VAT deferment under Article 23 is a topic I often discuss with businesses that import goods into the Netherlands. Many of them ask whether it truly helps cash flow or whether it creates new administrative pressure. From my experience, the answer depends on how they operate, how disciplined their records are, and how well they handle compliance. In this blog, I will share a clear and honest view of VAT deferment under Article 23, including the benefits, the downsides, and the real-life situations where it works well or causes trouble.
I will also speak from a practical angle, using I, we, they, and their experiences, so the topic feels grounded rather than theoretical.
Why businesses I work with talk about VAT deferment under Article 23
When goods are imported into the Netherlands, import VAT normally becomes payable at the border. This can create a heavy burden, especially for companies that import frequently or deal with high-value shipments. We often see that cash gets locked for weeks or even months before VAT can be reclaimed.
Article 23 offers an alternative. Instead of paying VAT at the border, businesses can declare import VAT in their periodic VAT return. In comparison to the traditional system, this shifts the timing of payment and recovery to the same return.
Many companies I speak with look for article 23 registration services Netherlands because they want to:
- Avoid upfront VAT payments
- Improve liquidity without taking loans
- Keep imports moving smoothly through customs
However, although the idea sounds attractive, it is not free of conditions or risks.
How VAT deferment under Article 23 works in real practice
Under Article 23, import VAT is not physically paid to customs at the time of import. Instead, it is reported in the VAT return as both output VAT and input VAT. In the same way, this often results in a net zero effect, assuming full deduction rights.
They usually need to meet certain requirements, such as being established or fiscally represented in the Netherlands. We always remind clients that approval is required before using this mechanism.
This is why article 23 registration services Netherlands are often requested, as the application process itself requires care and accuracy.
Cash flow relief that many importers genuinely feel
One of the biggest advantages I see is improved cash flow. Admittedly, this is often the main reason businesses apply.
With VAT deferment:
- Money stays available for operations
- There is no need to prefinance VAT
- Working capital pressure is reduced
Likewise, for fast-growing companies, this can make a measurable difference. Instead of waiting for VAT refunds, they keep funds available for stock, logistics, or staffing.
We have seen businesses avoid short-term borrowing simply because Article 23 removed the VAT prepayment requirement. Still, this benefit only holds when VAT returns are filed correctly and on time.
Administrative discipline becomes non-negotiable
While cash flow improves, the administrative responsibility increases. They must report import VAT accurately in their VAT return. Despite the simplicity on paper, mistakes can be costly.
Common obligations include:
- Correct customs valuation
- Matching customs data with VAT returns
- Timely filing without delays
In spite of the advantages, I have seen companies struggle when their internal systems are not aligned. This is where professional article 23 registration services Netherlands often become necessary, not just for registration but also for ongoing compliance.
Compliance risks that businesses sometimes underestimate
Article 23 is not a loophole. Tax authorities actively monitor its use. However, some companies assume that because no VAT is paid upfront, scrutiny is lower. This assumption is incorrect.
Risks include:
- Penalties for incorrect reporting
- Interest on late or inaccurate VAT declarations
- Withdrawal of the Article 23 permit
Although these risks exist, they are manageable. We advise clients to treat VAT deferment with the same seriousness as any other tax obligation.
Why foreign companies often rely on fiscal support
Foreign businesses importing into the Netherlands face additional complexity. They may need a fiscal representative or local VAT registration. In comparison to Dutch-established companies, they often require more guidance.
This is where article 23 registration services Netherlands play a crucial role. We often act as a bridge between customs data, VAT reporting, and local regulations.
They benefit because:
- Language barriers are reduced
- Local compliance expectations are clearer
- Communication with authorities becomes smoother
Still, choosing the right support partner matters greatly.
Situations where Article 23 may not be ideal
Despite its popularity, VAT deferment is not always the best option. I have advised some clients not to apply.
For example:
- Businesses with limited import volume
- Companies with partial VAT deduction rights
- Firms with weak bookkeeping systems
In such cases, the administrative burden may outweigh the cash flow benefit. But this decision should always be made after reviewing their import patterns and VAT position.
Common mistakes I see during application and usage
Even experienced businesses make errors when applying or using Article 23. Some of the most frequent issues include misaligned customs and VAT data.
This leads to what many call Common Artikel 23 Rejections, often caused by:
- Incomplete documentation
- Incorrect business details
- Inconsistent VAT history
Still, these problems can be avoided with preparation and realistic expectations.
Ongoing reporting responsibilities that should not be ignored
Once Article 23 is granted, the responsibility does not end. They must continue meeting all VAT filing obligations.
Key responsibilities include:
- Monthly or quarterly VAT returns
- Correct import VAT declaration
- Retention of supporting documents
Likewise, authorities may request audits or explanations. In the same way, good recordkeeping becomes essential, not optional.
Businesses using article 23 registration services Netherlands often benefit from structured reporting frameworks that reduce errors over time.
The role of timing and accuracy in VAT returns
VAT deferment shifts payment timing, but it does not remove liability. Accuracy becomes critical. A late or incorrect return can undo the benefits.
Despite the deferred payment, penalties apply if obligations are not met. We remind clients that VAT deferment is based on trust and compliance history.
This is another reason why article 23 registration services Netherlands are used repeatedly, not just once.
Practical benefits for supply chain efficiency
Beyond finance, Article 23 can also improve logistics. Goods are cleared faster because VAT payment is not a blocking factor at the border.
Benefits include:
- Faster customs clearance
- Predictable import processes
- Reduced shipment delays
But these benefits only apply when customs declarations are correct. Still, many logistics teams appreciate the smoother flow.
When tax authorities reassess eligibility
Authorities can reassess eligibility at any time. If they find repeated errors, they may revoke the permit.
In comparison to initial approval, maintaining eligibility is often more challenging. They must show consistency and reliability.
We often support reviews and reassessments through article 23 registration services Netherlands to ensure continued compliance.
Why preparation matters before applying
Before applying, businesses should assess their readiness. This includes financial records, VAT filing history, and internal controls.
To Apply for an Artikel 23 License in the Netherlands, they should ensure:
- Clean VAT compliance history
- Clear import documentation
- Reliable accounting systems
Admittedly, skipping preparation leads to delays or rejection.
Balanced view on pros and cons from real cases
From what I have seen, VAT deferment under Article 23 is powerful but not automatic. The advantages are clear, especially for cash flow. However, the administrative and compliance responsibilities are real.
Pros include:
- Improved liquidity
- Simplified VAT cash movement
- Faster import handling
Cons include:
- Higher reporting responsibility
- Risk of penalties if errors occur
- Ongoing scrutiny
Despite these challenges, many companies still choose this route.
Final thoughts from my professional experience
VAT deferment under Article 23 can be a strong tool when used correctly. I have seen it help businesses grow without financial strain. However, I have also seen issues arise when companies underestimate the discipline required.
They should approach it as a long-term compliance commitment, not a short-term fix. With the right preparation and reliable article 23 registration services Netherlands, the system can work smoothly.
Still, every business is different. The decision should be based on facts, internal capability, and realistic expectations rather than assumption or trend.
