The Netherlands has many beneficial VAT properties:
In case VAT subjects that reside or have a permanent establishment in the Netherlands are interrelated from a financial, economical and organizational perspective they (can) form a VAT Group. Such group is treated as one VAT subject, whereas all transactions within the VAT group in the Netherlands are ignored, which means that no VAT is to be charged.
The Netherlands has beneficial regimes for warehousing activities. Under these regimes, the import of goods into the EU and with it the applicable import duties and VAT effectively is postponed until the goods leave the warehouse. There are two types of warehouse regimes
- Bonded warehouse: Under this regime, the payment of import duty and VAT will be postponed until the goods are removed from the warehouse and released for free circulation.
- Excise warehouse: Under this regime, the payment of excise duties is suspended until the excisable goods (like beer and wine) have been removed from the excise warehouse for free circulation. In this respect, supplies of goods to an excise warehouse but also supplies within an excise warehouse are subject to 0% VAT (if all applicable conditions are met).
Import VAT deferment relief
Normally when goods are imported into the EU, import VAT (at an average rate of 20%) is payable in each country where the import takes place. This requires the importing company to be VAT registered in many EU countries. Since in many countries the refund requires several months it results in a substantial cash flow cost.
This can be overcome under the Dutch system for import VAT deferment relief. Technically, the VAT upon import into the Netherlands is still periodical payable, but it is followed by an immediate corresponding deduction when reported in the return. Effectively, no payment has to be made and hence a VAT cash flow benefit is realized. Its properties:
- There is no VAT cash flow.
- Subsequent sales to purchasers outside the Netherlands generally is subject to 0% VAT.
- Less foreign VAT registrations required.
In both cases goods are transferred from one EU member state to another to be held in stock:
- Consignment stock: the supplier remains to own and control the goods, which are only transferred when customers have been found. The supplier therefore needs to VAT register in the country where the stock is held and at the time of the actual movement of the goods needs to consider the VAT on the intra-Community acquisition.
- Call-off stock: a customer controls the goods, so the supplier does not have to register for VAT in the country where the goods are stocked. Rather, the customer can consider the VAT on the delivery of the stock, which would be an intra-Community acquisition. The supplier, on the other hand, performs a VAT-exempt intra-Community supply taxable in the EU country of departure.
Fiscal representation this is mandatory for non-EU companies, but optional for EU based companies.
Relatively simple VAT compliance obligations (e.g. returns are shorter than in many other countries)
Practical The Dutch tax authorities are open for practical solutions
We would be glad to assist with setting-up and implementing aforementioned VAT matters for your business. In case you are interested in any of the facilities, please feel free to contact us.