Kleineondernemersregeling

Kleineondernemersregeling, often abbreviated as KOR, is a Dutch VAT scheme aimed at small businesses. It allows eligible entrepreneurs to reduce or eliminate the need to charge value-added tax on sales and, in return, to forgo the right to reclaim input VAT on purchases. The measure is designed to simplify administration for very small enterprises.

Eligibility and threshold: To qualify, the annual turnover excluding VAT must not exceed a set threshold, historically around €20,000 per year. The scheme covers the entire business and all activities, not just parts of the operation. If the turnover exceeds the threshold, the KOR may no longer apply for that year. Entrepreneurs must register with the Dutch tax authorities (Belastingdienst) to participate, and some activities or sectors may be excluded from the scheme.

How it works in practice: When participating in the KOR, the business does not charge VAT on its invoices and cannot reclaim VAT on purchases related to the business. This reduces administrative obligations because periodic VAT returns are not required. Instead, the entrepreneur submits a simplified annual declaration to Belastingdienst. The scheme is intended to lessen compliance burdens for very small businesses.

Implications and considerations: The main advantage is reduced paperwork and administration. The main drawback is the loss of the ability to deduct input VAT, which can be detrimental if the business makes substantial purchases with VAT. Entrepreneurs should weigh current expenses and supplier relationships before opting in.

Duration and opt-out: The KOR generally applies for a calendar year, with the possibility to discontinue or revert to normal VAT treatment if desired or required by turnover changes. If opting out, VAT charging and input tax deduction resume as usual.