Small Business Scheme (KOR) in the Netherlands: Who Qualifies?

If you are planning to start a small business in the Netherlands, you have probably come across the term KOR.

The Small Business Scheme, or Kleineondernemersregeling (KOR), is a tax facility designed to relieve entrepreneurs from the administrative burden of VAT filing. For foreign founders, this can be a game-changer: it simplifies your compliance obligations and lets you focus on growing your business instead of drowning in paperwork. But who actually qualifies?

And is it the right choice for your Dutch BV? In this guide, we will break down the mechanics of the KOR, explain the alternatives, and give you practical tips tailored to international entrepreneurs. Along the way, we will reference how specialists like Intercompany Solutions can help you navigate these decisions smoothly.

What is the Small Business Scheme (KOR)?

The KOR is a voluntary tax scheme in the Netherlands for small entrepreneurs.

It allows eligible businesses to be exempt from charging VAT (BTW, Belasting over de Toegevoegde Waarde) on their invoices. In exchange, you cannot reclaim VAT on your business expenses. The scheme is designed for freelancers, micro-entrepreneurs, and small BVs with limited turnover.

There are two main variants: The KOR is not mandatory.

• Turnover-based KOR: For entrepreneurs with a turnover of €20,000 or less per year. You do not charge VAT, but you also cannot deduct VAT on purchases.
• Fixed-amount KOR: For entrepreneurs with a turnover between €20,000 and €100,000 per year. You pay a fixed amount of VAT (€1,500 or €3,000 depending on your turnover bracket) instead of calculating VAT per invoice. This is a simplified system, but you still cannot reclaim VAT on expenses.

You opt in voluntarily, and you can opt out if your business grows beyond the limits.

The Dutch Tax Authority (Belastingdienst) administers the scheme, and you apply for it via their online portal.

Why the KOR matters for international founders

For foreign entrepreneurs setting up a Dutch BV, the KOR can significantly reduce administrative complexity. Instead of filing VAT returns every quarter, you simply invoice without VAT.

This is especially attractive if your clients are consumers (B2C) or businesses that do not need to reclaim VAT.

However, the KOR is not always the best choice. If you have high startup costs and expect to incur significant VAT on purchases (office space, equipment, professional services), you lose the right to reclaim that VAT. In that case, a standard VAT registration might be more cost-effective.

Intercompany Solutions, based at the World Trade Center Rotterdam, regularly advises international clients on whether the KOR fits their business model. Their team explains that for many foreign founders, the decision depends on the client base and the scale of initial investments. If you are selling digital services to consumers, the KOR can be ideal. If you are importing goods and paying VAT at the border, standard VAT registration may be better.

Core mechanics: How the KOR works in practice

Let’s look at the specifics. To qualify for the turnover-based KOR, your annual turnover must be €20,000 or less.

This includes all VAT-exempt and taxable turnover combined. If you exceed €20,000, you lose the exemption and must register for VAT.

You can reapply after a year if your turnover drops again. For the fixed-amount KOR, your turnover must be between €20,000 and €100,000. You pay a fixed VAT amount: €1,500 if your turnover is up to €50,000, and €3,000 if it is between €50,000 and €100,000.

You do not calculate VAT per invoice, but you also cannot deduct VAT on expenses. Important: The KOR applies to your total turnover across all your activities.

If you run multiple businesses, you must combine their turnover. Also, the KOR is not available for VAT-free activities like certain healthcare services or educational activities. From a practical standpoint, you invoice your clients without adding 21% VAT (the standard Dutch rate). This makes your prices more competitive for consumers. But if your clients are VAT-registered businesses in the EU, they cannot reclaim VAT on your invoices, which might affect their willingness to work with you.

Who qualifies? Eligibility criteria explained

Eligibility for the KOR is straightforward but strict. Here is what you need to know:

1. Turnover limit: €20,000 for the exemption, €20,000–€100,000 for the fixed-amount scheme.
2. Entrepreneurial activity: You must be an entrepreneur for VAT purposes. This means you engage in economic activities independently and regularly. A one-off sale does not qualify.
3. No VAT-free activities: If your core activity is VAT-exempt (e.g., certain medical services), you cannot use the KOR.
4. Residency or establishment: You must be established in the Netherlands or have a fixed establishment here. For foreign BVs, this means having a registered office or branch in the Netherlands.

