Making use of the Small Businesses Scheme (KOR)

How does the small businesses scheme (KOR) work?

You may use the KOR if your turnover (excluding VAT) is no higher than €20,000 in a calendar year and in the previous calendar year. If you go over this limit at any time during the calendar year, the VAT exemption will stop at once from the date of the supply or service that takes you over the sales limit. You must include all products and services for which you would normally have to charge VAT.

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 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. Many business owners choose the scheme because of its simplicity. Whether the KOR is financially attractive depends mainly on your costs, investments, and type of customer.

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. 

Benefits of the KOR

Do you meet the conditions? If so, using the KOR could be beneficial for you. For example, you will not need to keep VAT records or submit VAT returns.

Are your customers mainly private individuals and organisations that cannot claim VAT? If your sales price remains the same as before using the KOR, your profit margin will increase. In that case, the KOR could be of interest to you. This applies, for example, to entrepreneurs who mainly sell their own time, such as coaches, trainers, photographers, designers, and copywriters.

When is it better not to use the KOR?

The small businesses scheme 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.

If you are unsure whether joining the scheme is a good idea, then do not just look at your turnover. Also take your customers, costs, investments, and any foreign activities into account when making your decision. Seek advice from your (tax) adviser.

Applying for the KOR

You are already an entrepreneur

You can join the KOR from the start of a new tax return period. This is usually from the start of a new quarter. Ensure that your application for the KOR (in Dutch) reaches the Netherlands Tax Administration no later than 4 weeks before the start date of the new quarter.

You are starting soon

You can only apply for the KOR once you are an entrepreneur and have received a VAT number from the Netherlands Tax Administration. You can then join from the next quarter onwards. Register with the Netherlands Tax Administration no later than 4 weeks before your desired start date.

Until you join the KOR, you must continue to submit VAT returns as normal. You may only use the KOR once you have received written confirmation from the Netherlands Tax Administration.

Stop using the KOR

There are 2 situations to stop using the KOR: if you exceed the turnover limit, or if you ask 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) right awau. From the delivery that takes you over the limit, you must start charging VAT again, keep standard VAT records, and submit VAT returns. Turnover generated prior to that point remains VAT-exempt.

• Asking to stop using the KOR yourself

Do you want to stop using 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.

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? Then you may apply the VAT exemption (vrijstelling voor kleine ondernemers, in Dutch). You do not need to register with the Netherlands Tax Administration as a business for VAT purposes. Nor do you need to notify the Netherlands Tax Administration. You are then making use of the voluntary registration threshold.

You can always decide later to register as a VAT-registered business with the Netherlands Tax Administration. You must do so if your turnover exceeds €2,200. Check whether you need to register in the Business Register with KVK. If your turnover is up to €20,000, you can apply for the KOR.

Using the KOR in another EU country

Since 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.

More information

You can find more information about the KOR on the Netherlands Tax Administration website. You can also contact the Netherlands Tax Administration. You can do this via the chat service every working day.