Entrepreneurs with an annual turnover under € 20,000 may be exempt from paying VAT if they opt for the so called small businesses VAT scheme (“KOR”). In order to participate in this small businesses VAT scheme, an application is to be made with the Dutch tax office at least 4 weeks before the start of the oncoming VAT quarter.
If you are already exempt from paying VAT, your exemption will continue automatically. If you no longer require a VAT exemption or do not qualify for the new exemption rules, you must inform the Dutch tax office.
When applying the small businesses VAT scheme, such entrepreneurs with an VAT exemption no longer charge VAT to their clients. Also, when applying the exemption, such small businesses do not have to file a VAT return, meaning they do not have to pay VAT but can also not deduct VAT. In addition applying small businesses are exempted from keeping a VAT administration.
The exemption of not having to file VAT returns and keeping an administration only applies to goods and services provided within the Netherlands. Small businesses that apply the exemption, will have to continue the exemption for at least 3 years, unless the annual turnover exceeds €20,000. In case of exceeding the tax office must be notified.
New as of 2020 is that legal entities (e.g. the B.V.) are also eligible for the small businesses VAT scheme.
We can assist to check the pro’s and cons of this new VAT exemption and to apply for the new scheme. We can also assist your company with all required tax, legal and accountancy needs.