Netherlands KOR Small Business VAT Scheme: Complete Guide

The KOR (Kleineondernemersregeling) is the Dutch small business VAT exemption scheme that allows entrepreneurs with annual turnover below EUR 20,000 to operate entirely outside the regular VAT system. If you qualify and opt in, you do not charge BTW (the Dutch term for VAT) on your invoices, you cannot reclaim input VAT on business purchases, and you are not required to file periodic VAT returns with the Belastingdienst. As the Dutch Chamber of Commerce (KVK) explains, under the KOR, Dutch entrepreneurs with annual turnover below EUR 20,000 are exempt from charging, paying, and filing VAT — and since January 2025, the scheme extends cross-border with a EUR 100,000 EU-wide turnover cap across all 27 EU member states.

For ZZPers, freelancers, and micro-entrepreneurs registered with the KVK (Kamer van Koophandel), the Netherlands KOR small business scheme can meaningfully reduce administrative burden. Instead of tracking output VAT, filing quarterly or monthly returns, and maintaining detailed BTW records, KOR participants handle invoicing and bookkeeping without VAT obligations altogether. Your prices become final prices — what you quote is what your client pays, with no VAT line item.

That administrative simplicity comes with a fundamental trade-off. Because you sit outside the VAT system, you lose the right to deduct input BTW on everything you buy for your business: software subscriptions, equipment, professional services, office supplies. For businesses with minimal expenses, this trade-off is negligible. For those investing heavily in tools or inventory, the lost deductions can exceed the administrative savings.

The scheme targets a specific profile: small businesses and solo entrepreneurs whose revenue stays comfortably under the EUR 20,000 threshold. It is not designed for rapidly growing companies or businesses with significant B2B client bases where VAT-inclusive pricing creates friction. Understanding whether the KOR fits your situation requires looking beyond the headline exemption to how it interacts with your specific cost structure, client mix, and growth trajectory. This guide covers eligibility (including the 2025 reforms most English sources miss), exactly what must and must not appear on a KOR invoice, and a structured framework to determine whether the KOR actually saves or costs you money.

The KOR underwent significant reforms in January 2025 that changed both eligibility rules and participation terms, including the removal of the 3-year minimum commitment and the introduction of a new EU-wide turnover cap.

KOR Eligibility Requirements and the 2025 Reforms

Before you can benefit from the KOR, you need to confirm you actually qualify. The rules are specific, and the January 2025 reforms introduced new conditions that most English-language sources haven't caught up with yet.

The Core Threshold

The fundamental requirement is straightforward: your annual turnover must stay below EUR 20,000 (excluding VAT). But there's a detail many entrepreneurs miss — this threshold applies to both the current calendar year and the previous one. If you earned EUR 18,000 last year but are on track for EUR 22,000 this year, you no longer qualify. Both years must stay under the ceiling.

Turnover here means the total value of your goods and services before VAT. It includes all taxable supplies, certain exempt supplies, and services subject to the reverse-charge mechanism.

The New EU-Wide Cap (2025 Reform)

Starting January 2025, the Netherlands aligned the KOR with the broader EU SME VAT exemption framework. This introduced a second turnover ceiling: your total turnover across all 27 EU member states must remain below EUR 100,000.

For a freelance designer based in Amsterdam who only invoices Dutch clients, this changes nothing in practice. But if you're a ZZP consultant billing clients in Germany, Belgium, and France alongside your Dutch work, your combined EU revenue now matters. Exceed EUR 100,000 across all member states and you're disqualified from the KOR regardless of what your Dutch-only turnover looks like.

Who Can Apply

You must be established in the Netherlands and registered as an entrepreneur for VAT purposes with the Belastingdienst (Dutch Tax Authority). One notable exception: if your annual turnover falls below EUR 2,200, you can use the KOR without a KVK (Chamber of Commerce) registration. This covers very small-scale activities — occasional freelance work, hobby businesses generating modest income, or side projects that haven't scaled yet.

The KOR is not automatic. This is one of the most common misconceptions among expats and new entrepreneurs. Unlike some tax benefits that apply by default, you must formally submit an application to the Belastingdienst. Simply having turnover below the threshold does not exempt you from charging VAT. Until your application is approved, you remain in the regular VAT regime.

