Making use of the Small Businesses Scheme (KOR)

How does the small businesses scheme (KOR) work?

The KOR is a scheme for entrepreneurs who stay below a certain turnover limit. You are eligible for this exemption if your turnover (excluding VAT) is no higher than €20,000 in a calendar year and in the previous calendar year.

When calculating the turnover limit, you include the turnover you got without VAT from also counts:

• the supply and rental of immovable property,
• financial services, and
• insurance services.

Turnover from other VAT-exempt services does not count towards the turnover limit. This includes, for instance, medical services, sports services, and services provided by writers and journalists.

When can you use the KOR?

The KOR is a voluntary scheme. Any entrepreneur may use KOR, the scheme applies to all legal structures. This includes associations and foundations. The only condition is the turnover limit of no more than € 20,000 per calendar year.

Under the scheme, you do not charge VAT on your goods and services. Nor may you reclaim any VAT on expenses (input tax). You can keep your accounts simple and you do not have to file a VAT return.

Invoice without VAT

When using the KOR, you do not have to send an invoice, but you are allowed to do so. No VAT percentage or VAT amount can be stated. Instead, the invoice should include the sentence 'factuur vrijgesteld van OB o.g.v. artikel 25 Wet OB' (invoice exempt from VAT under Article 25 of the Turnover Tax Act). If you make use of the KOR you do not need to meet the standard invoice requirements. 

Stop using the KOR

There are 2 situations to stop using the KOR: if you exceed the turnover limit, or if you request to stop the KOR yourself. 

Exceeding the €20,000 limit

Have you made more than €20,000 turnover in a calendar year? Then you must end the KOR (in Dutch) and calculate VAT from the first delivery with which you exceeded the €20,000 limit. From that moment, you must again keep the normal VAT records, file VAT returns, and keep a VAT administration. The turnover before exceeding the limit remains free of VAT. 

Requesting to stop using the KOR yourself

Do you want to quit the KOR yourself? From 2025 onwards, there is no minimum period of participation. Submit your request to the Tax Administration no later than 1 month before the end of the quarter via the online form on Mijn Belastingdienst Zakelijk. After stopping the KOR, you cannot participate again for the rest of the current year plus the following year.

Advantages of the KOR

Do you meet the conditions? If so, using the KOR can be advantageous. You do not have to keep VAT records or submit VAT returns. Do you mainly have private individuals and organisations that cannot offset VAT as customers? With the same sales price as before using the KOR, your margin will be higher. Then the KOR is interesting for you.

When is it better not to use the KOR?

The Small Business Scheme (KOR) is not advantageous for every entrepreneur. In these cases, using the scheme is less interesting:

• Do you have many business customers? When using the KOR, you cannot set off VAT on purchases and business expenses. So your “purchase price” becomes higher. To keep the same margin, you have to increase your selling price without VAT. For business customers, your product then becomes less interesting.
• Are you planning to make a large investment? If you use the KOR, you cannot reclaim the VAT paid. Your investment amount will increase as a result.
• Have you deducted VAT on investments as input tax (voorheffing) in the past 5 years? And is the deducted VAT divided by 5 years more than €500? Then you face a VAT revision. You have to repay that amount of VAT. For investments in real estate, you count 10 years.
• If you are starting a sole proprietorship now and have bought solar panels on your home before 2023, read the Netherlands Tax Administration's information (in Dutch) on this.
• Do you rent out a property subject to VAT? Then you cannot use the KOR.
• Do you have foreign customers or transactions in which the VAT is reverse-charged? Then you must submit an occasional VAT return.

Still in doubt? Then get advice from your (tax) consultant first.

Are you already running a business and would you like to use the KOR?

Then you need to apply to the Belastingdienst. You can participate in the scheme from the start of each new tax period (usually a quarter). Make sure the Tax Administration receives your application (in Dutch) no later than 4 weeks before the starting date.

Please note: you cannot use the KOR unless you have applied for it, and your application has been accepted by the Belastingdienst. You will receive their confirmation by mail. A turnover of less than €20,000 does not automatically mean you are a KOR user.

Are you starting a business soon and would you like to make use of the KOR?

You can only apply for the scheme if you are an entrepreneur and have received a VAT identification number from the Tax Administration. The first possibility to participate in the Small Businesses Scheme is at the start of next quarter. Apply to the Tax Administration no later than 4 weeks before your desired starting date.

You can use the Small Businesses Scheme after you get a written confirmation from the Tax Administration.

Turnover less than €2,200 and no KVK registration

Do you have an annual turnover of no more than €2,200 and are you unable to register with the Netherlands Chamber of Commerce KVK? You can still use the KOR (in Dutch). In this case, you do not register as an entrepreneur for VAT and you do not have to report to the Tax Administration. You then make use of the voluntary registration threshold.

You can always decide later to register as an entrepreneur for VAT with the Tax Administration. In any event, you must do so if your annual turnover exceeds €2,200. Check if you must register with KVK. If your turnover is up to €20,000, you can apply for the small businesses scheme.

You can find more information on the KOR on the Netherlands Tax Administration's website (in Dutch). You can also talk to the Netherlands Tax Administration (in Dutch). You can do this every working day via chat.

Using the KOR in another EU country

From 2025, you can also use the EU KOR, the small businesses schemes that apply in other EU countries. Your total annual turnover in the EU must remain below €100,000. This is the so-called Union annual turnover threshold. A national turnover threshold also applies to each country. Entrepreneurs from other EU countries can use the Dutch KOR.