Legal entities in the Netherlands can use the Small Business Scheme, also known as the Kleine Ondernemersregeling (KOR). However, the requirement for this is that your turnover does not exceed €20,000. By taking advantage of the KOR in the Netherlands, you as a business owner are exempt from declaring and filing VAT returns. Read in this article more about what the Small Businesses Scheme is all about, how to apply for it and how to stop it.
The KOR is particularly aimed at small business owners, such as start-ups and sole proprietors. The Small Businesses Scheme is an exemption from VAT (‘btw’ in Dutch). So as a natural person or sole proprietor, general partnerships (vof’s) or as a legal person (private limited companies, aka bv’s), you temporarily no longer have to charge VAT to customers.
Also, you no longer have to file a VAT-return to the Dutch Tax and Customs Administration (Belastingdienst).
In short, if you take part in the KOR, you:
Do not have to charge your customers VAT
Do not have to file VAT-returns
Can not deduct VAT on business costs
Can not deduct VAT on investments
Since January 1, 2020, the KOR is a VAT exemption. Before that date, the KOR was a tax reduction. So there have been some changes.
Any business owner can choose to apply this exemption scheme, this also includes associations, foundations, private limited companies or general partnerships. Once you accepted to use the Small Businesses Scheme, you do so for a period of three years (or until you exceed a turnover €20,000).
In short, you can use the Small Businesses Scheme if:
Your company is based in the Netherlands
Your turnover does not exceed €20,000 in one calendar year
You are a natural person (natuurlijke persoon), which include:
Sole proprietors (eenmanszaak)
General partnerships (vof’s)
Private limited companies (bv’s)
Foundations (stichting)
Associations (vereniging)
The KOR can provide many benefits for you, assuming, of course, that you meet the conditions mentioned above. Decide whether the KOR might be interesting for you based on the points below:
Do you have mostly private customers or organizations that cannot offset VAT? If your selling price remains the same as before you used the KOR, your margin will be higher, thus the Small Businesses Scheme will be beneficial for your company.
Instead, do you have mostly b2b customers? If you use the KOR, then you cannot reclaim the VAT on purchases and business expenses, which increases the purchase price. Then the KOR is more likely to be less interesting for your business.
For foreign customers or transactions, you must still file a VAT return. Then the KOR is less interesting for your business.
Application for the Small Businesses Scheme can only be made through the application form on the Belastingdienst website.
You can apply for the KOR by following these steps:
Make sure you meet the requirements of the KOR.
Navigate to the website Belastingdienst.nl
Follow the menu: Home > Btw (VAT) > Hoe werkt de btw? (How does VAT work?) > Kleineondernemersregeling (Small Businesses Scheme) > Aanmelden (Subscribe).
Complete and submit the form on this page. You can read the PDF with Adobe Reader.
Once your application is received, you will receive a confirmation of receipt within 15 days.
The application form must be received by the Belastingdienst no later than 4 weeks before the effective date of the return period in which you want the KOR to take effect.
Are you already using the Small Businesses Scheme, but do you exceed the turnover limit of € 20,000 per year (excluding VAT)? Then you have to stop the KOR. From now on, you have to apply the regular VAT rules again, which means that you have to charge VAT to customers again and file VAT-returns. In addition, the use of the Small Business Scheme stops after three years.
You can stop the KOR by following these steps:
Navigate to the website Belastingdienst.nl
Follow the menu: Home > Btw (VAT) > Hoe werkt de btw? (How does VAT work?) > Kleineondernemersregeling (Small Businesses Scheme) > Afmelden (Unsubscribe).
Complete and submit the form on this page. You can read the PDF with Adobe Reader.
If you do not take action, your participation in the KOR will be extended.
As of January 1, 2025, significant changes will be made to the Small Business Scheme (KOR), both nationally and internationally. The KOR will continue to offer VAT exemption for small businesses with a turnover of up to €20,000 in the Netherlands, but the rules will become more flexible and expansive. Additionally, a EU-KOR will be introduced, allowing entrepreneurs from all EU member states to apply the scheme in their own country as well as in other EU countries.
One major change to the national KOR is the way entrepreneurs can register and deregister. From October 1, 2024, entrepreneurs can register online via the “Mijn Belastingdienst Zakelijk” portal, replacing the current paper-based process. This makes it quicker and easier to apply for the KOR. If you register before December 3, 2024, you can start participating in the scheme as of January 1, 2025.
The deregistration process will also become more flexible. Currently, once you register, you're tied to the KOR for three years. However, starting in 2025, you can deregister at any time, and you'll only be excluded from participating for the remainder of that year and the following year. This gives businesses more flexibility to decide when they want to benefit from the scheme or not.
One of the most significant changes is the introduction of the EU-KOR. Until now, entrepreneurs could only apply the KOR within the Netherlands. From 2025, however, they will be able to use VAT exemptions in all EU member states where they are active, provided their total EU-wide turnover remains below €100,000. This new European scheme makes cross-border business for small entrepreneurs much simpler and more appealing by removing the need to pay VAT in multiple countries.
Entrepreneurs must register separately with the Dutch Tax Office to use the EU-KOR and follow specific administrative steps, such as reporting their EU turnover quarterly. Additionally, the local turnover thresholds in each EU country will still apply, meaning entrepreneurs will need to monitor both the EU-wide turnover limit and the national thresholds in each country.
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