This month, a new tax ruling on small businesses flushed into the many medias, which is the Small Business Scheme (kleineondernemingsregeling, KOR). This ruling is a new amendment of the existing rules on VAT taxes, which will bring down the VAT taxes to be paid by small undertakings as of 1st January 2020. In some cases, there could be no VAT tax to be paid.
Four main conditions must be met to enjoy this new ruling.
- Being registered in the Dutch Chamber of Commerce as a small business or at least a permanent establishment in The Netherlands.
- The business must be either a one-man business (eenmanszaak) or an entity formed by natural persons, such as partnerships (maatschap or vennotschap onder firma).
- Annual VAT threshold under €1,883 after deducting the input tax (voorbelasting).
- All tax obligations under the Tax Authority and the Custom Administration are up to date, including any exemption.
This KOR ruling does not apply to private limited companies (BV), foundations (stichting), associations and professional partnerships in which one partner is a legal entity.
The calculation of the VAT tax to be deducted is done under two thresholds, respectively €1,883 and €1,345. With VAT due in between €1,883 and €1,345, the tax deductible should be 2.5*(1.883 – (VAT tax declaration 5a – input tax declaration 5b)). With VAT amount falling under €1,345, declaration is needed but the whole amount is not expected to be paid any more. (further information here)
A kind reminder would be to register yourself to the new small business scheme before 20th November 2019, if you haven’t yet. The next step is to apply for the definite VAT deduction, where you can apply the deduction to the last return of this year or the first return of next year. There is also a provisional option that you could apply the deduction monthly or quarterly.
Global Connect Admin B.V. | Xuan Hao