Importing through the Netherlands using Limited Fiscal Representation

The Netherlands is the gateway to Europe, with excellent infrastructure through Amsterdam’s main airport and the port of Rotterdam. Many foreign companies use these trade lanes to distribute their products around the European Union (EU). 

From a Customs and tax point of view, the great benefit we can offer is Limited Fiscal Representation (LFR). Simply put, by using LFR, an importer of record does not need to register itself in the country of importation (Netherlands) but can defer the mandatory import Value-Added-Tax (VAT) to their EU customer via the VAT number of their fiscal representative (NNR). 

The most important condition is that the importation needs to be followed up by a subsequent supply (selling) of goods to an EU-based entity with a valid VAT number. This is the so-called ‘zero VAT-rated intra-community supply’ of goods, where there is free circulation of customs-cleared goods moving between EU countries.  

How does LFR work? 

Usually, the goods will clear customs upon arrival in the Netherlands. Then, if needed, the goods may remain in short-term storage until they are ready to be delivered to the end buyer in the EU. The VAT is transferred to and paid for by the end customer (buyer & receiver of goods).  

Also, it’s possible to keep the goods under bonded status in our warehouse, only to be customs cleared as soon as they need to ship out to the end customer. In that case, it is always an option to return the purchased goods to their origin (re-export) without paying import duties. 

In summary, the great benefits of Limited Fiscal Representation for a foreign entity importing through the Netherlands are: 

– No local VAT (Netherlands) registration is needed. NNR arranges the mandatory monthly tax declaration; 

– Liquidity advantage because of the VAT deferment; 

– No customs procedures are needed in the EU country of delivery 

If you would like to have more information about LFR, don’t hesitate to get in touch with your local NNR representative.