The small business scheme (KOR): VAT-free under €20,000

If your annual turnover is under €20,000, you have a choice that many new freelancers don't realise exists: you can opt to be exempt from VAT under the kleineondernemersregeling (KOR, or "small business scheme"). Instead of charging 21% VAT to your customers and paying it through to the Belastingdienst, you simply don't charge VAT at all — and you don't claim back the VAT on your business costs either. It sounds simple, and it can be a genuine tax saving, but it's not always the right move. This guide explains when the KOR works in your favour and when it costs you money.

Who qualifies for the KOR?#

You're eligible for the KOR if:

• Your annual turnover in the previous calendar year was under €20,000, or
• Your turnover in the current year is expected to stay below €20,000.

Once you've crossed the €20,000 threshold, you lose the exemption unless you drop below it again.

A few important notes:

• The KOR is optional — you're not forced into it. Even if you qualify, you can choose to register for VAT anyway.
• Part-year traders: If you started mid-year, the €20,000 is measured from when you began trading.
• Combined income: If you have both employment and freelance income, only the freelance revenue counts toward the KOR threshold (in most cases).

How the KOR works: the trade-off#

If you opt for the KOR, two things happen:

1. You don't charge VAT to your customers. Your invoices show the net amount only (e.g., €100 instead of €121).
2. You don't claim back VAT on your business purchases. If you buy a €100 laptop with 21% VAT, you pay €121 and can't reclaim the €21.

This is the core trade-off. For many freelancers selling B2C (to private customers), it's a win: your customers don't expect VAT anyway, and your costs stay the same. For anyone selling B2B (to businesses), it's often a loss: businesses expect to reclaim VAT, so a zero-VAT invoice looks suspicious, and you lose the ability to reclaim your own VAT costs.

Worked example: B2C freelancer (KOR benefits)#

You're a personal trainer. Annual income: €18,000 (under the threshold). Your clients are individuals, not gyms.

Without KOR (registered for VAT):

• Client invoice: €100 + €21 VAT = €121 total
• Your gym membership cost: €1,000 + €210 VAT. You reclaim the €210.
• At the end of the year, you've earned €18,000 gross; clients paid the VAT, and you've reclaimed your costs' VAT.

With KOR:

• Client invoice: €100 (no VAT). The client doesn't expect VAT, so they're fine with it.
• Your gym membership: €1,210 (inc. VAT). You can't reclaim the €210.
• Result: You're €210 worse off (the cost you couldn't reclaim).

In this case, the KOR loses you €210. But many personal clients don't care about VAT on the invoice anyway — they're not businesses claiming it back — so your invoices may be easier to sell without VAT shown.

Worked example: B2B freelancer (KOR costs)#

You're a graphic designer. Annual revenue: €19,000 (under the threshold). Your clients are small marketing agencies.

Without KOR:

• Client invoice: €2,000 + €420 VAT = €2,420. The agency's accountant claims back the €420 VAT.
• Your software costs: €500 + €105 VAT = €605. You reclaim the €105.
• You've earned €19,000 gross; clients paid the VAT on the invoice, and you've reclaimed your costs' VAT.

With KOR:

• Client invoice: €2,000 (no VAT). The agency's accountant is annoyed — they wanted to claim back VAT, and now they can't. They may ask for a VAT invoice or take their business elsewhere.
• Your software: €605 (inc. VAT). You can't reclaim the €105.
• Result: You've lost VAT-reclaim ability on costs (€105), AND you may lose business because B2B clients expect VAT invoices.

In this case, the KOR costs you money and client goodwill.

Registering and deregistering (2025 onwards)#

Since 2025, the rules for the KOR have been simplified and relaxed:

• Registration is easier: You can register for the KOR (or deregister from it) multiple times within a year if your turnover fluctuates. Previously, you were locked in for 3 years.
• Deregistration is simpler: If your turnover jumps above €20,000 mid-year, you can request to move to standard VAT registration without waiting for year-end.
• Relief for starters: New businesses that expect to stay below €20,000 can opt in right away without proving past income.

To register for the KOR, you notify the Belastingdienst (usually on your first VAT return or via a form). To deregister, you submit a request to change your VAT status. Check belastingdienst.nl for the current forms and process.

When the KOR makes sense#

• B2C-heavy freelancers: Coaches, therapists, trainers, tutors, artists. Your customers don't resell; they don't expect VAT.
• Low-cost operations: If your business costs are minimal, you're not losing much VAT reclaim.
• Simplicity over tax savings: Some freelancers like the KOR because they never file a VAT return — it's simpler admin.

When the KOR costs you#

• B2B freelancers: Agencies, consultants, freelancers who sell to businesses. Your clients want to reclaim VAT, and you lose that ability.
• High-cost operations: If you invest heavily (software, equipment, training), you lose reclaim rights on all that VAT.
• Growth phase: If you expect to outgrow €20,000 soon, the KOR's lock-in (until 2025, now relaxed) meant a year or two of lost reclaims.

A tax-planning question#

Suppose you're on the KOR with €18,000 revenue and you're offered a big contract for €4,000. Should you take it?

If you take it, your turnover rises to €22,000, exceeding the KOR threshold. Next year, you'll have to register for VAT and start paying/reclaiming. The €4,000 invoice can't be KOR — you'd have to charge 21% VAT, making it €4,840 to the customer (or lower your rate to keep it at €4,000 net, reducing your take).

This is a real decision: do you want the growth, or do you prefer the simplicity of staying under €20,000? There's no right answer — it depends on your business model.

Frequently asked questions#

The KOR is a real break for some freelancers and a trap for others. The decision hinges on one question: do your customers expect VAT, or do they not care? If they're individuals, don't expect it, and don't care about reclaiming it, the KOR is a simplification win. If they're businesses, expect it, and want to reclaim it, the KOR costs you money. Honest self-assessment of your customer base is the key to getting this right. ZZP Belasting tracks your turnover and can flag when you're approaching or crossing the KOR threshold, so you can plan the transition before it becomes a compliance surprise.

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