The KOR: when is the small business scheme smart?

If your revenue stays under 20,000 euros per year, you can opt for the Dutch small business scheme (KOR): no more VAT on your invoices and no VAT returns. Sounds like a pure win, but it often is not. Here is how to weigh it.

What the KOR actually does

Under the KOR you are exempt from VAT. You put no VAT on your invoices, remit nothing and skip the quarterly return. In exchange you also reclaim no input VAT: the VAT on your own business purchases is simply lost. The threshold is 20,000 euros of Dutch revenue per calendar year.

When the KOR is attractive

• Your clients are consumers. They cannot reclaim VAT, so your price drops by over a fifth for them, or you keep the same amount without remitting VAT.
• You have few business costs. Then you also lose little input VAT.
• You want less administration. No quarterly return saves four deadlines a year.

When to skip the KOR

• Your clients are businesses. For them VAT is a pass-through; your exemption gains them nothing, while you lose your input VAT.
• You are about to invest. Without the KOR you reclaim the VAT on a laptop, camera or furniture; with it you do not.
• You are growing. Cross the 20,000 euro threshold during the year and the exemption ends immediately; you must charge VAT again from that moment.

Signing up and leaving

You register with the Tax Administration; do it well ahead, because the registration must be in before the return period in which you want to start. Since 2025 the scheme is more flexible: you are no longer locked in for years and you can also deregister in between. After leaving there is a waiting period before you may rejoin, so zigzagging is not an option.

Mind your invoices

Under the KOR you state no VAT on your invoices, not even "0%". Many participants add a line such as "exempt from VAT under the small business scheme (KOR)" so clients do not ask for a VAT breakdown. Also read what must be on your invoice.

In doubt? Run two scenarios: your expected revenue and costs with regular VAT administration and with the KOR. The VAT calculator helps convert between amounts including and excluding VAT.