From 1 June 2019, business owners can register for the new small business scheme (KOR) for VAT. The new KOR will come into force on 1 January 2020.
All business owners
The current KOR applies only to natural persons and partnerships in which only natural persons are partners.
The new KOR applies to all VAT-registered businesses. From 2020, private limited companies (BVs), public limited companies (NVs), foundations, associations and other legal entities will also be able to apply the KOR. The same applies to partnerships in which legal entities participate.
Turnover not exceeding €20,000
The new KOR is subject to a turnover threshold. A business owner whose turnover does not exceed €20,000 per calendar year (excluding VAT, of course) may apply the KOR. However, this is not compulsory.
You opt to apply the KOR by submitting a form (the Tax and Customs Administration will make this form available via its website). You are then bound by the KOR for at least three years. A significant disadvantage of applying the KOR is that you will not be entitled to deduct input VAT. If you are expecting to make a substantial investment, it may be wise not to apply the KOR.
Business owners who wish to apply the KOR with effect from 1 January 2020 must make their choice by 20 November 2019 at the latest have notified the Tax and Customs Administration of this. If you make this choice at a later date, the KOR cannot take effect any earlier than 1 April 2020.
If you opt for the KOR scheme and your turnover exceeds the €20,000 threshold during the year, you will become liable for VAT from that point onwards. You must keep track of this yourself.
Exemption from administrative obligations
Many business owners who currently apply the KOR are also exempt from administrative obligations. The new KOR will automatically apply to them. If these business owners do not wish this to be the case, they must notify the Tax and Customs Administration.
The current KOR is linked to the VAT balance. This is the difference between the VAT payable and the input VAT deductible. It is therefore possible for the current KOR to apply even if annual turnover exceeds €20,000. If these business owners are exempt from administrative obligations, they must register with the Tax and Customs Administration. After all, they will once again be liable for VAT from 2020 onwards.
Review
The new KOR is an exemption. When transitioning to an exemption, the VAT deducted on business assets (whether movable or immovable) must be revised. For movable assets, this must be done within four years of the asset being put into use. For immovable assets, a review period of nine years applies.
As part of the introduction of the new KOR, it has been stipulated that no review is required if the amount of VAT involved in the review is less than €500 per year. Under this scheme, most private owners of solar panels are exempt.