Small Business Scheme (KOR): when does it pay off?
The KOR (kleineondernemersregeling) offers VAT exemption for small entrepreneurs. Find out when you qualify, what the pros and cons are, and how to register.
What is the small business scheme (KOR)?
The small business scheme (KOR — kleineondernemersregeling) is a VAT exemption scheme from the Belastingdienst for entrepreneurs with annual revenue of up to € 20,000. If you apply the KOR, you do not charge VAT to your customers, do not need to file VAT returns, and issue invoices without VAT. In return, you cannot deduct input VAT on your purchases. The KOR is especially beneficial for service providers and self-employed persons who have few purchases and mainly supply to private individuals. You register via the Belastingdienst and are then bound for a minimum of three years. If your revenue exceeds € 20,000, the KOR automatically lapses and you must start charging VAT and filing VAT returns again.
KOR requirements
To apply the KOR, you must meet these conditions:
- Your revenue is a maximum of € 20,000 per calendar year
- You are an entrepreneur for VAT purposes (including sole trader, general partnership, foundation or private limited company)
- You are established in the Netherlands
Note: the revenue threshold applies to all VAT-taxable supplies combined. Exempt supplies do not count.
Advantages of the KOR
- No VAT records — you do not need to file VAT returns
- Lower prices — you can offer a cheaper price to private individuals (they cannot deduct VAT anyway)
- Less administrative work — simpler bookkeeping
Disadvantages of the KOR
- No input VAT deduction — if you purchase a lot (materials, equipment), you miss out on VAT deductions
- Not advantageous for business customers — they can deduct the VAT anyway, so your price without VAT is not necessarily cheaper
- 3-year commitment — if you register, you must participate for at least 3 years (unless you exceed € 20,000)
When does the KOR pay off?
The KOR pays off most when:
- You have few purchasing costs (service provider, consultant)
- You mainly supply to private individuals
- You stay below € 20,000 revenue
- You value the administrative simplification
The KOR does not pay off when:
- You invest or purchase a lot (you miss out on input VAT)
- You mainly supply to business customers (they deduct VAT anyway)
- You expect to grow quickly above € 20,000
Registration and deregistration
Registration
You register via the Belastingdienst. The KOR takes effect from the first day of the following quarter. You are bound for a minimum of 3 years.
Deregistration
You can deregister after 3 years. Deregistration takes effect from the first day of the following quarter.
Automatic termination
If your revenue in a calendar year exceeds € 20,000, the KOR automatically lapses. From that moment on, you must charge VAT again and file VAT returns.
KOR and your bookkeeping
Are you using the KOR? Then you do not need to keep VAT records. But you do need to keep proper financial records — you are still an entrepreneur after all. Read more about the basics of bookkeeping or consider whether you want to hire an accountant or do it yourself. With Giroo you can keep your bookkeeping professional even without VAT returns.