25 November 2024
KOR scheme in the Netherlands — how it works and changes awaiting entrepreneurs in 2025
What is the KOR scheme?
The Kleineondernemersregeling (Small Entrepreneurs Scheme, KOR) is a VAT exemption programme available to small businesses with an annual turnover not exceeding EUR 20,000. The scheme simplifies bookkeeping and allows entrepreneurs to offer lower prices. However, it comes with significant limitations that should be considered before making a decision.
Conditions for joining the KOR scheme
An entrepreneur must meet certain requirements:
- Running a business in the Netherlands (available to sole traders, partnerships, foundations and associations)
- Annual turnover below EUR 20,000 (exceeding the threshold results in exclusion from the scheme)
How to join the KOR scheme?
The entrepreneur fills in an online form on the Mijn Belastingdienst Zakelijk website. The application must be submitted at least 4 weeks before the start of the next reporting period. Within 6 weeks the Belastingdienst (Dutch Tax Authority) will send a decision with information on acceptance into the scheme.
Benefits of joining the KOR scheme
- No obligation to charge VAT: The entrepreneur can offer cheaper products and services, increasing competitiveness
- Simplified bookkeeping: Detailed VAT documentation is no longer required. Invoices should include the note: "Factuur vrijgesteld van OB o.g.v. Artikel 25 Wet O.B."
- No quarterly VAT returns: No need to file regular VAT declarations
Limitations of the KOR scheme
- No VAT deduction: Input VAT on business expenses cannot be reclaimed, which increases costs
- Maximum turnover: Annual revenue is limited to EUR 20,000 and must be monitored regularly
Changes to the KOR scheme from 1 January 2025
1. Easier registration
From 1 October 2024 the online form on Mijn Belastingdienst Zakelijk makes registration simpler.
2. Removal of the mandatory 3-year period
From 1 January 2025 this obligation will be abolished, meaning entrepreneurs will be able to end their participation in the scheme at any time.
3. Faster re-enrolment
The change allows re-joining after the end of the year of withdrawal and after a full year has passed.
4. Introduction of EU-KOR
Another important change coming into effect on 1 January 2025 is the new EU-KOR option, which will allow entrepreneurs to benefit from VAT relief not only in the Netherlands but also in other EU countries. The conditions are a total EU-wide turnover not exceeding EUR 100,000 and having the main place of business in the Netherlands.
Summary
It is worthwhile to carefully analyse your financial situation and consider whether the benefits of the KOR scheme will outweigh the potential costs before joining. Consulting a tax adviser is recommended if you have any doubts.