New Small Business Scheme KOR

1. If your annual turnover does not exceed €20,000 (Revenue excluding VAT)? As of January 1, 2020, you can apply for the new Small Business Scheme (KOR). This grants you an exemption from your VAT responsibilities. In other words:

a. You can NO LONGER reclaim VAT (BTW) on your business expenses at any point. b. You are not obligated to file sales declarations (VAT). c. You are still obligated to file income tax returns. d. You must continue to maintain proper business administration (keeping invoices in order in case of audits). e. This applies to sole proprietorships (eenmanzaak), partnerships (VoF), BVs, associations, and foundations. f. Applies regardless of the age of the business. g. When you apply for the new KOR scheme, it applies for a minimum period of 3 years.

2. The old KOR scheme (Kleineondernemersregeling – Small Business Scheme) will expire as of January 1, 2020. This new exemption replaces the old Small Business Scheme KOR as of January 1, 2020. Under the old KOR scheme, you were not liable for taxes in sales declarations (VAT) if your VAT (BTW) payable during the year was less than €1,345. a. If you wish to register for the new KOR scheme and start using it from January 1, 2020, you must register before November 20, 2019, using the KOR Registration form (Refer to point 9).

3. Who can participate in the new Small Business Scheme? If you meet the following conditions, you can participate in the new KOR: a. If you are already a VAT entrepreneur (regularly filing your declarations). b. Your business is established in the Netherlands or you have a permanent establishment here in Holland. c. Your turnover does not exceed €20,000 per year (Revenue excluding VAT).

4. Foundations (stichtingen), associations (verenigingen), and private limited companies (bv’s) can participate in this new KOR scheme. Participation in the new KOR scheme is not limited to natural persons (natuurlijke personen) or associations of natural persons (samenwerkingsverbanden van natuurlijke personen). Legal entities such as foundations (stichtingen), associations (verenigingen), and BVs can also use it.

5. Check if you can participate in this new Small Business Scheme. Not sure if you can participate in the new KOR? For example, because you’re not sure how to estimate your sales? Or what revenue counts for the new KOR? Participating in the new scheme has advantages and disadvantages. You have fewer administrative obligations, meaning:

Advantages of the exemption:

• You don’t have to send invoices to your clients. But if you wish to send invoices or if your clients request them, you may do so. You only need to indicate on the invoice that the KOR exemption applies. • You do not charge VAT to your clients, but you also cannot reclaim VAT on expenses. • If you issue invoices, you cannot declare VAT (The invoice must have 0% VAT). If you at any point add 9% or 21% VAT, etc., the exemption will expire. • You don’t have to file VAT declarations for a minimum period of 3 years, however, you can NO LONGER reclaim VAT on your business expenses. • You must keep your purchase invoices in your administration for a period of 7 years. • For real estate and rights over them, a period of 9 years applies, after the year the real estate is put into service. • The exemption (new KOR scheme) can only start on the first day of your tax return period.

Disadvantages of the exemption:

• The start date of the KOR must be at least 4 weeks after submitting the Registration form. Meaning if you submit the KOR scheme form before November 20, it will only be effective for your business from January 1, 2020. • You cannot reclaim VAT on any type of expense. This disadvantage can weigh heavily if you make large investments or purchases such as laptops, equipment, machinery, investments, rentals, etc. • In some cases, if you still need to file a declaration. Use the incidental VAT refund tool to determine if you need to file. • You participate for a minimum period of 3 years in the KOR scheme after your registration, or until your turnover exceeds €20,000 (Revenue excluding VAT) in 1 calendar year.

7. Participate or not in the new Small Business Scheme? Therefore, we have listed a series of examples where you can see how this scheme works in practice for different professional groups and in different situations. Example 1 Relocated construction contractor with VAT Example 2 Hair salon with 9% VAT. Example 3 Accountant with exempt clients and clients who can deduct VAT Example 4 Trader in laptops with margin scheme or intra-Community deliveries (ICL)

8. Special situations with the new KOR. Are you participating in the new KOR? Perhaps 1 of the following situations applies to you. a. You have more sub-businesses within 1 company. As an entrepreneur, do you have more business activities within 1 company? Then the KOR scheme applies to all business activities as 1 single company.

a. If you regularly import products from countries outside the European Union with an Article 23 license, then the Belastingsdienst will withdraw this permit when you register for the new KOR scheme. c. You rent out real estate to an entrepreneur. Then you cannot opt for taxed rental if you participate in the new KOR scheme. Meaning charging VAT on such rent. Have you already opted for taxed rental and are registering for the new KOR? Then you no longer pay taxes on this rent.

KOR Scheme Netherlands

Freelancer – Tax In | Administratie & Belastingen | Administración e impuestos | Administration & Taxes

Source: Belastingdienst