Millions in savings via VAT reverse-charging

The port of Rotterdam offers numerous advantages as a transit port for companies based in Germany. One such advantage is VAT reverse-charging, which can be arranged via a local tax representative. Tax expert Ton van Grinsven of Customs Support explains the finer points of this scheme, and how German firms can save a great deal of money through reverse-charging.

A German firm that imports products from outside the EU via Rotterdam is allowed to reverse-charge VAT via fiscale vertegenwoordiging (‘tax representation’) – provided the company does not have a permanent establishment of its own in the Netherlands. Another reason, in other words, why German businesses are advised to ship their cargo via the Rotterdam port rather than Hamburg or Bremen. The savings can run into the millions.

Generally speaking, a company that imports products from outside the EU is required to pay import duties and VAT. The firm can apply for a refund of this VAT at a later stage. A rather inefficient process, which has led a number of European countries to decide to allow VAT charged at the time of import to be transferred via a ‘return via a tax representative’. In concrete terms, the foreign trader is not required to pay VAT when excisable goods arrive in the port. German companies that import goods via Hamburg or Bremen cannot take advantage of this scheme, however: they are required to pay VAT as usual every time a shipment arrives. “Of course, the company can subsequently claim a return for this VAT, but it often takes one or two months before you’ve recovered your money,” says Ton van Grinsven, Business Development Director at Customs Support. This firm is one of the leading European players in the administrative settlement of all manner of customs documents.

“For many of our German clients, it’s still something of an ‘eye opener’ when I explain this arrangement to them,” continues Van Grinsven. “Which is quite surprising, considering how much money you can actually save through this scheme. Particularly in the case of the automotive and electronics sectors, for example. At a VAT rate of 19%, the amounts involved in their non-EU imports are very substantial. There’s no need to finance these charges. This not only saves you interest; it also saves you the fees you would otherwise be paying to a tax consultant to file returns and claim refunds on your behalf.”

For many of our German clients, it’s still something of an ‘eye opener'

Ton van Grinsven, Business Development Director at Customs Support

An additional advantage of shipping via Rotterdam is that, according to Van Grinsven, the Dutch port strives to achieve maximum integration when it comes to the administrative burden placed on companies active in the port. “A one-off authorisation as your ‘Tax Representative and Direct Representative’ allows us, as your agent, to handle the entire customs settlement of your shipment on your behalf via a single return. After this, your cargo can immediately be transported on to its final destination in Germany. A proof of delivery document wraps it up. Credit where credit’s due: the Dutch Customs Administration works very quickly.”

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