Quick answer
The KOR is beneficial if your annual turnover stays below €20,000, you primarily serve private consumers and you make few VAT-liable purchases. You then pay no VAT and file no quarterly returns. If your turnover is higher, you sell to businesses, or you make significant investments — the KOR is likely not worth it.
What is the KOR?
The KOR (kleine ondernemersregeling) is a Dutch VAT exemption for businesses. Under the KOR you do not charge VAT to customers, file no quarterly returns, and remit no VAT to the Dutch Tax Authority (Belastingdienst). The trade-off: you also cannot reclaim VAT on your business purchases and investments.
The scheme applies to businesses whose annual turnover does not exceed €20,000 (excluding VAT). This is a hard threshold — once you exceed it, the exemption lapses automatically.
The KOR was introduced in 2020 as a replacement for the old small business scheme (which provided a VAT reduction rather than a full exemption). The €20,000 threshold has remained unchanged since then.
Who is the KOR most useful for?
The KOR works best when two factors combine:
- Low turnover — you structurally earn less than €20,000 per year
- Consumer-facing business (B2C) — private consumers cannot reclaim VAT, so for them it doesn't matter whether you charge it. Your service effectively becomes cheaper for them when you operate under the KOR
Typical KOR users:
- Freelancers in healthcare, welfare or childcare (often partially VAT-liable)
- Creative freelancers, photographers, copywriters with modest turnover
- Coaches and trainers working with private clients
- Small consumer-facing webshops or market stall holders
- Entrepreneurs running a side business alongside employment
Advantages of the KOR
- No VAT returns — no quarterly or monthly filings
- Less administration — no need to track VAT separately on invoices
- Lower price for consumers — your invoice price is VAT-free, which can improve your competitive position in consumer markets
- Simpler invoicing — invoices are simpler; you state "VAT exempt under the small business scheme"
Disadvantages and pitfalls of the KOR
- No VAT reclaim on purchases — the VAT on your purchases (laptop, office supplies, software) is a direct cost. VAT-registered businesses can reclaim this
- Minimum term of 3 years — you are committed for at least 3 years (unless you exceed the threshold). You cannot simply opt out early
- Threshold covers all VAT-liable turnover — even one-off projects count. An unexpectedly large project can push you over the limit
- No VAT on invoices — business clients who can reclaim VAT effectively pay more from you than from a non-KOR competitor (since your gross price is the full cost to them)
- You must still track your turnover — monitoring the €20,000 ceiling remains your responsibility
When is the KOR NOT a good idea?
You sell to businesses (B2B)
If your clients are VAT-registered businesses, they can reclaim any VAT you charge them. For them, it makes no difference whether you charge VAT — the net cost is the same. But since you cannot reclaim VAT on your own purchases under the KOR, you bear those costs directly. In a B2B market the KOR is rarely advantageous.
You make significant investments
Buying a laptop for €1,500, a camera for €2,000 or other equipment? As a VAT-registered business you reclaim the VAT (21%): €315–€420 per purchase. Under the KOR that VAT is a pure cost. On a €5,000 investment you forgo €1,050 in reclaims.
Your turnover is growing quickly
Are you building your business and expect to exceed €20,000 within 1–2 years? It's wiser not to enter the KOR so that you can plan the transition consciously rather than being forced out after just one year.
How to apply for the KOR
Applying for the KOR works as follows:
- Submit a request to the Tax Authority via the form "Melding omzetbelasting kleine ondernemersregeling" (available at belastingdienst.nl)
- The request must be submitted at least 4 weeks before the desired start date — for a January 1 start, apply before December 1
- The standard application window is October–November for a January start
The KOR takes effect from the first complete quarter after approval. You will receive written confirmation from the Tax Authority.
What to write on your invoice under the KOR
As a KOR business you may not show a VAT amount on your invoice. Instead of a VAT line, you write:
If you accidentally include VAT on an invoice, you owe that VAT to the Tax Authority — even without a return.
KOR vs. standard VAT registration: a comparison
| Situation | Without KOR | With KOR |
|---|---|---|
| Charge VAT to clients | Yes (21% or 9%) | No |
| Reclaim VAT on purchases | Yes | No |
| Quarterly VAT return | Yes | No |
| Annual turnover limit | None | Max. €20,000 |
| Minimum term | Exit freely | Min. 3 years |
| Advantageous for consumer clients | Limited | Yes |
| Advantageous for major investments | Yes | No |
What happens if you exceed €20,000?
Once your turnover in a calendar year exceeds €20,000, the KOR lapses automatically from the date of exceeding the threshold. You must notify the Tax Authority yourself and start charging VAT from that moment onwards. VAT is owed on turnover above the threshold.
Note: the €20,000 threshold applies to annual turnover. If you start mid-year, your turnover is annualised. If you earn €12,000 in 6 months, your annualised turnover is €24,000 — above the threshold.
Frequently asked questions
Can a BV (Dutch private limited company) use the KOR?
Yes, legal entities including a BV can apply the KOR provided turnover stays below €20,000. In practice, a BV with such low turnover is unusual — the administrative burden of a BV is considerable regardless.
Does the KOR apply to all VAT rates?
Yes, the KOR covers all turnover that would normally be subject to VAT, regardless of the rate (21%, 9% or 0%). Turnover already legally exempt from VAT (such as healthcare or education) does not count towards the threshold.
Can I exit the KOR early?
No, you are committed for at least 3 years unless your turnover exceeds €20,000. Early exit requires a compelling reason that the Tax Authority accepts — in practice this is rarely approved.
Does turnover from foreign clients count towards the KOR limit?
Yes, in principle revenue from services to foreign clients counts, unless that revenue is not taxable in the Netherlands under VAT rules. This depends on the nature of the service and where the client is established. If in doubt, have this assessed by a tax adviser.