What Changed in January 2025

The 2025 reforms went beyond the EU-wide cap. Several changes directly affect how the scheme works day-to-day, and they're underreported in English-language sources:

• The 3-year lock-in period is gone. Under the old rules, once you opted into the KOR, you were committed for a minimum of three years. That restriction has been removed entirely. You can now opt out at any time if your circumstances change — if you land a large B2B client who needs to reclaim VAT, for example, you're no longer trapped.
• The EUR 100,000 EU-wide turnover cap applies across all member states, as described above. This is part of the EU's harmonized approach to small business VAT exemptions.
• A new "EX" prefix identification number may be issued to KOR participants. This replaces or supplements the standard BTW identification number and signals your VAT-exempt status to trading partners and tax authorities across the EU.

What Happens If You Exceed the Threshold

This is where the KOR carries real financial risk. If your turnover crosses EUR 20,000 during a calendar year, you don't simply start charging VAT from that point forward. Instead, you must retroactively charge VAT on all transactions from the start of that year.

In practice, that means going back to every invoice you issued since January 1st and accounting for the VAT that should have been charged. Depending on your client mix and contract terms, you may need to absorb that cost yourself — particularly with B2C customers who won't expect a supplementary VAT invoice months after the original transaction.

If you're tracking toward EUR 16,000 or EUR 17,000 by mid-year, pay close attention. A few good months could push you over the line, and the consequences are retroactive, not prospective.

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How the KOR Changes Your Invoice Requirements

Once you opt into the KOR, your invoicing obligations shift substantially. The most fundamental change: you do not charge VAT (BTW) on your invoices. No VAT rate, no VAT amount, no BTW line item. These must not appear anywhere on the document.

What surprises many new KOR participants is that you are not required to issue invoices at all under the scheme. The KOR exemption removes the legal obligation to send invoices that normally applies to VAT-registered businesses. That said, most freelancers and small business owners continue issuing invoices anyway for practical reasons: your clients expect them, your bookkeeping depends on them, and your bank records are cleaner with proper documentation backing each payment.

The Mandatory Exemption Statement

When you do issue an invoice under the KOR, one element is non-negotiable. Every invoice must carry this specific Dutch legal text:

"Factuur vrijgesteld van OB o.g.v. artikel 25 Wet OB"

This translates to: "Invoice exempt from OB (Omzetbelasting) pursuant to article 25 of the Wet OB (Dutch VAT Act)." For international clients, you may include an English equivalent alongside or instead of the Dutch version.

This statement serves a clear purpose. It tells your client why there is no VAT on the invoice and provides the legal basis under Dutch law. Without it, a client's accountant may flag the invoice as incomplete or assume you made an error by omitting VAT.

What a KOR Invoice Should Include

The standard Dutch invoice requirements that apply to regular VAT-registered businesses do not apply to you as a KOR participant. Your invoicing is simplified. At minimum, a KOR invoice should contain:

• Your business name (and contact details)
• Invoice date
• Description of the goods or services provided
• Total amount (a single figure, with no VAT breakdown)
• The exemption statement referenced above

Notice what is absent from this list. A regular Dutch invoice requires your BTW-id (VAT identification number), the applicable VAT rate, a separate VAT amount, sequential invoice numbering per specific rules, and several other fields prescribed by the Belastingdienst. Under the KOR, these requirements fall away.

In practice, a KOR invoice from a freelance consultant might look like this: the business name and address at the top, followed by the invoice date (15 March 2026), a description ("Marketing consulting services, February 2026"), and the total amount (EUR 1,500). At the bottom, the mandatory statement: Factuur vrijgesteld van OB o.g.v. artikel 25 Wet OB. No BTW-id, no VAT rate line, no separate VAT amount — just the service, the price, and the exemption text.

Practical Transition Tips

If you are switching from regular VAT registration to the KOR, update your invoice template before your KOR period begins. Remove all VAT-related fields and add the exemption statement. Sending even one invoice with a VAT line after your KOR start date creates confusion and potential compliance issues.

Keep in mind that KOR invoice requirements are specific to the Netherlands. Other European countries operate under entirely different frameworks. Switzerland's QR-bill invoicing requirements, for instance, follow a structured payment-integration model that bears little resemblance to Dutch invoicing conventions, and Austria's Kleinunternehmer invoice rules impose their own mandatory exemption wording and field requirements that differ from the Dutch KOR format. If you work across borders, verify each country's rules independently rather than assuming any consistency.

Limitations and Trade-Offs of Choosing the KOR

The KOR removes your VAT obligations, but it also removes several tools that VAT-registered businesses rely on. Before opting in, you need a clear picture of what you give up.

