VAT
The small businesses scheme
Below € 20,000 in turnover you get a choice: no VAT on your invoices, but no VAT back either. What that choice actually means.
In short
The small businesses scheme (KOR, Article 25 of the Dutch VAT Act) is an exemption for businesses with no more than € 20,000 turnover per calendar year. If you join, you charge no VAT and in principle no longer file VAT returns — but you can no longer reclaim the VAT on your own purchases either. Your invoices state the exemption under Article 25. One thing still applies: VAT reverse-charged to you from abroad must be declared and paid, and you may not deduct it.
The essentials
- Turnover threshold
- € 20,000 per calendar year (Article 25 of the Dutch VAT Act), in the year you register and in the year before. Your business must be established in the Netherlands.
- On your invoice
- No VAT, with the statutory note that the supply is exempt under Article 25 of the Dutch VAT Act.
- The exception
- VAT reverse-charged from abroad must be declared and paid — deducting it is not allowed. For goods, an acquisition threshold of € 10,000 per year applies.
Example: what the KOR saves you, and what it costs
A self-employed cleaner cleans homes for private customers, at 9% VAT. Her customers pay her € 16,350 a year in total; she has € 2,000 in costs, plus € 420 VAT on them. The amounts are made up; the calculation is that of the scheme.
| Her customers pay | € 16,350 a year — the same with and without the KOR |
|---|---|
| Without the KOR: VAT to pay | € 1,350 (9% of € 15,000) minus € 420 input VAT = € 930 |
| Without the KOR: she keeps | € 16,350 − € 930 − € 2,420 costs = € 13,000 |
| With the KOR: VAT to pay | Nothing — but she no longer gets the € 420 on her costs back either |
| With the KOR: she keeps | € 16,350 − € 2,420 costs = € 13,930, so € 930 more |
| The same work for businesses | A business customer deducts the VAT itself and pays € 15,000 net. With the KOR she then keeps € 12,580 instead of € 13,000: € 420 less |
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What the scheme involves
The small businesses scheme is a turnover-based exemption. Stay below € 20,000 in turnover per calendar year and you may choose to stay outside VAT altogether: you charge your customers no VAT, you file no returns in principle, and your administrative burden drops considerably.
The flip side is that you no longer get the VAT on your own costs back. For a service provider with few purchases that is often favourable; for someone who has just bought a van or a stock of goods, almost never. The scheme is a choice, not automatic, and you register for it with the Dutch Tax Administration.
Is the KOR right for you?
- Your business is in the Netherlands and you are weighing up the KOR → At most €20,000 turnover this calendar year and last?
- At most €20,000 turnover this calendar year and last? — yes → A lot of VAT on your purchases, e.g. a van or stock?
- At most €20,000 turnover this calendar year and last? — no → No KOR: you charge VAT as normal
- A lot of VAT on your purchases, e.g. a van or stock? — yes → Then the KOR is almost never worth it
- A lot of VAT on your purchases, e.g. a van or stock? — no → The KOR is often worth it: register with the Dutch Belastingdienst
What changes in your records
VAT disappears from nearly everything: no more VAT column on your sales invoices, purchase invoices, receipts and bank entries, and no VAT return in your reports. Sales invoices charge no VAT and carry the statutory exemption note.
The VAT on what you buy is no longer deductible and therefore belongs in your costs gross. An invoice of € 121 is € 121 of cost to you, not € 100 of cost plus € 21 to reclaim. That shifts your cost base noticeably, and it is why the calculation is worth doing before you register.
The exception that gets missed most often
The reverse-charge mechanism applies even without VAT liability. Buy a service from a supplier abroad — a hosting subscription, software, a subcontractor who reverse-charges to you — and the VAT has been shifted to you. You must declare and pay that VAT, and you may not reclaim it as input VAT.
This means that under the scheme you may still have to file a VAT return: one showing only the reverse-charge boxes and the amount payable, with the turnover boxes and input VAT left empty. For goods — not services — an acquisition threshold of € 10,000 per year applies.
What happens if you cross the threshold
If you exceed € 20,000 during the year, the exemption lapses from the supply that crosses the line. From that moment you charge VAT again and file ordinary returns. Turnover before that point stays exempt.
So it pays to keep measuring your turnover against that threshold during the year rather than discovering it afterwards. Accounting software that tracks your cumulative turnover against the € 20,000 makes the difference between switching in time and correcting after the fact.
Updated October 2, 2026. General explanation of the Dutch rules, not tax advice — for your own situation, decide together with your accountant or the Dutch Tax Administration.
Frequently asked questions
Does exempt turnover count towards the € 20,000 threshold?
Not all exempt turnover counts, and which does depends on the type of exemption. Because this differs per situation, this is the point to settle with your accountant or the Belastingdienst before you register.
Can I switch back to the normal VAT rules after registering?
Yes, but the choice binds you for a minimum term. If you deregister, you cannot rejoin the very next year. So calculate several years ahead rather than only the next one.
Can I still reclaim VAT on investments made before joining?
VAT you reclaimed on investments may have to be partly revised when you move to the scheme. This mainly plays out with larger purchases in the years just before the switch; have it calculated before you decide.
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