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As mentioned, the KOR is a VAT exemption. This means that you don’t charge VAT on your income and, in principle, you no longer need to file VAT returns. The flip side is that you can also no longer reclaim VAT on your business expenses and investments. The KOR is a voluntary scheme for which you can register with the Tax Administration (Belastingdienst). You can apply for the scheme online, through MijnBelastingdienst Zakelijk. You can start participating in the KOR every quarter, but please keep a processing time of at least 4 weeks in mind.
Since 1 January 2025, the minimum participation period of 3 years has been canceled. You can now unsubscribe at any moment, starting from the next quarter. Quite nice, because as an entrepreneur, you often don’t know what your business will look like in a few years.
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To register for the KOR, you must meet the following conditions:
You’re an entrepreneur for VAT. This means you are self-employed. The KOR applies to every legal form of business.
Your company is located in the Netherlands or you have a permanent establishment here.
Your turnover is not higher than €20,000 per calendar year.
Does your turnover exceed €20,000 during the year? Then you are obliged to immediately start charging VAT on your income. You must also unsubscribe from the KOR at that exact moment. For the remainder of that calendar year and the following year, you won’t be able to register for the scheme again. Turnover that is normally not taxed, such as exempt income or income with reversed VAT, does not count towards this turnover limit.
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Participating in the KOR has its advantages and disadvantages. It can save you a lot of time administration-wise and you don’t have to be bothered with VAT returns. However, there are also downsides. When making your choice, it is recommended to look into the following aspects:
Are your customers mainly private individuals or customers who cannot reclaim VAT themselves? Then participating in the KOR can be interesting. You can keep your prices or tariffs as they were, but you no longer pay VAT over them to the tax authorities. This will increase your margin.
Are your customers mainly businesses or professionals? Because you can no longer reclaim VAT on purchases and business costs, your purchase price will be higher and your margin will drop. In this case, the KOR is probably not favourable.
Do you need to make a lot of investments or purchase a lot of materials for your work? Then it is also not beneficial to register for the KOR, because you can no longer reclaim your VAT on your purchases.
Although the KOR scheme has become a lot more flexible due to the cancellation of the three-year minimum participation period, it remains wise to check with your bookkeeper whether the KOR is beneficial for your specific situation. At Kees de Boekhouder, we help small businesses with these kinds of questions on a daily basis. Interested? Plan a free introductory call with us and discover what Kees de Boekhouder can do for you!
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The KOR is a voluntary VAT exemption for entrepreneurs with an annual turnover of up to €20,000. The biggest advantage is that you no longer have to charge VAT on your income and, in principle, you don’t have to file VAT returns anymore, which saves a lot of administrative time.
The disadvantage is that you can no longer deduct the VAT on business expenses and investments. Therefore, the KOR is usually not favourable if you have a lot of business clients (your purchase price becomes higher and your margin lower) or if you need to purchase many investments and materials.
As soon as your turnover exceeds the €20,000 threshold, you are obliged to start charging VAT immediately and you must unsubscribe from the KOR. You will then not be allowed to re-participate in the scheme for the remainder of the current calendar year and the entire following year.
Schedule a no-obligation, digital introductory meeting with us.
