Foreign entrepreneurs entering the Dutch market often hear about tax advantages linked to import and VAT deferment. One of the most discussed tools is the Artikel 23 License in the Netherlands. However, misinformation frequently leads to rejected applications, delayed approvals, and unnecessary compliance risks.

I have seen businesses assume approval is automatic once they Register a company in Netherlands. Others believe a local address alone is enough. These misunderstandings can cost time and credibility with tax authorities.

In this article, I will clarify the most common myths that lead to rejection and explain what foreign businesses should realistically expect.

What Artikel 23 Actually Refers To

Before discussing myths, it is important to clarify what this license is.

Artikel 23 refers to a VAT deferment mechanism under Dutch VAT law. It allows businesses importing goods into the Netherlands to reverse-charge import VAT on their VAT return instead of paying it at the border.

This system is administered by the Belastingdienst.

Instead of paying VAT immediately upon import:

  • The VAT is declared in the periodic VAT return

  • Input VAT and output VAT are reported simultaneously

  • Cash flow pressure is significantly reduced

However, not every business qualifies automatically.

Myth 1: Registering a Company Automatically Grants Approval

Many foreign founders believe that once they Register a company in Netherlands, they are automatically eligible for the Artikel 23 License in the Netherlands.

This is incorrect.

While registration is a prerequisite, approval depends on:

  • Business substance

  • Compliance history

  • Financial reliability

  • Proper administration

Although a Dutch company structure is required, approval requires additional evaluation. In comparison to simple company registration, Artikel 23 approval involves deeper tax assessment.

Myth 2: A Virtual Address Is Always Sufficient

Some businesses assume that a virtual office guarantees approval.

However, tax authorities assess operational substance. They may evaluate:

  • Whether the company genuinely operates from the declared address

  • Whether management decisions are traceable

  • Whether records are accessible within the Netherlands

In spite of flexible business models, authorities still expect credibility and traceability.

A purely nominal presence may raise red flags.

Myth 3: Foreign Directors Automatically Reduce Approval Chances

There is a belief that having non-Dutch directors leads to automatic rejection.

This is not necessarily true.

Foreign directors are common in international trade. However, authorities may look at:

  • Management transparency

  • Communication responsiveness

  • Availability of documentation

  • Compliance with reporting obligations

Similarly, businesses engaged in outbound sales outsourcing often operate internationally without issue, provided their structure is transparent.

The problem is not foreign ownership. The problem is weak compliance structure.

Myth 4: Artikel 23 Is Only for Large Corporations

Another misconception is that only multinational corporations qualify.

In reality, small and medium-sized enterprises can apply, provided they meet compliance standards.

What matters more than size:

  • Proper bookkeeping systems

  • Timely VAT filings

  • Financial stability

  • Clear import activity

Admittedly, larger businesses often have more established processes. Still, smaller firms can qualify when their systems are organized.

Myth 5: Approval Is Guaranteed If You Have a VAT Number

Receiving a Dutch VAT number does not automatically mean the Artikel 23 License in the Netherlands will be granted.

The VAT number confirms tax registration. Artikel 23 approval allows deferment of import VAT.

These are two separate steps.

In comparison to basic VAT registration, Artikel 23 approval involves additional review of risk and compliance exposure.

Myth 6: There Is No Ongoing Compliance Obligation

Some companies assume that once approved, they no longer face scrutiny.

However:

  • VAT returns must be filed accurately and on time

  • Import declarations must match VAT reporting

  • Administrative errors may trigger audits

  • Repeated mistakes can result in withdrawal

Despite the convenience of deferred VAT, compliance remains strict.

Authorities monitor consistency between customs data and VAT filings.

Myth 7: You Can Apply Without Clear Import Activity

Businesses sometimes apply before they have structured import operations.

Tax authorities may question:

  • The expected volume of imports

  • The business model

  • Supplier agreements

  • Sales channels

In the same way financial planning requires projections, tax authorities expect operational clarity.

Applying too early without structured activity can increase rejection risk.

Myth 8: Bank Account Location Does Not Matter

While it is not mandatory to use a Dutch bank in all cases, authorities evaluate financial traceability.

They may consider:

  • Where transactions are processed

  • Whether financial flows are transparent

  • Whether the company has reliable accounting systems

Although international banking is common, unclear transaction structures may raise concerns.

Myth 9: Approval Happens Instantly

Some entrepreneurs expect immediate confirmation.

In reality, review times can vary depending on:

  • Application completeness

  • Risk profile

  • Business structure

  • Tax authority workload

In comparison to company registration, which may move quickly, Artikel 23 approval can require additional verification.

Planning ahead avoids operational disruption.

Myth 10: Outsourcing Sales Removes VAT Responsibility

Businesses using outbound sales outsourcing sometimes believe VAT responsibility shifts entirely to partners.

This is incorrect.

Even if sales activities are outsourced:

  • The importing entity remains responsible for VAT compliance

  • Reporting obligations remain with the Dutch entity

  • Errors by third parties can still affect your compliance standing

Outsourcing commercial activity does not eliminate fiscal responsibility.

Myth 11: Previous Rejections Prevent Future Approval

A prior rejection does not permanently block eligibility.

However, reapplication should address the original concerns.

Common improvements before reapplying include:

  • Strengthening administrative processes

  • Improving documentation quality

  • Clarifying operational structure

  • Demonstrating active trade

Similarly, correcting weaknesses increases approval probability significantly.

Practical Steps to Avoid Rejection

To reduce risk, foreign businesses should:

  • Establish genuine Dutch business substance

  • Maintain organized accounting records

  • File VAT returns consistently

  • Align customs declarations with VAT reporting

  • Seek professional tax advice before applying

In the same way that structured planning improves investment decisions, structured compliance improves approval outcomes.

Why Artikel 23 Remains Valuable for International Traders

Despite the strict evaluation process, the Artikel 23 License in the Netherlands remains highly valuable.

Benefits include:

  • Immediate cash flow improvement

  • No upfront VAT payment at import

  • Competitive advantage in European distribution

  • Simplified VAT settlement process

For businesses importing regularly, the financial impact can be substantial.

However, the advantage comes with responsibility.

Final Thoughts on Avoiding Artikel 23 Rejection

Foreign businesses are not rejected because they are foreign. They are rejected when structure, documentation, or compliance appears weak.

When you Register a company in Netherlands with long-term strategy in mind, build substance, and maintain strong accounting systems, approval chances increase significantly.

Similarly, businesses using outbound sales outsourcing must ensure internal tax compliance remains strong.

The key message is simple: treat Artikel 23 as a privilege that requires preparation, not as an automatic right.

With proper structure, transparency, and consistent reporting, foreign companies can use this mechanism effectively and strengthen their European trade operations.