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With effect from 1 January 2025, the European Kleine Ondernemersregeling (KOR) will be incorporated into Dutch VAT legislation. In addition, a number of minor changes will be made to the domestic KOR.
Small business scheme (KOR)
The KOR is a VAT exemption for entrepreneurs whose annual turnover remains below the KOR threshold (see below).
Entrepreneurs who apply the KOR do not mention VAT on their invoices and do not pay VAT on their turnover.
And they are obviously not entitled to deduct input tax paid during the period in which they apply the KOR.
Domestic KOR
An entrepreneur established in the Netherlands can choose to apply the KOR if the annual turnover in the Netherlands does not exceed €20,000.
What counts as turnover?
- supply of goods and services taxed with Dutch VAT (at 21%/9%/0%)
- supply of goods and services taxed with Dutch VAT, which is transferred to the customer;
- The following VAT-exempt supplies:
- property-related services (including rentals);
- financial services;
- insurance services.
If the margin scheme or travel agency scheme is applied, turnover is equal to the total fees received (for the KOR threshold, unrealised margin may be taken into account).
What doesn't count as turnover?
- private use of goods and services;
- supply of investment goods used in the company;
- supplies for which the tax is shifted to the entrepreneur;
- performance taxed outside the EU;
- intra-community acquisitions;
- the VAT-exempt supplies not mentioned above.
Distance sales
A special category, which is also important in the context of the EU KOR, are distance sales. These are:
- deliveries of goods;
- To a non-BTW entrepreneur;
- Who lives/is based in another EU Member State;
- where the supplier arranges the transport of the goods.
Distance sales are subject to a threshold of €10,000. This threshold does not apply per member state, but to the total of all distance sales within the EU.
As long as the threshold is not exceeded, the supplies are taxed with VAT in the Netherlands. These supplies will then count as turnover for the KOR threshold.
Once the distance sales threshold is exceeded, the supplies are taxed in the member state where the customer resides. The supplies then no longer count towards the Dutch KOR threshold, but obviously do count towards the EU KOR threshold and the threshold of the relevant member state.
Application/ termination
The KOR must be applied for with the tax authorities at least 4 weeks before the start of the calendar quarter in which the entrepreneur wants the KOR to take effect (for example, if the KOR is to take effect on 1 January 2025, the tax authorities must have received the application before 4 December 2024).
The application of the KOR can be terminated by notice and is then effective as of the calendar quarter starting at least 4 weeks after the receipt of the notice (a notice to take effect as of 1 January 2025 must be received by the Tax Administration by 4 December 2024).
Changes to domestic KOR
From 1 January 2025, the mandatory 3-year participation period will lapse.
Re-registering for the KOR after a termination will no longer require 3 years from 1 January 2025.
Logging in and out
Signing in and out of the KOR must be done in MijnBelastingdienstZakelijk (using eRecognition) from 1 October 2024.
Signing in and out using the paper form is no longer possible.
Registration threshold
An entrepreneur established in the Netherlands can apply the KOR, without prior notification to the tax authorities, if:
- its annual turnover in the Netherlands is less than €2,200;
- he did not register for VAT with the Inland Revenue or the Chamber of Commerce;
- he does not apply the EU KOR.
The registration threshold does not apply in relation to services provided to the entrepreneur:
- supplies or services for which the charge is shifted to the customer;
- supply of goods that the entrepreneur acquires intra-community.
EU-KOR
Until 1 January 2025, entrepreneurs established in the Netherlands can only apply the KOR in the Netherlands. Turnover realised by a participant in the Dutch KOR in other EU member states will be taxed in those member states.
With the introduction of the EU KOR, these entrepreneurs can also apply the KOR for supplies in other EU member states. In that case, no VAT may be mentioned on invoices in the relevant member states and no VAT has to be paid. However, a quarterly turnover statement must be submitted to the Dutch tax authorities each quarter.
An entrepreneur established in the Netherlands can apply the EU KOR to supplies of goods and services made in other EU member states if:
- the annual turnover in all EU Member States (including turnover in the Netherlands) does not exceed €100,000;
and
- turnover in each individual Member State does not exceed the KOR threshold applicable to that Member State.
Entrepreneurs wishing to apply the KOR for another EU member state must apply to the Tax Administration. The Tax Administration then issues a VAT number with the suffix EX.
The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.