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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 not charge your customers VAT and do not pay turnover tax (VAT) to the Dutch Tax and Customs Administration (Belastingdienst). You will also be exempt from the administrative obligations of the VAT system altogether. You can no longer deduct VAT charged to you.
The small businesses scheme
Entrepreneurs with a turnover under €20,000 per year will be exempt from paying VAT. To participate in the small businesses scheme, make sure you apply to it (in Dutch) at least 4 weeks before the start of the next quarter. If you are already exempt from paying VAT, your exemption will continue automatically. If you no longer require exemption from paying VAT, you must inform the Tax and Customs Administration (in Dutch). You can check whether you are eligible for the small business scheme (in Dutch).
Participating in the small businesses scheme means entrepreneurs with VAT exemption no longer charge their customers VAT on their invoices. In addition, they are no longer 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 are also 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. In that case you must notify the Tax and Customs Administration (in Dutch).
When do you qualify?
- Your business has a permanent establishment in the Netherlands and must be registered with the Dutch Chamber of Commerce (KvK).
- Your annual turnover is less than €20,000. On the website of the Dutch Tax and Customs Administration you can read more on how to estimate your turnover (in Dutch).
- From 1 January 2020 legal entities are also eligible for the new Small Businesses Scheme.
Read more about the Small Businesses Scheme (in Dutch).
How to apply?
If you want to register for the small businesses scheme (in Dutch), you have to fill in the following form (in Dutch) and return it to the Tax and Customs Administration 4 weeks before the next quarter at the latest.
The Small Businesses Scheme is an exemption from VAT. Administrative exemption from the VAT system 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.
Old Small Businesses Scheme
Did you have an exemption from VAT before 31 December 2019? The Dutch Tax and Customs Administration will automatically sign you up for the new Small Businessess Scheme. You must notify the Tax and Customs Administration (in Dutch). You can do this at any time. Please note: after you have ended participation in this scheme, you cannot reapply for 3 years.
If you need to file your tax return for a period before 1 January 2020, you can consult the Tax Administration's leaflet on the Old Small Businesses Scheme (prior to 1 January 2020) (in Dutch).