Application of 0% VAT on goods not yet imported

The State Secretary of Finance has published an updated decree on the application of zero VAT rate. Among other things, the updated decree provides legal guidance and sets limits on the application of the zero rate to the importation of goods into the Netherlands. Section A.1. deals with the application of the zero rate to the supply of goods from outside the Netherlands that have not yet been imported.

Application of zero VAT to goods that have not yet been imported

In principle, the supply of goods that are physically located in the Netherlands is subject to Dutch VAT. However, if the goods have not yet been imported because the goods already are or will be subject to a customs regime upon entry into the Netherlands, it is not desirable to charge VAT. Consequently, the sale of goods in the Netherlands that have not yet been imported is subject to a zero VAT rate, regardless of whether the buyer is located in the Netherlands, another EU member State or outside the EU. Furthermore, under section B.1 of the decree services in relation to non-imported goods are also subject to zero VAT.

The zero VAT rate is applicable to the goods entering the Netherlands if:

• the goods are under a customs regime at the time of entry into the Netherlands; or
• the goods are subject to a customs regime after their entry into the Netherlands; or
• a customs regime is terminated for the goods in the Netherlands, however, this regime is replaced by another customs regime; or
• the goods are withdrawn from the internal customs transit procedure in the Netherlands because they are transported within the EU.

Note that the zero rate in principle does not apply to intra-community distance sales and distance sales of goods imported from outside the EU. These sales are subject to special place of supply rules.

EU supplies of goods that have not yet been imported

The amended decree clarifies that the zero VAT rate applies to intra-community supplies from the Netherlands of goods that have not yet been imported. As a result, the intra-community supplies do not have to be included in the EU sales list or in the Dutch VAT return. Similarly, also the acquisition of goods that have not yet been imported from another EU country does not have to be declared in the Dutch VAT return. Please note that this is a specific approval of the Dutch State Secretary of Finance. Other EU Member States may disagree and require the reporting of an intra-community supply and acquisition. 

Formal requirements for the application of the zero VAT rate

In order to apply the zero VAT rate to the supply of goods that have not yet been imported, the supplier has to comply with the customs formalities relevant for the particular customs regime under which the goods are being sold. Furthermore, the supplier has to comply with the VAT reporting requirements. The application of the zero VAT rate must be substantiated with proof. 

More information?

Of course we are happy to help you if you have any questions about the changes in the decree or the application of the 0% VAT. Please contact one of our advisors for more information.