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KOR Scheme in the Netherlands, or How to Pay 0% VAT

Mar 1, 2023 · 4 min read

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Taxes, right? Ugh. Small businesses are hard enough to maintain even without them, but we have the Dutch government to thank for understanding that — there’s a chance that your company could be exempt from any VAT whatsoever.

In this article, we will go over the Small Business Scheme you can apply for, and highlight all you need to know about it.

What is a KOR Scheme?

Kleineondernemersregeling, or KOR, is a tax exemption scheme any small businesses in the Netherlands can benefit from given that their annual turnover doesn’t exceed €20,000 (excluding VAT). Using it means that you:

  • don’t charge your customers VAT;
  • don’t file VAT declarations;
  • cannot deduct VAT on business costs and investments.
Take note: in some cases you still need to file a VAT return. For example, if you make a big purchase in another EU country, or if you have foreign customers or transactions for which you reverse-charge VAT.

It probably also needs to be mentioned that any other taxes, such as income tax, are not part of the deal, and you still need to file those under this scheme.

Am I eligible for KOR?

The Small Business Scheme can be applied to:
  • natural persons or their partnerships (sole proprietors, professional or general partnerships);
  • legal persons (foundations, associations, private limited partnerships).

Of course, your business must also meet the condition of annual turnover no higher than €20,000 and be registered in the Netherlands. Alas, there is an exclusion: you are not eligible for the Small Businesses Scheme if you rent out your property subject to VAT.

But hey, if your yearly turnover does not exceed €1,800, good news: you are using the benefits of the KOR scheme by default. And if you’re still unsure, you can check in with the official tool made by the Tax and Customs Administration by answering a couple of simple questions.

How do I apply for KOR?

This might be tough: you need to remember the location of the closest post-office. Then you download and fill in the form from the government website, and finally send the printed out version of it to the Tax and Customs Administration address mentioned on the linked page. Just make sure you do so at least 4 weeks prior to the start of the next return period.

What happens after?

If you decide to take part in the Small Business Scheme, two things can happen: you either commit to it for at least 3 years (after which it automatically renews if you still want it), or your business grows beyond the €20,000 turnover threshold. If the latter is the case, you must notify the Tax and Customs Administration immediately and the scheme will no longer apply to your business. That means you’re going to have to pay and declare VAT from then on, starting with the first payment that exceeded the limit.

That’s not the worst thing in the world though, because a) it means you’re doing well enough, and b) the KOR scheme is not always financially beneficial. For example, if you receive VAT back annually, or if you’re planning to make some investments in the near future, the scheme will probably end up costing you more than what it saves.

Some businesses also deal with strongly fluctuating turnover, when it’s below €20,000 one year and above it the next. Whatever the situation is, as soon as you reach the threshold, the KOR scheme expires and you’re unable to participate in it for the next 3 years. It’d be best to keep that in mind.

Making it easier with Enty

If all of the above seems kind of unnerving, we get that — keeping track of one’s taxes is definitely not for everyone. And we can take that off your hands, too. Our KOR scheme accounting services include:

  • KOR scheme application — €159
  • Annual report — from €249
  • Consultation with manager — free
  • Consultation with accountant — €99

Be sure you will get all the professional help you need if you choose the whole package, but also feel free to enjoy any given option separately if that’s what you need at the moment. Hope to chat soon!
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