Small Business Scheme (KOR)
The KOR (Kleineondernemersregeling, Small Business Scheme) is a VAT exemption for entrepreneurs with annual turnover below €20,000. If you participate in the KOR, you do not need to charge VAT to your clients, file VAT returns, or remit VAT. This saves a lot of administrative work. There are downsides though: you also cannot reclaim VAT on your own purchases. This makes the KOR mainly attractive for service providers with few business costs, such as freelance coaches, copywriters, or consultants. If you invest a lot or have high business costs, it may be more advantageous to stay outside the KOR. You choose to participate in the KOR by registering with the Tax Authority. The scheme then applies for a minimum of 3 years. If your turnover exceeds €20,000 during this period, you are automatically deregistered and must start charging VAT again.
Example
You are a freelance translator and expect €18,000 in annual turnover. You have few business costs (mainly your laptop and internet). You register for the KOR: you invoice without VAT, don't file VAT returns, and don't need to maintain a VAT administration. Your clients (individuals) pay a lower amount and you have less administration.
Why does this matter?
The KOR is ideal for small entrepreneurs with few costs and turnover below €20,000. It saves administration and makes your rates more attractive for private clients. But calculate carefully: if you can reclaim a lot of VAT on purchases, the KOR may not be beneficial.
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