Small businesses may be well familiar with the standard VAT scheme for small businesses in the Netherlands. If you're a small Dutch business or have a fixed establishment in the Netherlands, you can apply for VAT exemption, granted that your annual turnover doesn’t exceed EUR 20,000 (excluding VAT). However, recent developments may carry significant changes regarding the scheme for small businesses in terms of who’s eligible to apply.
One of the key potential changes that could impact the scheme occurred on 24 February, when the Dutch government submitted a draft bill implementing the
Amending Directive to the VAT to parliament.
Here's what you need to know about the draft bill and its possible implications for small businesses in the Netherlands.
The small business scheme (KOR) in the Netherlands
The current Small Businesses Scheme (KOR) in the Netherlands is specifically geared towards small business owners, such as start-ups and sole proprietors. This scheme is open to all Dutch legal entities, provided their turnover does not exceed €20,000 The Kleineondernemersregeling (KOR) exempts small businesses from having to:
- charge your customers VAT;
- file VAT declarations;
- deduct VAT on business costs and investments.
Although the KOR scheme carries significant benefits, as with all things VAT-related, businesses can’t get comfortable for too long. Here’s why.
Broadening the KOR scope to other EU member states
The draft bill recently submitted to parliament proposes that small businesses established in another EU member state should also be eligible to apply for the VAT scheme for small businesses in the Netherlands. The draft bill specifies that other EU member states should be allowed to apply for the VAT exemption provided that they have an annual turnover in the European Union that does not exceed EUR 100,000. However, the draft bill also clearly states that the exemption should not apply to
- The purchase of new means of transport that are by or for the account of the seller or customer and that are dispatched or transported to another Member State.
- Immovable property and related rights which a taxable person has used in his company.
Additional key points within the draft bill include proposals that
- Small businesses established in the Netherlands can request the application of the exemption for other EU Member States if their annual turnover in the EU does not exceed EUR 100,000.
- Removing the exemption's minimum application period of 3 years.
Regarding implementation, the draft bill states that the new rules will apply from 1 January 2025 and a request for the application of the exemption must be filed at the latest by 3 December 2024.
How to apply for the small businesses scheme
Businesses can apply for the small businesses scheme by completing the Dutch-language form Melding omzetbelasting kleineondernemersregeling. Take note that businesses are expected to apply at least 4 weeks prior to the start of the next return period.
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