Small businesses scheme

If you are based in the Netherlands and your normal taxed turnover is not higher than €20,000 per year, then you are eligible for this. You do not have to add the turnover that is exempt from VAT (not to be confused with the 0% rate, which often applies to goods and services provided abroad) to this. Exempted goods or services include compositions and teaching children.

If you apply for the small businesses scheme, you no longer charge VAT. This means that you no longer specify this on your invoice. Do state on your invoice that you are using the small businesses scheme with this sentence: ‘Invoice exempt from OB due to. Article 25 OB Act’. When you no longer pay VAT to the Dutch Tax and Customs Administration, you can no longer claim back input tax. You are also indemnified from administrative obligations for the VAT, so you no longer file any VAT returns. If your turnover (on which you are liable to pay VAT, so not the exempted turnover) exceeds €20,000 in a year, the exemption ceases to apply and you can no longer make use of the small businesses scheme. You need to opt out. From that moment on, you have to charge VAT again. (Previously you registered for three years, this expires in January 2025.)

From 2025 there will be a European variant of the KOR. You apply for a VAT exemption for one or more EU countries to which you supply. So you choose which countries the exemption applies to. You then do not charge VAT to customers in these EU countries, but you are also no longer allowed to deduct VAT from the costs you incur for these international deliveries.

Conditions
Your total annual turnover in all EU countries, including the Netherlands, may not exceed €100,000. You must also take into account the turnover limit of the country where you want to apply the VAT exemption. An important difference with the KOR is that with the EU-KOR you must declare your total EU turnover to the tax authorities every three months.

Whether the small businesses scheme is a sensible choice for you depends on the costs that you incur, who your customers/clients are and how you keep your accounting records:

• Financial consequences
  If you participate in the small businesses scheme, you will no longer charge VAT. You will also not deduct the VAT on business expenses and investments. Whether this is financially beneficial depends on your situation. Are you planning on making a lot of investments soon? In that case, it may be favourable to be able to deduct VAT and not, therefore, to participate in the small businesses scheme.
   
• Who are your clients?
  If your clients can deduct the VAT that you charge, then they pay back the VAT paid. In that case, whether your invoice is inclusive or exclusive of VAT doesn’t make any difference in terms of the costs. If your clients cannot deduct the VAT, the VAT will increase the price. If you do not charge any VAT, it will be cheaper for the client. If you keep the price the same for clients who cannot deduct VAT, you will keep that amount (equal to the VAT) yourself and therefore you will have more turnover.
   
• Accounting records
  Not having to worry about the administrative obligation can save you some time. If you previously outsourced you turnover tax return, you will not only save time, but also costs.
   
• Does your turnover mainly consist of exempt services?
  Then the KOR can save you time and there will not be a big difference in what you can claim back in input tax, because you already had to recalculate the VAT, you already received little back in input tax.