As a freelancer (ZZP'er) in the Netherlands, understanding the tax landscape is crucial for effective financial management. One significant scheme designed to ease the tax burden on small businesses is the Kleineondernemersregeling (KOR), or Small Businesses Scheme.
Today we delve into what KOR entails: its benefits, potential drawbacks, and a step-by-step guide on how to apply.
What is the KOR VAT scheme in the Netherlands?
The KOR is a VAT (Value Added Tax) exemption scheme aimed at small businesses with an annual local turnover of €20,000 or less. By participating in the KOR, businesses are exempt from charging VAT on their goods and services and are relieved from the obligation of filing VAT returns. However, it's important to note that while you won't charge VAT, you also cannot reclaim VAT on your business-related purchases. For everything you need to know about the ZZPer tax and VAT deadlines and procedures read this blog.
Who is eligible?
The KOR scheme is available to various business entities, including:
- Sole proprietors (Eenmanszaak)
- Professional partnerships
- General partnerships (VOFs)
- Legal entities such as foundations, associations, and private limited companies (BVs)
To qualify, your business must be established in the Netherlands, have an active VAT registration and your annual turnover should not exceed €20,000. As this is a voluntary scheme, it’s completely up to the individual business to choose whether or not to participate based on the specific circumstances.
Benefits of KOR
Opting in to the KOR scheme come with a handful of small business benefits that include:
- Simplified administration: By opting into KOR, you eliminate the need to file periodic VAT returns, reducing administrative tasks and associated costs.
- Competitive pricing: Without the addition of VAT, your services or products may become more affordable to local consumers, potentially enhancing your competitiveness in the market.
- Cash flow management: Not having to remit VAT can improve your cash flow, allowing you to reinvest funds directly into your business operations.
Potential drawbacks
Although this scheme presents some great benefits it also comes with a few potential drawback that are worth considering:
- Non-reclaimable VAT on purchases: While you don't charge VAT, you also cannot reclaim VAT paid on business expenses, which could increase your operational costs, especially if you make significant investments.
- Perception among business clients: Business clients who are VAT-registered may prefer suppliers who charge VAT, as they can reclaim it. Not charging VAT might make your services less attractive to such clients.
- Turnover monitoring: If your turnover to local businesses and consumers exceeds €20,000 within a calendar year, you must immediately deregister from the KOR online through the Netherland Tax Administration’s portal, start charging VAT, and resume regular VAT administration. Additionally, you cannot reapply for the KOR in the current year and the next year.
How to apply for KOR
Applying for KOR is a simple three step process:
- Assess: Ensure your business meets the criteria of being established in the Netherlands with an annual Dutch turnover of €20,000 or less.
- Apply:
- Complete the Dutch-language digital form "Melding omzetbelasting kleineondernemersregeling" available through the Netherlands Tax Administration's portal.
- Submit the application at least four weeks before the start of the next VAT return period.
- Await Confirmation: Upon approval, you'll receive confirmation from the Tax Administration, and the KOR will apply from the start of the next return period.
For more information and detailed guidance on the application process visit the Netherlands Chamber of Commerce (KVK) website.
Is the KOR right for your business?
Deciding whether to opt into KOR requires careful consideration of your business model, client base, and future plans. If your clientele consists mainly of private consumers and you anticipate minimal large-scale investments, KOR could be advantageous. Conversely, if you deal primarily with VAT-registered businesses or plan significant capital expenditures, participating in KOR might not be beneficial.
In conclusion, KOR offers a valuable opportunity for small businesses and solopreneurs in the Netherlands to simplify their VAT obligations. By understanding its benefits and limitations, you can determine if this scheme aligns with your business objectives and operational needs.
If the KOR scheme is music to your ears, then make sure to also read our blog on additional tax benefits targeted small businesses in the Netherlands.
Get the answers you need about the KOR Scheme
Q: What is the KOR scheme and who can apply for it?
Answer:
KOR (Kleineondernemersregeling) is a VAT exemption scheme designed for small businesses and freelancers (ZZP’ers) in the Netherlands. If your annual turnover stays under €20,000 (excl. VAT), you can apply to opt out of charging and filing VAT entirely. That means no VAT on your invoices, no quarterly VAT returns, and less admin.
Who can apply?
- You’re a sole proprietor (ZZP’er), partnership or foundation.
- Your business is based in the Netherlands.
- You expect to earn less than €20,000 in turnover per calendar year.
Q: What are the pros and cons of applying for KOR as a freelancer?
Answer:
Pros:
- ✅ No VAT on your invoices – less confusing for your clients.
- ✅ No need to file quarterly VAT returns – less paperwork!
- ✅ Ideal for part-time freelancers or those just getting started.
Cons:
- ❌ You can’t deduct input VAT on your business expenses (e.g. software, equipment).
- ❌ If you cross the €20,000 threshold mid-year, you must immediately start charging VAT and can’t rejoin the scheme for at least 3 years.
- ❌ Some B2B clients may prefer VAT invoices to reclaim the tax themselves.
Q: How do I apply for the KOR scheme and how long am I enrolled?
Answer:
You can apply for KOR by submitting a request to the Belastingdienst. It’s important to do this at least 4 weeks before the quarter in which you want the exemption to start. For example, if you want to start in Q1, apply by December 1st of the previous year.
Once accepted, your participation is locked in for 3 years – or until your turnover exceeds €20,000. You can’t opt out earlier unless you exceed the limit.
Q: Is the KOR scheme worth it for me?
Answer:
That depends on how your business is structured and your typical expenses.
✔️ If you mostly sell to individual clients and keep expenses low, KOR can simplify your life.
❌ If you have lots of business-related purchases, travel costs, or work mostly with VAT-registered companies, it might be better to charge VAT and reclaim it on expenses.
Trust Xolo to keep your business compliant
Navigating the administrative complexities of Kleineondernemersregeling (KOR) can be challenging for small business owners.
Xolo offers tailored solutions and guidance to help businesses remain compliant within the KOR framework, allowing you to focus on growing your business. Xolo provides guidance on the application process, ensuring you a seamless setup.
Confidently manage your business operations – with Xolo! And know that your compliance with the KOR scheme is handled efficiently.