Business owners with an annual turnover of up to € 1.800 may apply the small business scheme without having to notify the authorities. The State Secretary for Finance announced this approval in a recent decision. The approval applies retrospectively from 1 January 2020.
Small Business Scheme
Since 1 January 2020, the small business scheme has included an exemption. This means that no VAT is payable on services provided. However, it also means that there is no right to deduct VAT on services purchased.
Business owners who wish to make use of the KOR must register with the Tax and Customs Administration. This must be done at least four weeks before the intended start date of the KOR. The business owner is then bound by the KOR for at least three years, unless the KOR threshold is exceeded. This is the case as soon as the annual turnover exceeds €20,000.
The new approval is also known as a registration threshold mentioned. Without this approval, business owners must apply for VAT returns as soon as they become liable for VAT. By opting for the KOR scheme, these business owners can remain exempt from VAT. However, this requires them to submit a registration. Very small business owners are now exempt from this requirement.
This would apply, for example, to a buyer of an existing property on which the previous owner had solar panels installed.
Conditions
The approval is subject to a number of conditions.
- Business owners who have already registered as VAT-registered businesses with the Tax and Customs Administration cannot make use of this approval.
- Business owners who make use of this approval may still submit their VAT returns to the Tax and Customs Administration (provided, of course, that they comply with the usual deadlines).
- As soon as a business exceeds the registration threshold, it must comply with the standard VAT obligations (with effect from the transaction in which the registration threshold is exceeded).
- This business owner may opt for the KOR scheme provided that the KOR threshold of €20,000 is not exceeded, and must register for it, subject to the statutory registration deadline (registration must take place no later than 4 weeks before the start of a tax return period).
- If a flat-rate scheme is applied, the turnover calculated on the basis of this flat rate must be included when determining the annual turnover.