Small business scheme (KOR) 2025: VAT exemption

What is the small business scheme (KOR)?

The small business scheme (KOR) is an exemption from VAT for entrepreneurs with a limited annual turnover. If you participate, you do not have to charge VAT to your customers, file VAT returns or pay VAT to the tax authorities. This makes your administration a lot easier and leaves you more time for your business. You decide for yourself whether this is advantageous for your situation. Keep in mind that you cannot reclaim VAT on costs or investments as long as you apply the scheme.

Conditions for participation in the KOR

You can participate in the Small Business Administration (KOR) if you meet the following conditions:

• Your company is based in the Netherlands.
• You achieve a turnover of up to €20,000 per calendar year.
• This €20,000 limit applies to the calendar year in which you apply as well as to the previous year.
• The products or services you provide are subject to VAT.

Do you meet these conditions? Then you can apply for the scheme from the tax authorities. The exemption then applies to your entire company.

Consequences of participating in the KOR

If you join the KOR, your VAT administration changes completely. You no longer have to calculate or remit VAT and file returns. You can also no longer reclaim VAT on expenses or investments.

The exemption applies to all your activities within the company. As soon as your turnover in a calendar year exceeds EUR 20,000, the scheme stops immediately. You then have to start calculating VAT and file a tax return.

Advantages KOR scheme

The KOR has several advantages for small business owners:

• Fewer administrative obligations: no VAT returns and less bookkeeping.
• Your prices may be more attractive to individuals because you do not charge VAT.
• Simple administration without VAT rules or offsets.
• No more reservation needed for future VAT payments.
• Better cash flow because everything you invoice remains yours directly.

Invoice without VAT

Invoicing becomes easier. You don't mention a VAT amount and a VAT rate. Instead, you put on your invoice, “Invoice exempt from VAT under the small business scheme.” This makes it clear that the exemption applies.

Just make sure your invoices are correct with date, number and description. The tax authorities can always ask for inspection.

Disadvantages of KOR scheme

There are also drawbacks to the KOR that you need to consider:

• You can no longer reclaim VAT on your business expenses.
• Large investments become more expensive because VAT is not deductible.
• The scheme is less interesting if you work mainly for corporate clients.
• Once you exceed the turnover limit, the exemption expires immediately.
• You have to keep a constant eye on your turnover to avoid subsequent taxes.

These drawbacks may actually make the KOR unfavourable for some entrepreneurs, especially if investments are high or the clientele is mainly business.

Signing up for the KOR

Apply via My Tax Business. Make sure you do this at least four weeks before a new quarter starts. After your application, you will receive a letter with the effective date of the exemption within about six weeks.

From that date, you no longer have to charge VAT and file returns. Once the Inland Revenue confirms your registration, you can apply the KOR to your invoices.

Unsubscribing to the KOR

If you want to stop using the small entrepreneurs scheme (KOR), you can arrange this via My Tax Office Business. You will receive a confirmation by post within a few weeks.

Does your turnover exceed €20,000? If so, you have to deregister immediately. The exemption does not stop immediately when the limit is exceeded, but with the next delivery thereafter you have to calculate and declare VAT again.

Unsubscribe no later than four weeks before a new quarter so that the Inland Revenue can process it on time.

Late cancellation KOR

If you deregister too late, you still have to pay VAT on the amount above the limit. You cannot recover that amount from your customers, so it costs you immediate profit. So check your turnover regularly.

If this does happen, you can still correct by crediting in the correct way. This means you can (partially) reverse the previous invoices and issue a new invoice with VAT. Note: customers are usually reluctant to accept this.

Regretting KOR scheme

It may happen that in practice the KOR does not suit you as well as you thought. Perhaps you find that you make a lot of investments and want to reclaim the VAT on them, or that you mainly work for business clients. Since 2025, you can decide to quit the scheme at any time. The old minimum participation period of three years no longer applies. If you want to stop, you simply inform the tax authorities via the deregistration form.

Quitting the KOR

You can stop voluntarily or compulsorily if you cross the limit. Voluntary quitting goes per new quarter. From 2025, there is no minimum participation period, so you are free to quit whenever you want.

Re-registering for the KOR

After unsubscribing, you cannot participate again immediately. You cannot participate for the rest of the calendar year in which you deregistered and for the entire following year. After that, you can re-join if your turnover remains below the limit.

Small business scheme within the EU (EU-KOR)

From 2025, there will be an extension: the EU KOR. This scheme applies to entrepreneurs who supply within the EU and whose total EU turnover is below €100,000. You will then not have to register for VAT in each country separately.

The EU-KOR is especially useful for entrepreneurs making small deliveries to customers in other EU countries, such as Belgium or Germany. You arrange the exemption through the Dutch Tax Administration.

Frequently Asked Questions