The pros and cons of the new KOR tax rule

The pros and cons of the new KOR tax rule

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Do you own a small business? If so, it's important to know about the upcoming KOR tax rule. Blue Umbrella tells us about the pros and cons of this rule. 

On January 1, 2020, the Dutch VAT rules for smaller businesses (Kleine Ondernemersregeling or KOR) will be amended.

Currently, smaller entrepreneurs may qualify for this so-called smaller businesses scheme if the Dutch VAT they need to pay is below €1.883 per calendar year. The new rule will have a more general and discretionary exemption; it will be a full exemption and related to a maximum turnover of €20.000 per annum. Additionally, the KOR will be available for both natural persons as well as for corporate entities, such as a limited liability corporate entity (B.V.).

The rule should lower the administrative burden for smaller entrepreneurs, e.g. for Airbnb landlords. How do you calculate the turnover maximum of €20.000? In short, the turnover concerns all sales in the calendar year that the entrepreneur in the Netherlands realises. Reverse-charged VAT should be taken into account as well.

Potential benefits

Invoices sent after the new KOR has been applied are set without VAT. This can be beneficial, as your price will be lower than your competitors’ who have not applied for the KOR. The price for private individuals will be 21% or 9% lower, as you no longer charge VAT. The last advantage of this rule is that entrepreneurs no longer have to worry about the deadlines for VAT filings. By using the KOR, a lot of entrepreneurs are no longer required to file their VAT each quarter.

Potential negatives

Potentially, there are a few negatives when it comes to this new tax rule:

Increased expenses

Companies that do not apply for the KOR will still charge their customers 21% VAT. This means that if you buy something from a company that does not use the KOR, your expense will increase by 21%. So, you will have to adjust your prices.

No VAT number

Some platforms, such as Shopify, Uber and Amazon, sometimes require you to have a VAT number if you want to sell your products through their platform. Since you will not be able to use your VAT number anymore with the new KOR, this can be a downside for some entrepreneurs.

Administration obligation

There is a misconception that if you use the new KOR rule, you no longer have to keep records. However, it is important to know that if entrepreneurs use the new KOR rule, the administration obligation will continue to exist.

VAT can’t be reclaimed

Finally, it is important to know that VAT cannot be reclaimed from the Dutch Tax Office at the end of a quarter. So, if you have a company with a lot of Dutch expenses, you should know that it is no longer possible to claim back the VAT on these expenses.


If you have successfully applied for the new KOR, you do not have to charge VAT. On the other hand, any VAT charged to you cannot be deducted. The new KOR rule applies for three years. However, if you exceed the maximum turnover, the rule expires automatically.

The choice as to whether you should make use of this ruling is therefore not one that can be easily made. After all, it can determine the future of your business.

For more information on the new KOR rule or other tax-related issues, you can contact Blue Umbrella, they will gladly help you with your choice. 

Viviënne Wormsbecher


Viviënne Wormsbecher

Viviënne Wormsbecher is a tax adviser with Blue Umbrella. Viviënne finished her bachelors in law and is specialized in the field of international tax law. Viviënne regularly provides workshops...

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Irene Palmer Ba... 14:27 | 9 January 2020

What happens if you apply for the KOR rule and exceed the maximum turnover? Do you need to re-calculate your VAT payments for each quarter? If you do not apply for the KOR, can you still benefit from the previous scheme (when the VAT paid is lower than €1.883?

VWormsbecher 16:58 | 29 January 2020

Dear Irene, In this case you will have to notify the Dutch Tax Office that you have exceeded the amount. After this your VAT number will be valid again and your VAT administration will start from that point onward. You won't have to charge the VAT retroactively to your previous clients. Kind regards, Vivienne

MoniaAntinori2 14:08 | 24 March 2021

Dear Viviënne, I would like to apply for the KOR. I am a Fashion Designer and will design a collection for a company in Belgium and one in Turkey. Do I need to charge VAT to them or not? Thank you in advance, Monia

VWormsbecher 14:23 | 24 March 2021

Dear Monia, Could you kindly send an email to [email protected], so we can help you further?

DimitrisThivaios2 19:02 | 6 November 2022

They recently accepted my KOR application. This means that if for example i need to buy a new phone or pc to evolve my business, i cannot get rid of the VAT they have and i will have to pay the full price, like a regular customer?

VWormsbecher 17:09 | 8 November 2022

Dear Dimitris, Thank you for your question. The moment when the KOR has been granted is the moment when you cannot claim back the vat ('btw') anymore. This means that you indeed will have to pay the full price. The letter from the Dutch Tax Office mentions this date. From this moment you can see the full price (incl. vat) as an expense for your business. Kind regards, Vivienne