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The advantages of setting up overseas warehouses in the Netherlands

08 Nov 2021

By Eric Huang    Photo: Tiger Lily

The overseas warehouse in the Netherlands has the cost advantage of VAT deferral, and it will be a great weapon for cross-border trading companies to enter the EU market!

In the past two years, due to the impact of the epidemic, the global supply chain crisis has caused many traders to consider the option of setting up overseas warehouses to avoid repeating the same mistakes and falling into the trap of supply chain crisis again! The EU single market is the second largest economy in the world, with the overall GDP of USD 15.2 trillion in 2020, which is USD 0.47 trillion more than the third-ranked China, and only USD 5.7 trillion less than the first-ranked United States. Therefore, entering the EU market is an important strategic for a lot of foreign trading companies. However, in order to avoid the recurrence of the aforementioned global supply chain crisis, setting up an overseas warehouse in the EU has become one of the important strategies. 

Although the European Union has a single-market with single tariff system, each member country has different policy of the VAT tax rate that is a domestic tax. For example, the VAT tax rate in Germany is 19%, in France is 20%, in Italy is 22%, and in Luxembourg is 17%. As for the Netherlands, Spain, Belgium, it is 21%, and in Hungary is as high as 27%. In the past, if you want to export goods to EU countries for sale, when the goods arrive in the EU countries, in addition to customs duties, you must also prepay the import value-added tax (VAT). After the goods are sold, the merchant can refund this import value-added Tax, and then pay the sales value-added tax based on sales amount. Because it takes a certain amount of time from payment of import value-added tax to refund, this delay will bring certain cash flow pressure to the cross-border traders, especially when the value of imported goods is high, so it can be said that import value-added tax will affect cross-border Traders’ cash flow and import costs.

Among EU countries, the Netherlands and Luxembourg are two countries that implement tax incentives. However, because Luxembourg has no any seaport but only an airport, the Netherlands has become the most important gateway for general trade to enter the EU. What are the advantages of setting up overseas warehouses in the Netherlands? First of all, the Netherlands has developed maritime transportation for centuries and has been an important port into the European continent since ancient times. The hinterland includes various parts of Southeast and Western Europe. Second, the Dutch government implements a VAT deferral system. That is, after your goods arrive in the Netherlands, if you enter the bonded warehouse, as long as you take the T1 customs declaration, you do not need to pay customs duty and VAT in advance. After the goods are confirmed for sale, you can declare the import to the Dutch customs and pay the customs duties, and then the end buyer can declare sales value-added tax to the local government! This will greatly reduce the import costs of cross-border traders. Overseas companies do not need to have a local entity in the Netherlands. They only need to entrust a local tax agent (a fiscal representative) to declare then You can enjoy this VAT deferral discount! However, if the final sale of the goods is in the Netherlands, the Dutch VAT must be paid first when leaving the bonded warehouse. This is the preferential treatment from the Dutch government to foreign companies who set up the overseas warehouse here.

TGL has rich operating experience of overseas warehouses in the Netherlands. Currently, we help many small and medium-sized enterprises to operate this overseas warehouse, including many industries such as fitness equipment, electronic equipment, sports equipment, leisure and entertainment equipment. We believe that such demand will keep increasing, and it will become the main aspect of cross-border trades with the EU.

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