If you run a small business in the Netherlands, you have probably come across the term KOR. It is a simplified VAT scheme that in some situations can significantly facilitate running a business. For companies that also operate outside the Netherlands there is additionally EU-KOR, the EU version of this scheme.
What is KOR?
KOR, or Kleineondernemersregeling (small business VAT scheme), is a system in which the entrepreneur does not add VAT to their invoices. This means that:
- the client pays only the net amount,
- the entrepreneur does not pay VAT to the Belastingdienst (Dutch Tax Administration),
- does not file VAT returns,
- but at the same time has no right to deduct VAT on costs and business purchases.
KOR can be used by entrepreneurs whose annual turnover does not exceed €20,000.
When can KOR be a good solution?
KOR most often works well when:
- you run a small business,
- you have mainly private clients,
- your business costs are not high,
- you are not planning major investments,
- you care about simpler accounting and fewer administrative obligations.
In such cases, KOR can really simplify running the company and reduce formalities.
When KOR will not be beneficial?
KOR is not always the best choice. It may not be worth it if:
- you incur high costs with VAT,
- you are planning to buy more expensive equipment or a car,
- you mainly cooperate with other companies,
- your turnover is growing fast and approaching the limit.
In such a situation, the lack of the possibility to deduct VAT may mean higher costs of running the business.
What is EU-KOR?
EU-KOR is a solution for entrepreneurs who also conduct business in other EU countries. The scheme allows you to use VAT exemption in one or several EU countries without the need to register for VAT there.
Under EU-KOR:
- you do not charge VAT to clients in the countries covered by the scheme,
- you do not deduct VAT on costs in those countries,
- you do not file local VAT returns there,
- you file one quarterly turnover statement in the Netherlands.
The conditions include having the company's seat in the Netherlands and a total turnover across the EU of up to €100,000 per year.
What to pay attention to?
Both KOR and EU-KOR can be a good solution, but not in every situation. Before making a decision, it is worth analysing:
- the structure of clients,
- the level of costs and VAT to be deducted,
- company development plans,
- expected turnover in the coming years.
A well-chosen VAT scheme allows you to avoid unnecessary costs and simplify running the business, while a poorly thought-out decision can have the opposite effect.
Got a similar situation?
If you want to check whether KOR makes sense in your company, write to us
In practice, what matters most is turnover, clients and planned costs. A short consultation usually quickly shows whether the simplification will really pay off.