Deferment or Postponed VAT Accounting

What is deferred or postponed VAT accounting?

This term refers to the reverse-charge mechanism wherein you are not required to pay the VAT on import immediately. The VAT can then be paid when you file your periodic VAT return, offering significant cash flow benefits.

In the Netherlands, to make use of deferred VAT at import you will need an Article 23 permit. As a foreign entity, you are not able to apply for an Article 23 permit yourself. However you can appoint a limited tax representative and use their VAT number and art. 23 import license.

In the UK, to make use of postponed VAT accounting, your business needs to be registered for VAT in the UK. If you are not VAT registered in the UK you will need to appoint a representative.

Who benefits from deferring import VAT?

Importers that can recover VAT on their return benefit most. The deferred import VAT and the matching recoverable VAT offset each other on the same return, so you don't fund the VAT at the border and wait for a refund. Rules differ by country, so confirm eligibility and reporting steps with a local tax adviser.

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