Small business scheme (KOR) 2026: VAT exemption

What is the small business scheme (KOR)?

The KOR is a voluntary VAT exemption for entrepreneurs who meet the conditions, including a maximum annual turnover of €20,000 that counts towards the threshold. When applied, you do not charge VAT and cannot reclaim input VAT. The KOR is not an exemption from income tax. Administration and special VAT obligations remain important.

Conditions for participation in the KOR

You can participate in the Dutch small businesses scheme (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? If so, you can apply for the scheme with the Tax and Customs Administration. The KOR applies to all sub-entities within the same company. Add up the relevant turnover. Dutch turnover subject to VAT codes 21%, 9% or 0%, as well as certain exempt turnover, is included. For margin-based goods, the sales proceeds count, not just the margin. Not every foreign or exempt supply is included. Please check this official revenue statement.

Consequences of participating in the KOR

While the scheme applies, you do not charge VAT and cannot deduct VAT on expenses. Purchases from abroad, reverse charge VAT or the revision of previous deductions can still result in VAT obligations. Keep your records and monitor the turnover threshold. The exceeding supply or service already falls outside the small businesses scheme (KOR).

Advantages KOR scheme

The KOR can limit periodic VAT administration and may be attractive with customers who do not deduct VAT. You do still keep track of your turnover and costs. Keep money available for business expenses and income tax; the invoiced amount is not entirely free spending money. In special VAT situations, VAT may also remain payable.

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.
• Major investments become more expensive because the VAT is not deductible. Furthermore, VAT on investments previously deducted may need to be revised upon joining.
• 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

Sign up via Mijn Belastingdienst Zakelijk (the business tax portal) after you have been registered as a VAT entrepreneur. Participation begins on the confirmed start date at the beginning of a reporting period. Allow for a processing time of at least four weeks. The tax authorities will state the definitive date in a letter within eight weeks. Apply the exemption from that date and continue to submit the pending returns in the meantime.

Unsubscribing to the KOR

Unregister via Mijn Belastingdienst Zakelijk. If the €20,000 threshold is exceeded, the KOR stops immediately: the entire supply or service that exceeds the limit is taxed, not just the amount above the threshold. Previous supplies for which the KOR validly applied are therefore not taxed retroactively. For voluntary termination, the first day of a return period applies, with cancellation at least four weeks in advance. See the cancellation rules.

Example: your taxable turnover is €19,500. You then provide a service for €1,000 excluding VAT, subject to the standard 21% VAT rate. €210 VAT is payable on that service in full; the invoice total is €1,210. Check in advance what you agreed if your price includes VAT.

Late cancellation KOR

Amend invoices and returns from the exceeding supply onwards. VAT is payable on that entire supply and subsequent taxed supplies. Whether you can collect extra VAT from the customer depends on the price agreement. Have the correct correction determined; do not automatically re-tax all previous VAT exemption scheme (SME) turnover.

Regretting KOR scheme

The old minimum participation period of three years no longer applies as of 2025. Voluntary withdrawal is possible per new reporting period, with timely deregistration as stated above. Compare before you choose: can customers deduct VAT, how much input VAT do you expect, do you have recent or major investments, and how close are you to the turnover limit?

Quitting the KOR

Distinguish between voluntarily stopping per reporting period and mandatory immediate stopping upon exceedance. The four-week period for voluntarily stopping does not postpone the immediate end upon exceedance.

Re-registering for the KOR

After unsubscribing, you cannot rejoin immediately. You cannot participate for the remainder of the calendar year in which you unsubscribed and the entire following year. After that, you can sign up again if you meet the conditions once more.

Small business scheme within the EU (EU-KOR)

The EU-SME scheme is a separate arrangement. In addition to the threshold for total EU turnover, national conditions and an application apply for the countries where you want to apply the exemption. Dutch SME scheme participation does not automatically grant exemption in other EU countries. Check your foreign activities separately with the Tax and Customs Administration.

Frequently Asked Questions