Everything is getting more expensive, so many entrepreneurs will realise higher turnovers. However, the threshold of the small business allowance (KOR) will not be raised for the time being.
KOR threshold
The KOR threshold is €20,000. Entrepreneurs whose turnover per calendar year does not exceed €20,000 can choose to apply the small business scheme for VAT purposes. If they do so, their turnover is exempt from VAT, but they are not allowed to deduct the VAT imposed on purchased goods and services.
The decision to apply the KOR must be reported to the Tax Authorities (approximately) one month before a tax return period. An entrepreneur who wants the KOR to take effect from the third quarter of 2023 must therefore have reported this to the Tax and Customs Administration by the end of May 2023 at the latest. This must be done with an appropriate form. NOTE: you must then apply the KOR for at least 3 years.
Registration threshold
Very small VAT entrepreneurs do not have to register with the tax authorities at all. These are VAT entrepreneurs whose set-up per calendar year does not exceed €1,800 (the registration threshold). They are then automatically subject to the VAT exemption scheme (KOR). We elaborate on the conditions of this scheme in our article Voluntary VAT registration threshold for small business owners.
No indexation
In the Note following the report to the bill on the introduction of the new European small business scheme, Finance State Secretary Van Rij indicates that the law does not provide for indexation of the KOR and registration threshold. Only in 2026 will the scheme be evaluated. It will then be considered whether the thresholds should be adjusted.
Entrepreneurs who (threaten to) exceed the registration threshold must register with the tax authorities as VAT entrepreneurs and can then, of course, choose to apply the KOR. PLEASE NOTE: that choice cannot be made retrospectively.
Entrepreneurs who have opted for the KOR, but exceed the €20,000 threshold, must declare the KOR. This must also be done with a form. The KOR no longer applies from and with the transaction by which the turnover threshold of €20,000 is exceeded in a calendar year. That transaction (and all subsequent transactions) is then of course subject to VAT, but the VAT on purchased goods and services is deductible from then on.