The Small business scheme (KOR) ensures that a small VAT entrepreneur does not have to pay any or all VAT. The KOR may only be applied by natural persons (i.e. not, for example, by BVs , foundations, associations). The now best-known example of such a small VAT entrepreneur is probably the private individual who operates some solar panels on the roof of his own home, deducts the VAT on the purchase of the panels and then applies the KOR.
KOR
The KOR matches the VAT balance. This is the difference between the VAT to be paid and the deductible VAT (the input tax). If this balance in a calendar year is less than €1,345, the VAT entrepreneur does not owe any VAT. If the VAT balance is between €1,345 and €1,883, part of the VAT is due. If the VAT balance is negative (the VAT entrepreneur is entitled to a VAT refund), the KOR does not apply.
The small VAT entrepreneur processes the KOR in the VAT returns to be submitted periodically. Entrepreneurs whose VAT balance remains structurally below the KOR can request the Tax Authorities to exemption from administrative obligations.
Not a rental, but holiday spending business
The KOR may not be applied to property rentals. Therefore, for VAT purposes, the operation of a holiday home is often set up in such a way that no rental, but of operating under a holiday spending company. This way, the VAT paid when building or purchasing the holiday home can be deducted.
Because the income from the holiday spending business is taxed at the reduced VAT rate (6%), a substantial VAT advantage arises. This benefit is even greater when the VAT balance does not have to be paid in the years following the purchase of the holiday home by applying the KOR.
Foreign entrepreneur
The KOR may also not be applied by an entrepreneur not resident or established in the Netherlands. As a result, a non-resident owner of a holiday home located in the Netherlands may not apply the KOR, except where the operation of the holiday home is considered to be a permanent establishment (vi) of the foreign operator. The question of whether the operation of a holiday home qualifies as a vi was at issue in a case in which Zeeland West Brabant District Court judged.
This case concerns a situation where the holiday home, the owners of which are resident in Germany, is operated through a rental agency based in the Netherlands, which uses its own resources and staff for this purpose. A vi in the Netherlands exists when the owners of the holiday home actually conduct their operations from the Netherlands. Because the owners cannot influence the way the letting agency uses its personnel and resources, the court ruled that there is no vi. This is because the rental office also carries out its activities for other owners of holiday homes on the park and makes its own decision on which holiday home to rent to interested tenants. As a result, the KOR cannot be applied.