Limited Fiscal Representation and Why CMR's Are So Important

Limited Fiscal Representation and Why CMR's Are So Important

Jens Hartkoorn
Tax Accountant

Improve Your Cash Flow

When a foreign business conducts economic activities in the Netherlands, like importing goods, they need to adhere to the administrative obligations of the Dutch VAT laws. 

This Value Added Tax (VAT), 21 per cent for most goods, needs to be paid when you import goods into the Netherlands. Paying 21 per cent VAT now, and then redeeming it later is a waste of cash flow and man-hours. To avoid this (Limited) Fiscal Representation is an option.

Please note that import duties and other customs costs still need to be paid.

What is Limited Fiscal Representation?

When a foreign business uses Limited Fiscal Representation in the Netherlands, the VAT payable at import is shifted to the VAT declaration of the Limited Fiscal Representative. For this to be allowed, the representative/customs agent has to have a Limited Fiscal Representation Permit and a so-called Article 23 Permit. The customs agent takes responsibility for the foreign importers’ VAT obligation in the Netherlands. This means that both the import and the delivery after the import are now part of the customs agent’s Dutch VAT declaration. 

Delivery After Importing - Make Sure You Have Proof

Often the delivery post-import is the delivery of the imported goods to another EU member state. When goods are delivered from one EU member state to another EU member state a zero per cent VAT tariff applies. This zero per cent VAT tariff only applies when the customer receiving the goods has a valid VAT identification number and when the limited fiscal representative/customs agent has proof in their administration that the goods were actually delivered in another EU member state. Such proof is preferably a signed CMR.

If delivery to the customer outside the Netherlands can’t be proved the Dutch Tax Authority will deem the goods to have been imported and delivered in the Netherlands and Dutch VAT will apply. In such a case you will also be fined.

The Dutch Tax authority can request proofs of delivery from shipments up to five years old, which is why your customs broker will make sure your proofs of delivery are safely stored for at least six years.

Do you want to know more about the benefits of fiscal representation? Read my previous blog post on this subject.

Happy to Help

Customs Support has the right permits to offer companies Limited Fiscal Representation. If you have any questions about this process, or if you want to improve your cash flow, talk to one of our experts. They are happy to help and will take the load off your mind.