VAT on imports and exports of goods and intra-Community supplies

Reverse charge mechanism for imports

Operators can, in principle, deduct the VAT amount owed on the import of goods in their periodic VAT returns (monthly or quarterly). For operators who regularly import goods, this can be detrimental to their liquidity and cash flow position. That is why the Dutch legislator has made it possible for these operators to defer payment of the VAT amount due upon importation by transferring it to the periodical VAT return. If the so-called reverse charge mechanism for imports is used, operators do not have to pay the import VAT immediately upon importation of the goods and only deduct it later, but they may report the amount on their periodic VAT return and deduct the same amount as input VAT on the same return.

This scheme is based on Article 23 of the Turnover Tax Act 1968 ("Turnover Tax Act 1968"). However, this facility requires a license ("Article 23 authorization") from the Tax Authorities, to which conditions must be strictly adhered to.

Points to consider when using an Article 23 authorization  

It is very important that operators who have been issued with an Article 23 authorization use that authorization for goods intended for themselves. Recently, there have been cases where an authorization was being used by an operator other than the one to whom it was issued, either as a "favor" or as a practical solution. There have also been cases where an authorization was used to import goods which are not destined for the operator to whom it was issued. In these cases, the tax authorities (customs) state that the reverse charge mechanism does not apply to imports and reclaim the VAT due on the import from the declarant. Because in most of these cases, the goods are not destined for the declarant (often a logistics service provider), he cannot deduct the reclaimed VAT. He will have to charge the amount to his customer. This creates a problem if the claim turns out not to be recoverable, for example, if the principal is insolvent or is based outside the EU. Such cases have occurred in particular with e-commerce shipments.

Application of zero rate VAT for intra-Community supplies and VIES control

When an operator sells goods to a customer (also an operator) established in another EU Member State, the zero rate applies provided that the operator can prove that the goods have actually been transferred to that other Member State and that the customer has a valid VAT number from that other EU Member State.

In any event, he must check the VAT identification number given by his customer in the EU database VIES. VIES is an online system for checking VAT numbers of businesses and other organizations registered in the EU for the cross-border supply of goods or services.

In addition, in Implementing Regulation (EU) 2018/1912, the European Commission has laid down further rules on the evidence required for the application of the zero rate. In particular, these are documents issued by independent parties which prove that the goods have been transported to another Member State.

VAT and export of goods

If an operator exports goods from the EU, the zero rate applies provided that he can prove that the goods have actually been exported. This can be done, for example, by means of an export declaration signed by the customs authorities.

Ploum’s team Customs, Trade and Logistics

Ploum's customs team has a great deal of knowledge and experience in the field of VAT on imports and exports. You can contact us for advice on legislation and regulations, the drafting of contracts on fiscal representation, disputes with the tax authorities or disputes with your commercial parties such as seller, buyer, principal or logistical service provider.