Tax
Small Business VAT Scheme (KOR) Explained: Should You Opt for VAT Exemption?
The Kleineondernemersregeling (KOR) is a voluntary VAT exemption scheme for Dutch entrepreneurs with annual turnover of €20,000 or less. Since January 2025, the rules are more flexible: no more mandatory 3-year participation! This guide helps you decide whether the KOR is right for your situation.
In this guide we walk you through everything you need to know: the eligibility rules, the advantages and pitfalls, practical calculation examples for B2B and B2C, and the important 2025 rule changes that make the KOR more flexible than ever.
1. What is the KOR?
The Kleineondernemersregeling (KOR), or Small Business VAT Scheme, is a tax regulation administered by the Dutch Tax Authority (Belastingdienst) that provides VAT exemption for small entrepreneurs. If your annual turnover stays at or below €20,000, you can opt into this voluntary scheme. Under KOR, you are exempt from filing VAT returns.
2. Eligibility Requirements
To participate in the KOR, you must meet the following conditions:
| Requirement | Details |
|---|---|
| Business location | Your business must be established in the Netherlands |
| VAT registration | You must be registered as a VAT entrepreneur (btw-ondernemer) |
| Turnover limit | Maximum €20,000 per calendar year (current and previous year) |
| Calculation basis | Revenue excluding VAT; includes sales normally subject to VAT |
3. How the KOR Works in Practice
Once registered for the KOR, the following applies:
| Aspect | Under KOR |
|---|---|
| Charging VAT | Not allowed—prices are VAT-exempt |
| VAT returns | Not required (except incidental situations) |
| Input VAT recovery | Not possible—you cannot reclaim VAT on purchases |
| Invoices | Not mandatory, but recommended |
| Record keeping | Still required—keep purchase invoices |
4. Advantages of the KOR
Less administration
No quarterly VAT returns, simpler bookkeeping, no VAT calculations on sales.
Save hours!
Competitive for B2C
Private clients can't reclaim VAT—your lower prices are a real advantage.
Ideal for consumers
Higher margin potential
Keep what would otherwise be VAT payable. Same price = more profit.
Maximize earnings
Flexible since 2025
No more 3-year lock-in! You can opt out at any time.
New in 2025!
5. Disadvantages of the KOR
No input VAT deduction
The biggest drawback: you cannot reclaim VAT on ANY business expenses, including:
- Laptops, equipment, furniture
- Professional tools and machinery
- Business travel and fuel
- Software subscriptions
Less attractive for B2B
Business clients can deduct VAT anyway, so:
- Your VAT-free price offers them no advantage
- Your costs are higher (no VAT recovery)
- You effectively earn less per project
6. Practical Calculation Examples
Example 1: Selling to Business Clients (B2B)
Scenario: Web designer selling services to businesses
Without KOR
Rekenvoorbeeld
With KOR
Rekenvoorbeeld
Example 2: Selling to Private Consumers (B2C)
Scenario: Hairdresser or beautician with private clients. You can choose two strategies:
Strategy A: Lower prices
Charge €100 instead of €121—more competitive!
- Client pays: €100 (was €121)
- Your expenses: €12.10
- Profit: €87.90
Strategy B: Same prices
Keep charging €121—but keep the full amount!
- Client pays: €121
- Your expenses: €12.10
- Profit: €108.90
Example 3: Starting ZZP'er with Large Investment
Scenario: Photographer buying €5,000 camera equipment in year 1
Rekenvoorbeeld
Rekenvoorbeeld
7. Who Should Use the KOR?
KOR is typically beneficial for:
8. Who Should Avoid the KOR?
Avoid KOR if you are:
9. Invoice Requirements Under KOR
Under KOR, you are not required to issue invoices for VAT purposes. However, many business clients will request an invoice for their own administration.
One common mistake to be aware of when preparing your invoices under the KOR:
10. How to Apply for the KOR
1Check Eligibility
Use the Belastingdienst's KOR tool to verify you qualify: turnover under €20,000, registered as VAT entrepreneur, established in NL.
2Apply Online
Register via Mijn Belastingdienst Zakelijk. Find the form "Melding omzetbelasting kleineondernemersregeling" and complete it.
3Timing
Submit at least 4 weeks before the start of the quarter. KOR takes effect from the first day of the next quarter. Wait for written confirmation before treating sales as VAT-exempt.
11. Exceeding the €20,000 Threshold
What happens if you exceed €20,000 during the year?
Immediate consequences:
- Immediate VAT obligation: From the sale that pushes you over €20,000, you must charge VAT
- Mandatory deregistration: You must immediately deregister from KOR
- Previous sales unaffected: Sales before exceeding remain VAT-free
12. VAT Revision Rules (BTW Herziening)
This is often overlooked: joining the KOR can trigger VAT repayment obligations on past investments.
| Asset Type | Revision Period |
|---|---|
| Movable goods (equipment, vehicles) | 5 years |
| Immovable property (buildings, land) | 10 years |
To make this concrete, let's look at how the revision calculation works in practice with a real example.
Calculation Example
Situation: You bought a business car in 2024 and claimed €4,500 VAT. You join KOR on January 1, 2025.
Rekenvoorbeeld
13. 2025 Rule Changes
Since January 1, 2025, several significant changes apply to the KOR. These are part of broader tax changes for freelancers in 2026:
The table below compares the old and new rules side by side, so you can see exactly what has changed:
| Change | Before 2025 | From 2025 |
|---|---|---|
| Minimum participation | 3 years mandatory | No minimum—opt out anytime! |
| Deregistration timing | Limited flexibility | Can deregister at end of any quarter |
| Exclusion after leaving | 3 years before rejoining | Rest of current year + next year only |
| Registration method | Paper forms | Fully online via Mijn Belastingdienst Zakelijk |
| Foreign entrepreneurs | Allowed with fixed establishment in NL | No longer allowed (use EU-KOR instead) |
14. Decision Checklist: Should You Use the KOR?
15. Conclusion
Use the KOR if:
- Turnover stable at well under €20,000
- Clients are mainly private individuals
- Minimal business expenses
- Value administrative simplicity
Avoid the KOR if:
- Selling primarily to businesses (B2B)
- Significant expenses or planned investments
- Turnover fluctuates near €20,000
- Recently claimed substantial VAT on investments