How does the Small Businesses Scheme (KOR) work?

As of 1 January 2020, the Small Businesses Scheme has been modernised. This means that the KOR is no longer about the VAT you receive on an annual basis, but about your annual turnover.

How the Small Businesses Scheme will work from 2020

Entrepreneurs with a turnover of up to €20,000 in the Netherlands can opt to be exempt from the obligation to pay VAT as of 1 January 2020. This means that you do not invoice your clients for VAT (turnover tax) and therefore do not have to file a VAT return. Because you no longer receive VAT, you may also no longer deduct the VAT that other entrepreneurs invoice to you - for instance if you incur costs for your business.

Please note that this is a 3-year choice.

You make use of the Small Businesses Scheme for at least 3 years. If you have registered for the KOR, you cannot unsubscribe in the meantime. Not even if you want to make a large investment and therefore deduct the VAT.

Is it advantageous for me to participate in the KOR?

It can be advantageous for you to participate in the KOR. This depends on the situation you are in:

1. If you are a FreeFlexer and have few or no expenses, the KOR is suitable for you because you do not have to declare VAT every quarter.
2. If you are a FreeFlexer and you regularly incur expenses that you would like to offset against VAT, the KOR may not be as interesting for you.
3. If you made use of the KOR in 2019 or before, it will take some getting used to because you can no longer keep the VAT. Choose which situation suits you best: 1 or 2.

How can I apply for the KOR?

You can apply for the KOR via the Tax and Customs Administration. You will then receive a message within 6 weeks. Have you received a message from the Tax Authorities? Then you can easily indicate in your profile that you no longer wish to invoice VAT.

What if your turnover exceeds €20,000?

It may happen that you earn more than you had anticipated. From the moment your turnover exceeds € 20,000, you must send your customers invoices with VAT again. You also have to submit quarterly returns and pay VAT. It is therefore important that you immediately pass this on via the deregistration form for the small entrepreneurs' scheme.

What are the conditions of the Small Businesses Scheme?

There are a number of conditions you have to meet:

• You are a VAT entrepreneur.
• Your company is established in the Netherlands.
• Your turnover does not exceed €20,000 per calendar year.

Are you in doubt whether you can participate in the KOR? Check whether you can make use of the KOR with the Tax Authorities.

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