Article 23

What is Article 23 of the Internal Revenue Code?

Article 23 is an article of law that allows the imposition of sales tax (VAT) on imports to be shifted to the periodic declaration. In logistics, we therefore simply refer to it as a “Section 23 permit.” Without this permit, you pay the import VAT directly to Customs during the import declaration. Do you have a license? Then you do not report the VAT due until your next VAT return. In that same return, you immediately deduct this amount as input tax. So on balance you pay nothing and do not have to advance large amounts.

Calculation example liquidity advantage

The table below shows the concrete difference to your cash flow for a €10,000 import shipment.

Conditions of the permit

The Inland Revenue does not automatically issue this permit. As an entrepreneur, you must prove that your business is based in the Netherlands. Foreign entrepreneurs usually do not qualify directly and rely on tax representation. In addition, you must demonstrate that you regularly import goods from non-EU countries. Licenses are often not issued for occasional shipments. Also, your records must be in order. The tax authorities require that your administration is set up in such a way that it is easy to see how much VAT you owe on imports. Starting entrepreneurs can also apply for the permit, but must make a plausible case that they will soon be importing on a regular basis.

How does the diversion work in practice?

Applying the permit requires coordination between you, your customs representative and your accountant. When we receive the customs documents we indicate in the system that you have an Article 23 permit. At that time, no VAT is charged by Customs. You then enter the value of the imported goods and the VAT due in section 4a of the VAT declaration (“Supplies/services from countries outside the EU”). You enter the same amount in section 5b (“Input tax”). It is important that the administration of the customs declarations match exactly with your VAT declaration, as the tax authorities carry out checks on this.

Article 23 applications

You apply for the permit in writing to the Internal Revenue Service. This can be done using the form Application for Permit Article 23 on their website. Please allow an average processing time of 8 weeks at the time of writing. As long as the permit has not yet been granted, you must pay the VAT on import as usual. You cannot correct this retroactively. So make sure you start the application in time if you have import plans.

No Section 23 permit? (Fiscal representation)

Not every business qualifies for its own license. This often applies to foreign companies or entrepreneurs who do not yet meet the frequency requirement. In these cases, Limited Fiscal Representation (BFV). a godsend. Here, a logistics service provider acts as a fiscal representative and uses its own license for your goods. You can read more about this in our article on the requirements for customs representation.

Please note that European Customs Clearance does not currently offer fiscal representation for imports into the Netherlands. Are you importing via Belgium? There we do offer this service in certain cases.