Small Businesses Scheme (KOR): is it advantageous for you?
The Small Businesses Scheme (Kleineondernemersregeling, KOR) is a VAT exemption scheme intended for entrepreneurs with low revenue. Below we explain how it works and when it is worthwhile.
What is the KOR?
If you participate in the KOR, you do not charge VAT to your customers, you no longer file VAT returns, and you also cannot reclaim VAT on your purchases and investments. The scheme is intended to reduce the administrative burden for small entrepreneurs.
What is the revenue threshold?
To qualify for the KOR, your annual revenue (excluding VAT) may not exceed the applicable threshold. Always check the current threshold at belastingdienst.nl, as it can change each year. Use our free KOR checker to quickly see whether your revenue falls within the threshold.
When is the KOR advantageous?
- You mainly sell to consumers. They cannot reclaim VAT, so a price without VAT is more attractive to them (or you keep more margin at the same selling price).
- You have few business purchases/investments. Because you cannot reclaim VAT, this advantage is smaller if you incur a lot of VAT-taxed costs.
- You want less administration. No more quarterly or annual VAT returns.
When is the KOR actually disadvantageous?
- You mainly sell to other businesses (B2B). They reclaim the VAT anyway, so it makes no difference to them — but you miss out on reclaiming VAT on your own costs.
- You make large investments. For example equipment or a car — the non-reclaimable VAT can add up significantly.
- You are growing fast. If you exceed the revenue threshold, you must become liable for VAT retroactively for the entire year.
How do you register?
You register for the KOR via a form with the Belastingdienst (Dutch Tax Authority). Keep in mind that afterwards you are tied to the scheme for at least 3 years, unless you no longer meet the conditions.
Not sure whether the KOR is advantageous for you? Calculate it first with our KOR checker and discuss the outcome with an accountant for definitive advice.