No Input VAT Recovery

This is the trade-off that matters most for the majority of businesses considering the small business scheme Netherlands VAT exemption. When you operate under the KOR, you cannot reclaim BTW on any business purchases. Every euro of VAT you pay on equipment, software subscriptions, office supplies, professional services, and workspace costs is a final cost to your business.

For a freelance translator working from home with minimal expenses, this is rarely a problem. For a consultant spending EUR 3,000 per year on coworking space, professional software, and accounting services (with roughly EUR 630 in BTW), the lost deductions start to add up. The question becomes whether the administrative time saved by the KOR is worth more than the input VAT you can no longer reclaim.

No Reverse-Charge Mechanism

KOR participants cannot use the reverse-charge mechanism (verlegde BTW) for cross-border B2B transactions. Under normal VAT registration, when you sell services to a business in another EU country, the VAT obligation shifts to your customer through reverse charge. This keeps things clean for both parties.

Without access to reverse charge, your international B2B dealings become more complicated. Foreign business clients accustomed to standard intra-community VAT procedures may find it awkward or unfamiliar to work with a supplier who sits outside the VAT system entirely.

Other Restrictions and Common Misconceptions

Several additional rules can disqualify you from the KOR or catch new participants off guard:

• Real estate exclusion: If you rent out commercial property and have opted for VAT-liable rental (belaste verhuur), you cannot use the KOR. This exclusion is absolute.
• The herzieningsregeling (revision rule): Your application is blocked if you claimed more than EUR 500 in VAT deductions on capital goods within the previous five years (ten years for real estate). This prevents businesses from claiming large deductions and then switching to the KOR. If you recently bought expensive equipment or renovated a property while VAT-registered, calculate your prior deductions carefully.
• Other taxes remain: The KOR is a VAT exemption only. You still owe income tax (inkomstenbelasting) on business profits, mandatory health insurance contributions (zorgverzekeringswet), and any applicable social contributions. The KOR removes your BTW obligations, not your broader tax burden.

Professional Perception in B2B Markets

Operating without a VAT number can signal "hobby business" to certain clients. In industries where VAT registration is the norm, such as IT consulting, legal services, or architecture, some B2B buyers may hesitate to engage a supplier who appears to fall below the professional threshold. This is a soft cost, but in competitive markets it can influence whether you win or lose contracts.

The Threshold Risk Zone

Perhaps the most dangerous trade-off sits near the EUR 20,000 ceiling. If your turnover exceeds the threshold during the year, you must charge VAT retroactively on all revenue from the start of that calendar year. You cannot register for VAT going forward the way you might under other systems.

This differs sharply from how other countries handle similar thresholds. Under UK VAT invoice compliance rules, for instance, exceeding the registration threshold triggers future obligations rather than retroactive ones. The Dutch approach means that a business hovering around EUR 18,000 to EUR 19,000 in annual turnover carries real financial risk. One unexpectedly good month could trigger a VAT bill on revenue you already invoiced and collected without VAT.

If your projected turnover sits within a few thousand euros of the limit, the KOR may create more financial exposure than it eliminates.

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How to Apply for the KOR with the Belastingdienst

Deciding the KOR is right for you is one step. Actually enrolling requires a formal application to the Belastingdienst (Dutch Tax Authority). Meeting the turnover threshold alone does not place you in the scheme automatically.

Timing Your Application

Your application must reach the Belastingdienst at least four weeks before the start of the tax quarter in which you want the KOR to take effect. Dutch tax quarters follow the standard calendar:

• Q1: January 1
• Q2: April 1
• Q3: July 1
• Q4: October 1

If you submit your application on March 10, for example, you miss the four-week window for Q2 (which starts April 1). Your KOR status would begin Q3 at the earliest.

What You Need to Submit

You can apply through the Belastingdienst website (Mijn Belastingdienst Zakelijk) or by post. If you are an expat or non-Dutch speaker, note that the online portal has some English-language support, though much of the documentation is in Dutch. An English-speaking tax advisor (belastingadviseur) can help navigate the process. The application asks for:

• Your BTW-id (VAT identification number)
• Your KVK number (Kamer van Koophandel registration), if applicable
• Your expected annual turnover for the relevant period

Entrepreneurs who are already registered for VAT and filing regular returns cannot simply stop submitting returns. You must formally apply for the switch to KOR status. Ceasing to file without approval will trigger compliance issues with the Belastingdienst.

After Approval

Once the Belastingdienst processes your application, you will receive written confirmation of your KOR status along with the effective start date. From that date forward, you stop charging VAT on your invoices, stop filing periodic VAT returns, and lose the ability to reclaim input VAT.

