The Small Business Scheme explained

The Small Businesses Scheme (in Dutch: kleineondernemersregeling, KOR) is an exemption from VAT. Therefore, you temporarily no longer have to charge VAT to your customers, and you no longer have to file a VAT return. It is good to know that the KOR is a voluntary arrangement that applies for at least three years.

On January 1, 2020, the Small Business Scheme changed. Before January 1, 2020, it was a tax reduction. Now, it is a VAT exemption.

Turnover limit Small Business Scheme

A condition of the KOR is that your turnover does not exceed € 20,000 per year (excluding VAT). Do you already use the KOR, and do you exceed the turnover limit? Then, you have to stop the KOR. This is the only reason how you can get out of the Small Business Scheme within three years. You must immediately apply the regular VAT rules again. The following items count towards the turnover limit:

Goods and services that would usually be taxed with Dutch VAT (21%, 9%, or 0% VAT). In addition, Dutch VAT that you transfer to another Dutch entrepreneur. So, only your turnover from the Netherlands counts.

Goods and services that would usually be taxed with Dutch VAT (21%, 9%, or 0% VAT). In addition, Dutch VAT that you transfer to another Dutch entrepreneur. So, only your turnover from the Netherlands counts.

Is the Small Business Scheme beneficial?

The small business scheme can provide a financial advantage if your customers mainly consist of individuals and organizations that cannot settle VAT. If you keep your selling price the same when using the KOR, your margin will be a lot higher! So, in this case, it is interesting.

However, the small business scheme is not always beneficial. Besides the fact that you no longer have to pay VAT, you are no longer allowed to claim VAT. So check for yourself whether you get VAT back every year. Is this the case? Then, consider carefully whether the KOR is interesting for you. Moreover, the scheme becomes less interesting if you mainly have business customers. Your purchase price will be higher because you are no longer allowed to settle VAT on purchases and business costs. If you want to keep the margin the same, you increase the price excluding VAT. This makes your product less interesting for business customers.

small business scheme

Apply for the Small Business Scheme

Do you think that the KOR is interesting for you after reading this article? You can easily register via the Dutch tax authorities. What is important to know is that your application must be received no later than four weeks before the starting date. Do you want to use the KOR from October 1? Then, make sure your application is received before September 3!

We are happy to help!

Are you still unsure whether applying the Small Business Scheme (KOR) is beneficial in your situation? We then recommend engaging a tax advisor. We are happy to help you! Please feel free to contact us using the information below.

WhatsApp us:

Call us:

+31 (0)20-2170120