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If you run a small business in the Netherlands, you may be eligible for the Small Businesses Scheme (kleineondernemersregeling, KOR). If so you will pay less turnover tax (VAT) to the Dutch Tax and Customs Administration (Belastingdienst). In some cases, you may not have to pay any VAT at all and you may even be exempt from the administrative obligations of the VAT system altogether.
Please note: due to changes in the small business scheme there are 2 sets of information on this page about the scheme:
- the changes in the small business scheme
- the current situation
Changes in the small business scheme
As of 1 January 2020, entrepreneurs with a turnover under €20,000 will be exempt from paying VAT. In order to make sure your exemption from paying VAT can be processed on time (i.e. before 1 January 2020), you must submit your application by 20 November 2019 (in Dutch) at the latest. If you are already exempt from paying VAT, your exemption will continue automatically. If you no longer require exemption from paying VAT, you must also inform the Tax and Customs Administration (in Dutch) by 20 November 2019. You can also check whether you are eligible for the small business scheme (in Dutch). If you apply after 20 November the starting date of your exemption will be later than 1 January 2020.
The change means entrepreneurs with VAT exemption will no longer charge their customers VAT on their invoices. In addition, they will no longer be required to fill in a VAT return, nor will they be able to deduct VAT paid by them from their monthly or quarterly VAT returns. They will also be exempt from keeping VAT records. This only applies to goods and services they have provided inside the Netherlands. If you apply for exemption, the exemption will last for at least 3 years, unless your turnover exceeds €20,000.
The modernisation of the small businesses scheme (KOR) was announced on Prinsjesdag (Budget Day) 2019. It has already passed through the Upper and Lower Houses of Parliament.
The current situation
When do you qualify?
- Your business has a permanent establishment in the Netherlands and must be registered with the Dutch Chamber of Commerce (KvK).
- You run a one-man business or your company is a joint venture involving natural persons, such as a partnership (maatschap) or a general partnership (vennootschap onder firma).
- After deduction of input tax (voorbelasting), you pay less VAT than the annual threshold of € 1.883.
- You keep your tax administration up-to-date in accordance with Dutch Tax and Customs Administration obligations, unless you are eligible for administrative exemption (see below).
Which businesses do not qualify?
Some business do not qualify for the Small Businesses Scheme (KOR). This applies to legal entities, such as private limited companies (bv), foundations and associations. Your business also does not qualify if one partner in a professional partnership is a legal entity.
How to calculate your tax deduction?
You can check how much VAT you can deduct (in Dutch).
How to apply?
You must apply the definitive VAT deduction (in Dutch) to either your last return of the year or your first return of the following year. However, you are also allowed to apply the deduction provisionally in your monthly or quarterly VAT returns.
If you want to register for the new small business scheme (in Dutch) for 2020, you have to fill in the following form (in Dutch) and return it to the Tax and Customs Administration by 20 November 2019 at the latest.
If the annual amount of VAT due is expected to remain below € 1.345, you can submit an application for exemption from the administrative obligations of the VAT system (in Dutch) stating this in writing to your local Dutch Tax and Customs Administration office. This application must contain a credible reason for exemption based on your tax returns from previous years.
Administrative exemption from the VAT system (in Dutch) means you no longer have to:
- Send invoices. If you do send invoices you are not allowed to add VAT. Should you do so you will lose your exemption.
- Fill in VAT returns.
- Keep your purchase invoices for longer than 7 years, or 9 years in the case of immovable property from time of use.