Opting Out Again

Under the 2025 reforms, the previous three-year lock-in period no longer applies. You can deregister from the KOR at any time by notifying the Belastingdienst. The same four-week-before-quarter-start rule governs deregistration timing. This flexibility means you can exit the KOR if your business circumstances change, such as landing a large B2B client who needs you to charge VAT, without waiting years for the commitment period to expire.

Other Compliance Obligations

KOR status exempts you from VAT filing, but it does not exempt you from broader Dutch compliance requirements. You are still required to maintain proper financial records, and depending on your business structure, you may have Dutch audit file (XAF) reporting obligations or income tax filing duties. Treat KOR as a VAT simplification, not a blanket exemption from tax administration.

KOR or Regular VAT: Making the Right Choice

The rules are clear. The question is whether they work in your favor. Choosing between KOR and regular VAT registration comes down to two variables: who pays your invoices and how much you spend on your business.

When Your Customers Are Consumers (B2C)

If most of your revenue comes from private individuals, the KOR delivers a genuine financial advantage. Consumers cannot reclaim VAT, so the 21% tax is a real cost to them. Under the KOR, you can either lower your prices to undercut VAT-registered competitors or keep your prices the same and pocket the difference as margin.

A freelance language tutor charging EUR 60 per hour illustrates this well. Without the KOR, that rate becomes EUR 72.60 including 21% VAT for the student. With the KOR, the student pays EUR 60 flat. The tutor is more price-competitive without earning less. The same logic applies to market vendors, personal trainers, massage therapists, and anyone else whose clients are everyday consumers.

For B2C businesses under the turnover threshold, the KOR is almost always the right call.

When Your Customers Are Businesses (B2B)

The calculus shifts when you invoice other businesses. A freelance designer billing an agency EUR 5,000 plus EUR 1,050 VAT creates no real cost for that agency, because the agency reclaims the EUR 1,050 on its own VAT return. Whether you charge VAT or not, the net cost to your client is the same EUR 5,000.

This means the KOR does not give you a pricing edge in B2B markets. What it does give you is less paperwork. No quarterly VAT returns, no tracking output and input tax, no reconciling VAT accounts. For an IT consultant billing two or three corporate clients per quarter, that administrative simplification has real value, even if it does not affect what clients pay.

The trade-off: you lose the ability to reclaim VAT on your own purchases. If your business expenses are minimal, that is a fair exchange.

When You Have Significant Business Expenses

This is where the KOR can cost you money. Every euro of VAT you pay on equipment, software subscriptions, materials, or professional services is a euro you cannot recover under the KOR.

Consider a freelance photographer who spends EUR 8,000 on a new camera body and lenses. On a regular VAT registration, she reclaims EUR 1,680 in input VAT. Under the KOR, that EUR 1,680 is simply an additional business cost. If her total annual turnover is EUR 18,000, the lost VAT reclaim alone represents over 9% of her revenue.

Run the numbers before you decide. Add up the VAT on all your business purchases over a typical year. If that figure exceeds a few hundred euros, the Netherlands VAT exemption for small businesses may save you time but cost you more than it saves.

The Strongest Case for KOR

The ideal KOR candidate has a clear profile:

• Turnover well below EUR 20,000 with no realistic prospect of exceeding it
• Predominantly B2C clients who bear the full cost of VAT
• Minimal deductible expenses, meaning little input VAT to reclaim
• Limited appetite for administration, preferring to spend time on billable work

A freelance writer earning EUR 15,000 per year from consumer clients, working from home on a personal laptop with no significant equipment purchases, fits this profile precisely. The KOR eliminates VAT administration entirely with virtually no financial downside.

Threshold Risk and the 2025 Flexibility Factor

If your turnover is trending toward EUR 20,000, proceed cautiously. Exceeding the threshold triggers retroactive VAT obligations that can create a significant unexpected liability. Businesses consistently earning EUR 17,000 or EUR 18,000 should either build in a comfortable safety margin or consider whether regular VAT registration provides more predictability.

The reassurance: with the 3-year lock-in period removed in 2025, you can opt out of the KOR at any quarter's start if your circumstances change. Growing faster than expected? Switch to regular VAT. Dropped well below the threshold after losing a client? Opt back in. This flexibility reduces the cost of getting it wrong, but switching mid-year still means adjusting your invoicing and potentially confusing clients. Make a considered choice, but know that it is no longer an irreversible one.