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If you want to participate in the small businesses scheme (KOR), there are two options:
- The new small businesses scheme comes into force on 1 January 2020. You need to apply to the Dutch Tax Administration for this scheme before 20 November 2019. Are you already exempt from administrative VAT requirements? Then the Tax Administration will enroll you in the new scheme automatically. If you do not want this, you have to let them know before 20 November.
- The current small businesses scheme: you can make use of the current scheme until 1 January 2020.
New small businesses scheme (KOR) as of 1 January 2020
Does your turnover per calendar year not exceed €20,000? Then you may be eligible for the new small businesses scheme. Participating means, that you don’t charge your customers VAT. Nor do you pay the Tax Administration VAT. On the other hand, you will not be able to deduct VAT on business costs and investments.
You will no longer have to file a VAT return. Note: there are a few exceptions. Read what they are on the Tax Administration website (in Dutch).
Who is eligible for the new KOR?
To take part in the new KOR, you must meet the following conditions:
- You are an entrepreneur for VAT.
- You have a turnover of no more than €20,000 per calendar year.
- Your business is located in the Netherlands, or you are a permanent resident.
The new KOR can be used by:
- natural persons or collaborations, such as sole proprietors, professional or general partnerships.
- legal entities, such as foundations and associations and private limited companies.
You participate for at least 3 years
When you take part in the new KOR, you must participate for 3 years. You cannot quit the scheme earlier. But the Tax Administration may decide to scrap your participation, if your turnover exceeds €20,000 in one of the calendar years. You yourself are responsible for notifying the Tax Administration.
Advantages and disadvantages of the new scheme
It is not always to your financial advantage to take part in the new KOR. For instance, if you are usually reimbursed for (part of) the VAT you charge and pay to the Tax Administration. If you take part in the new scheme, you don’t charge VAT and so, you cannot reclaim it.
Another example: if you are planning to do a large investment in the next three years. If you have invested prior to your participation, and have deducted the VAT, you may have to repay part of that VAT once you take part in the new small businesses scheme. Depending on how much VAT you’ll have to repay, this may be to your financial disadvantage. On the Tax Administration website, you can find a number of considerations and examples (in Dutch).
Applying for the new KOR
If you want to participate in the new small businesses scheme, you have to apply by filling in a form. The Tax Administration must have received this form before 20 November.
Are you exempt from administrative requirements?
Are you exempt from administrative VAT requirements? You won’t have to apply for the new KOR: the Tax Administration will automatically enroll you for participation from 1 January 2020. If you don’t want to be enrolled, you must notify the Tax Administration before 20 November.
If you have been enrolled by the Tax Administration, you can cancel your participation within the 3 year period. For instance, if you plan on doing a large investment. After you have cancelled your participation, you cannot take part in the new small businesses scheme for 3 years.
Current small businesses scheme (KOR) until 1 January 2020
Do you pay no more than €1,883 VAT per calendar year? Then you are eligible for paying less tax under the current small businesses scheme, that remains in place until 1 January 2020.
Do you pay less than €1,345 VAT per year? In that case, you don’t have to pay VAT at all. Also, you can apply for an exemption from administrative VAT requirements to the Tax Administration (in Dutch). That way, you won’t have to file VAT returns or keep VAT records. Nor are you allowed to charge VAT. You must apply for this exemption in writing.
Who can take part in the current KOR?
You must meet the following conditions to participate in the current small businesses scheme:
- You are a sole proprietor (eenmanszaak). Or your business is a collaboration of natural persons, such as a general or professional partnership.
- You pay less than €1,883 in 1 calendar year. You have already deducted pretax from this amount.
- Your business is located in the Netherlands.
- You meet the administrative VAT requirements (in Dutch).
Calculating your tax reduction under the current small businesses scheme
How can you use the current KOR?
You can deduct your VAT reduction from your last VAT return of the year, or the first one of the next year. Do you want to deduct the reduction straightaway? That is also possible. You can fill in a preliminary reduction on your monthly or quarterly VAT returns (in Dutch).