uses a sub-number under their own permit.
BFV is suitable exclusively for B2B transactions and cannot be used for B2C sales. This form is often applied by logistics providers and freight forwarders who combine customs processing with VAT representation.
A practical example is a German importer bringing goods in via Rotterdam instead of Hamburg. Under BFV, no import VAT is paid and the goods are subsequently forwarded to Germany as an intra-Community supply at 0% VAT.
This provides a significant liquidity advantage compared to paying German import VAT upfront.
Who needs fiscal representation in the Netherlands?
Fiscal representation is not mandatory for every foreign company operating in the Netherlands. Whether a fiscal representative is needed depends on where the company is established, how it imports goods and whether it wants to use the article 23 scheme for the deferral of import VAT.
Below are the most common situations in which fiscal representation is needed:
- Non-EU companies that regularly import into the Netherlands: Non-EU companies that regularly import goods from outside the EU and want to use the article 23 scheme need a fiscal representative to apply for and maintain this permit.
- Companies holding stock in Dutch warehouses: Foreign companies that store goods in Dutch warehouses or distribution centers before supplying customers within the EU often need fiscal representation to correctly handle the associated VAT flows.
- E-commerce sellers using Dutch fulfilment services: British sellers, American brands or Asian manufacturers using a Dutch logistics provider to supply EU customers benefit from fiscal representation because they do not need to pre-finance import VAT on every incoming shipment.
- B2B importers bringing goods in via Rotterdam or Schiphol: Companies using Dutch ports and airports as a gateway to the EU for further distribution within Europe often use BFV because of the liquidity advantage and logistics flexibility.
- Foreign companies required to provide financial security: When Dutch authorities require a guarantee before issuing a VAT permit, a fiscal representative can provide this security.
Benefits and risks of fiscal representation
ALT: Balance between benefits and risks
Fiscal representation in the Netherlands offers foreign companies significant strategic benefits. At the same time, it also brings clear responsibilities that must be well understood before appointing a representative.
Benefits of fiscal representation
- Cash-flow optimization: Import VAT no longer needs to be paid upfront at the border. Working capital remains available within the company instead of being tied up while awaiting a VAT refund.
- Access to the article 23 scheme: This is the most important benefit for non-EU importers. Import VAT becomes an administrative entry instead of an actual cash outflow.
- Faster customs processing: Since no VAT payment needs to be processed through customs, goods can be released faster. This reduces the risk of demurrage and detention costs in the port.
- Centralized VAT compliance: The fiscal representative handles all VAT registrations, VAT returns and communication with the Tax Authority from a single central point.
- Access to the EU market through a single hub: Companies can import goods into the Netherlands and supply customers throughout the EU without needing a VAT registration in each individual country.
Risks and responsibilities of fiscal representation
- Liability of the representative: The fiscal representative can be held liable for unpaid VAT. As a result, a financial guarantee is often required and strict acceptance conditions apply for the companies being represented.
- Accurate record-keeping required: The foreign company must maintain accurate records of all shipments and provide complete data to the representative. Discrepancies between customs declarations and VAT returns can lead to audits.
- Incorrect use of article 23: Using an incorrect customs value, incorrect declarations or poor alignment between logistics processes and VAT obligations can lead to additional assessments, interest and fines. In serious cases, the article 23 permit can be withdrawn.
Fiscal representation and customs processing in the Netherlands
Fiscal representation and customs processing are closely linked in the Netherlands. When goods arrive in Rotterdam or at Schiphol, the import declaration forms the starting point for calculating VAT.
When article 23 is applied, the customs declaration states that no VAT is due upon import, and the goods can be released without a VAT payment at the border. After the import declaration, the goods are no longer under customs supervision and can be transported directly to their destination.
The Customs Company is an AEO-certified customs service provider in the Netherlands with direct connections to Dutch Customs and Portbase.
With 24/7 support for all import declarations and customs obligations, The Customs Company works together with fiscal representatives to ensure that customs declarations and VAT reporting align correctly from the moment goods enter the Netherlands.
Frequently asked questions
Q: What is the difference between General and Limited Fiscal Representation?
Ans: General Fiscal Representation (AFV) covers all Dutch VAT obligations and gives the foreign company its own Dutch VAT number. Limited Fiscal Representation (BFV) is intended exclusively for specific import transactions and subsequent B2B supplies via the representative’s VAT number.
Q: What is the article 23 permit and why is it important?
Ans: With an article 23 permit, import VAT is shifted from the moment of import to the Dutch VAT return. Instead of paying 21% VAT to customs upfront, the importer declares the VAT and simultaneously deducts it in the same return. This means there is no negative impact on cash flow.
Q: Is fiscal representation mandatory in the Netherlands?
Ans: Fiscal representation is not mandatory for all foreign companies. It usually becomes necessary when a non-EU company wants to use the article 23 scheme or when Dutch authorities require financial security before issuing a VAT permit.
