How does the small businesses scheme work?

The kleineondernemersregeling (KOR) only affects VAT (turnover tax). You still pay other types of tax, such as income tax. When participating in the KOR, you no longer pay VAT, but you cannot reclaim VAT either. You can use the KOR if your annual turnover is less than €20,000.

Advantages of the KOR

Participating in the KOR has several advantages. Here are the main ones.

• You do not charge VAT on your products or services. So you keep more money left over, ultimately making more profit. Or you choose to lower your prices, making it more attractive to do business with you.
• Less administration. You do not have to submit quarterly VAT returns and your administration becomes easier.
• No invoices. You no longer have to send invoices, but you can still do so.

Is the KOR of interest to you?

It is not wise for every entrepreneur to participate in the KOR. This is because it also has a number of disadvantages. Participating in the KOR can be disadvantageous if:

• you pay more VAT on your expenses than you receive from your customers. Normally, you then get this difference back from the Netherlands Tax Administration. With the KOR, you can no longer reclaim this VAT on your expenses. This leaves you with less money.
• you have many business customers. These customers cannot deduct VAT, which makes it less attractive for them to do business with you if you continue to charge the same price.
• you are going to make big investments. Maybe you want to invest a lot in your business, for example with expensive equipment or a car. Then participating in the KOR may be less advantageous, because you cannot reclaim VAT on these large expenses.

You can apply for the KOR (in Dutch) via the Belastingdienst (Netherlands Tax Administration). Do you still find it difficult to decide whether taking part in the KOR is good for you? Someone from the KVK Advice Team will be happy to help.