Fiscal representative in the Netherlands: do you need one?

Three options

• Direct registration: your company registers itself as a foreign business and files its own Dutch VAT returns. This is possible for most foreign companies, including companies from outside the EU
• General fiscal representative: a licensed Dutch representative handles the VAT for all your Dutch activities and is jointly liable for it. The licence usually requires a security, such as a bank guarantee
• Limited fiscal representative: covers only imports followed directly by a supply. For those transactions your company then does not need its own registration

Direct registration is the route for most companies. How it works, which documents the Dutch tax authorities ask for and what it costs (€ 275, everything included) is on VAT registration for foreign companies.

When a representative is compulsory

Dutch law makes a fiscal representative compulsory in two situations:

• Your company is established in a country outside the EU that has no agreement on mutual assistance with the EU, it sells goods from another EU country to consumers in the Netherlands, and it does not use the Union OSS scheme for those sales
• Your company wants to use the special arrangements for goods in a VAT warehouse, or for excise goods in an excise warehouse

In all other cases a representative is a choice, also for companies from outside the EU.

General or limited licence

A general fiscal representative handles the VAT on all your supplies and services on which you owe VAT, on goods you bring in from other EU countries and on your imports. You can only have one.

A limited licence only covers part of it: imports followed directly by a supply. Logistics companies often use this form for their customers.

What a general fiscal representative does

A general fiscal representative files your Dutch VAT returns and EC Sales Lists and pays the VAT on your behalf. Assessments are sent to the representative, and refunds are paid to the representative.

All of this runs under your company's own Dutch VAT identification number. Your company is registered with the Dutch tax authorities; if it is not yet registered when the representative applies for the licence, the inspector arranges the registration.

Invoices issued by or for your company for these transactions also state the VAT number, name and address of the representative.

A representative does not change who owes the VAT. When you supply goods or services in the Netherlands to a business established here, the VAT is in most cases reverse-charged to your customer, with or without a representative. See do I need a Dutch VAT number?

How a limited fiscal representative works

With a limited fiscal representative your company does not register with the Dutch tax authorities. The representative receives a sub-number on its own VAT number, for example 123456789B02 next to its regular 123456789B01. Under that number it files one consolidated return for all its clients and pays the VAT.

Do you supply the imported goods on to a business customer in another EU country? Then that supply goes on the EC Sales List under the representative's number, and you give that number to your customer. Your invoices state the VAT number, name and address of the representative.

A limited licence cannot be used when the supply after import is a distance sale: goods from outside the EU sold on to a customer in another EU country who has no VAT number. To shift the import VAT in that case, a company from outside the EU appoints a general fiscal representative.

If the limited representative does not pay the VAT or files an incorrect return, the additional assessment is imposed on your company, according to Dutch case law. You may use more than one limited representative, also next to a general one.

How a representative obtains the licence

The representative applies for the licence itself, in writing, to its own tax inspector. It states when the representation starts and the expected nature and volume of your taxable transactions per calendar year. For a general licence it encloses your authorisation to act for you; a limited representative keeps the authorisations in its own records.

Unless the inspector decides otherwise, the licence is only granted if the representative:

• lives or is established in the Netherlands
• has not been irrevocably convicted for breaching tax or customs law in the past five years
• keeps records that show the invoices issued to and by your company, where your goods come from and go to, and how much VAT you owe
• provides security up to an amount set by the inspector, and gives the information needed to set that amount

A general licence is issued per foreign business, and only after the Dutch tax authorities have accepted the security.

Security: how much and for how long

The starting point is the VAT that could be due on average per month on the transactions the representative acts for, before any deduction of input VAT. The VAT rate is applied to all those transactions, including zero-rated and exempt supplies and supplies on which the VAT is reverse-charged to your customer.

The security is 5% of that amount, per licence, within a minimum and a maximum:

• Bulk goods, semi-finished products and means of production: at least € 5,000, at most € 100,000
• Consumer goods: at least € 5,000, at most € 500,000. In case of doubt, goods count as consumer goods

The security is ongoing. It is released only in the year in which the VAT has been finally settled. Because the Dutch tax authorities can issue additional assessments up to five years after the end of the calendar year, it stays in place for at least five years. If your volumes rise, the inspector can ask for a higher security; a request for a lower one only takes effect once that five-year period has passed for the earlier years.

Example: the security

A company from outside the EU appoints a general fiscal representative for supplies of consumer goods that would be taxed at 21%.

• Supplies of € 100,000 per month: VAT € 21,000; 5% of that is € 1,050. That is below the minimum, so the security is € 5,000
• Supplies of € 1,000,000 per month: VAT € 210,000; 5% of that is € 10,500, so the security is € 10,500

This is a worked example with rounded amounts, not a client case.

Liability of the representative

A general fiscal representative is jointly liable for your Dutch VAT, including the related interest and penalties. That liability is capped per calendar year at the amount of the security. An additional assessment covering two years can therefore make the representative liable twice for that amount.

A limited fiscal representative is jointly liable for the VAT of all its clients together, without that cap. The full security it has provided is available for a claim, even if the claim results from one client only.

The Article 23 licence: the real reason to appoint one

When you import goods, you pay the import VAT at customs and reclaim it later in your Dutch VAT return. With every consignment, money is tied up.

With an Article 23 licence the import VAT moves to your VAT return, where you deduct it again in the same return. On balance you pay nothing at the border. A company that is not established in the Netherlands can only use this licence through a fiscal representative.

How the licence works through a representative depends on the type of licence:

• With a general fiscal representative, your company itself can be granted the Article 23 licence. The representative files the return in which the import VAT is reported and deducted
• A limited fiscal representative can obtain its own Article 23 licence and uses it for the imports of all the foreign clients it acts for

The usual condition that you import goods regularly does not apply to a foreign business with a fiscal representative: occasional imports are enough. The licence does not cover passenger cars, vans and motorcycles; those need a separate request. The other conditions, and where the import VAT goes in the return, are on importing into the Netherlands.

Is your company established in the Netherlands, or does it have a fixed establishment here? Then it applies for the licence itself, without a representative. We prepare that application for € 45, including a check whether you qualify (see all fees).

Example

A US company imports goods worth € 50,000 per quarter into the Netherlands and sells them to Dutch businesses.

• Direct registration: about € 10,500 import VAT is paid at the border each quarter and is refunded after the quarterly return
• Fiscal representative with an Article 23 licence: the import VAT is reported and deducted in the same return; nothing is paid at the border
• Whether that cash-flow benefit outweighs the representative's fee and the security depends on your volumes

This is a worked example with rounded amounts, not a client case.

What often goes wrong

• Importing in your own name without an Article 23 licence, so VAT was paid up front for years without need
• A limited licence used for goods it does not cover
• A return in the representative's name that does not match the company's own registration
• An EC Sales List that falls behind, which puts the zero rate on the onward supply at risk

What we do

We check whether a representative is compulsory in your situation or only useful, and whether you need the Article 23 licence. If you can register directly, we arrange the registration (€ 275, everything included) and file your Dutch VAT returns (€ 100 per month, € 150 with the OSS return). Valorem does not act as fiscal representative; if you need one, we refer you to a licensed partner.