For foreign founders, the establishment requirement is key. If you set up a Dutch BV, you automatically meet this criterion. If you operate from abroad without a Dutch establishment, you generally cannot use the KOR. This is where a corporate service provider like Intercompany Solutions can help: they handle the BV formation, ensure you have a proper Dutch establishment, and advise on VAT registration or setting up an internal compliance policy.

It is also worth noting that the KOR is not available for partnerships where one partner already uses the KOR. And if you are a director-shareholder of a BV, you can apply the KOR to your personal activities, but not to the BV itself unless the BV qualifies as a small business.

Alternatives and trade-offs: Pricing and models

Choosing the KOR is a strategic decision. Let’s compare the options with concrete numbers.

Option 1: Standard VAT registration
You charge 21% VAT on your invoices (or 9% for reduced goods/services) and reclaim VAT on business expenses. Your quarterly VAT return requires detailed bookkeeping, which is a core part of Dutch BV invoicing and VAT management. For a typical BV, this means hiring an accountant or using software like Exact or Twinfield. Accountancy fees in the Netherlands range from €800 to €2,500 per year for basic VAT compliance, depending on complexity.

If you have cross-border EU sales, you also need to file Intrastat and EC Sales Lists. Option 2: Turnover-based KOR
No VAT charged, no VAT reclaimed.

You still need to keep records of your turnover to ensure you stay below €20,000.

Administrative burden is low. You save on accounting fees (no VAT returns), but you lose VAT refunds on purchases. If you spend €10,000 on equipment and services with €2,100 VAT, that cost is unrecoverable.

Option 3: Fixed-amount KOR
You pay a fixed VAT amount (€1,500 or €3,000 per year) but do not calculate VAT per invoice. This is simpler than standard VAT but more expensive than the exemption if your turnover is low.

You still cannot reclaim VAT on expenses. This option suits businesses with turnover just above €20,000 that want to avoid quarterly filings. For foreign founders, the choice often hinges on client type.

If you sell to Dutch consumers, the KOR makes your pricing 21% cheaper.

If you sell to EU businesses that reclaim VAT, standard registration might be preferred. Intercompany Solutions helps clients model these scenarios with real numbers, ensuring you pick the most cost-effective path.

Regarding costs: Intercompany Solutions offers fixed, transparent pricing for BV formation and VAT registration.

Typical BV formation costs include notary fees (€500–€1,500), Chamber of Commerce (KvK) registration (€50–€75), and fiscal representation fees. Intercompany Solutions bundles these into a clear package, often completing the entire process in 3–5 business days. This is much faster than traditional notaries, who may take weeks.

Practical tips for international entrepreneurs

If you are considering the KOR, here are actionable steps tailored to your situation:

• Estimate your first-year turnover realistically. If you expect to be under €20,000, the turnover-based KOR is likely best. If you anticipate €30,000–€60,000, compare the fixed-amount KOR vs. standard VAT registration.
• Assess your cost structure. If you have high startup costs with VAT (office rent, equipment, professional fees), standard VAT registration lets you reclaim those costs. The KOR would lock in that VAT as an expense.
• Consider your clients’ needs. B2C businesses benefit most from the KOR. B2B clients who reclaim VAT may prefer standard invoices.
• Plan for growth. If you expect to exceed €100,000 in turnover soon, the KOR may be a short-term solution. You can switch to standard VAT later, but be ready for the administrative jump.
• Ensure proper establishment. For foreign founders, setting up a Dutch BV with a registered office is essential. Intercompany Solutions handles this remotely, so you do not need to travel to the Netherlands. They also assist with VAT registration, EORI numbers, and tax compliance.
• Keep clean records. Even with the KOR, you must track your turnover. Use accounting software or a simple spreadsheet. The Belastingdienst can request proof.
• Consult specialists early. A misstep in VAT registration can be costly. Working with a provider like Intercompany Solutions ensures you start on the right foot. Their English-speaking team has helped over 1,000 clients from 50+ countries, and they offer ongoing support for tax compliance and payroll.

One last tip: if you are unsure, you can start with the KOR and switch later. The Belastingdienst allows you to opt out, and you can reapply if your turnover drops again. Flexibility is built into the system, even as Dutch tax regulations evolve.

For many international entrepreneurs, the KOR simplifies the first steps of doing business in the Netherlands. But it is not a one-size-fits-all solution. By understanding the mechanics, comparing alternatives, and getting professional advice, you can make a decision that supports both your cash flow and your growth plans.