Deferment or Postponed VAT Accounting
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Deferred VAT accounting is a mechanism allowing businesses to delay payment of VAT on imports until filing their periodic VAT return, rather than paying upfront.
It provides significant cash flow benefits by postponing VAT payments, helping businesses manage their finances more effectively.
A foreign entity can appoint a tax representative in the importing country, like the Netherlands, to handle VAT matters and use their VAT number and Article 23 import license for deferred VAT at import.
An Article 23 permit is essential for deferred VAT. It can only be obtained through a limited tax representative, enabling businesses to leverage the benefits of deferred VAT.
To use postponed VAT accounting in the UK, a business must be registered for VAT.
In such cases, the business needs to appoint a representative to handle VAT on its behalf.
For the Netherlands, having a VAT number, Article 23 import license, and appointing a limited tax representative are prerequisites.
For the UK, being VAT registered is the key requirement for businesses to utilize postponed VAT accounting.
In the Netherlands, ensuring a foreign entity has the necessary permits and a competent tax representative is crucial for smooth deferred VAT accounting.
Non-VAT registered businesses in the UK should appoint a representative to manage VAT and ensure compliance with postponed VAT accounting regulations.
In conclusion, understanding and strategically implementing deferred VAT accounting can significantly benefit businesses by improving cash flow and ensuring compliance with country-specific regulations.
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