VAT in international supply chains: A practical case on EU import and compliance.

VAT challenges in EU import and cross-border supply chains

A non-EU trader in fresh produce approached us with a relatively straightforward question: are fiscal representation and a Dutch VAT registration required?

At first glance, the setup seemed simple. The intention was to purchase goods locally in the Netherlands and subsequently sell them to customer in other EU countries.

However, even in this seemingly straightforward structure, several key questions arose:

• Who acts as the importer of record?
• Which VAT number should be used for the transactions?
• Is a Dutch VAT registration required?
• Would fiscal representation be necessary?

These questions are not purely administrative. They directly determine how VAT is applied to transactions, how goods can be supplied across borders, and how compliance obligations are structured.

Why VAT treatment in international trade is not straightforward

While the intended structure appeared simple, the complexity emerged when analysing how the supply chain would operate in practice.

A key point of uncertainty was whether the non-EU trader would act as importer of record or instead purchase the goods locally in the Netherlands after import. This distinction has a direct impact on VAT obligations and whether fiscal representation or a local VAT registration is required.

This illustrates how relatively small operational or contractual choices can significantly impact VAT treatment and obligations.

Multiple VAT scenarios were possible, each with different implications for how the transactions should be structured and reported. To determine the most practical and compliant approach, these scenarios were analysed in detail.

Assessing VAT scenarios in EU import and intra-Community supply

To create clarity, we analysed the different trade and import setups and assessed the VAT consequences for each scenario, identifying which structure would lead to the most practical and compliant outcome.

This included:

• Determining the role of the importer of record
• Assessing the place of supply
• Evaluating whether the conditions for 0% VAT could be met
• Reviewing whether a Dutch VAT registration was required
• Considering the use of limited or general fiscal representation

By mapping these elements, it became clear that several of the possible structures would not lead to a compliant or workable outcome.

Outcome: Determining VAT registration and compliance requirements in the Netherlands

Based on the analysis, we advised on the structure that led to the most practical and compliant outcome for the client.

In this case, a Dutch VAT registration was required to correctly process the transactions. This was primarily driven by economic and logistical considerations, meaning that the client was not acting as importer of record at the time of import. This limited the possibility to apply certain structures, such as limited fiscal representation, and led to a structure in which the VAT treatment could be applied correctly.

Following this, we supported the client with:

• VAT registration in the Netherlands
• Ongoing VAT compliance
• Periodic VAT filings
• Intrastat and intra-Community reporting

We also supported the supplier with the import process, including the application of fiscal representation.

This ensured that the full flow, from import to onward supply, was aligned from a VAT and customs perspective.

What this case shows about VAT in international supply chains

This case reflects a broader reality in international trade: VAT is not determined by a single factor. It is the result of how your entire supply chain is structured, and as explored in our article “VAT in Europe: a necessary obligation or a strategic opportunity?”, it directly impacts cash flow, operations, and scalability.

In practice, this means:

• Small differences in Incoterms or ownership can change VAT treatment
• Multiple “valid” setups may exist, but not all are practical
• VAT risks often only become visible when operations are already running

Without a structured analysis, businesses may operate in a setup that creates unnecessary risk or inefficiency.

How to gain control over VAT in cross-border operations

In complex cross-border flows, VAT should not be approached reactively. Instead, it should be assessed upfront, as part of the overall supply chain design.

A structured review helps to:

• Identify the correct VAT treatment
• Align logistics, ownership, and invoicing
• Determine registration and compliance requirements
• Avoid issues during audits or at the border
• Re-adjust or redesign the supply chain where needed, for example by aligning agreements with suppliers or customers

Why VAT alignment is critical in international trade

Cases like this show that VAT is not just about compliance. It is about making sure your operational reality, contractual agreements, and tax position all align.

When they do, VAT becomes predictable and manageable. When they do not, complexity and risk quickly follow.