Are you a small business in the Netherlands? Important tax changes from 1 Jan 2020

If you are a small business based in the Netherlands like Zestee, there are some important tax changes coming into effect from 1 January 2020. Official information from is of course in Dutch:

2020 Nieuwe Kleineondernemersregeling (KOR)

Disclaimer here that I am no expert, and that you must understand and comply with the official information above. The majority of tax advisers will have their own accountant or bookkeeper to assist here. If you’re a native English speaker like me though, this translation below from Diana Oord, Care4Tax could be a useful starting point:

The Small Entrepreneurs scheme (KOR) is going to change 

Modernisation of the Small Entrepreneurs scheme From the 1st of January 2020, the Small Entrepreneurs Scheme (KOR) will be modernised. The new scheme is less complex and will also apply to for example foundations and associations. 

How the current Small entrepreneurs scheme does work (until 1st January 2020) Do you have to pay less than €1.883,- VAT in one year? In that situation, you can qualify for a tax relief or you don’t have to pay VAT at all. This is when the current Small Entrepreneurs scheme is applicable. This current scheme is valid until January 2020. 

How the new scheme will work (from 1st January 2020) If an entrepreneur expects to have a turnover in one year which stays below the limit of €20.000,- per year, he/she can choose to be entirely exempted from VAT, starting on 1 January 2020. 

PLEASE NOTE: In the calculation of the total annual turnover, certain tax-exempted turnover is taken into account as well. Consultation with your tax adviser is therefore advisable! 

The entrepreneur does not charge VAT to his customers and the VAT don’t need to be mentioned anymore on the invoices. The entrepreneur is also relieved from any VAT-tax returns and from the associated administrative obligations as well. On the other hand, the VAT he/she has paid on business expenses, cannot be deducted or claimed back anymore. This new scheme only applies to supplies of goods and services carried out by the entrepreneur in the Netherlands. 

In short, opting for the exemption means the following: 

• No charge of VAT and no indication of VAT on the invoices 

• No need to submit VAT-tax returns 

• Paid VAT on expenses cannot be deducted or re-claimed 

Who can join the new Small Entrepreneurs scheme? 

• You are an entrepreneur regarding to the VAT law 

• You are established as an entrepreneur in the Netherlands. Or you have a fixed establishment here. 

• Your turnover is not exceeding the limit of €20.000,- per calendar year. 

Foundations, associations and BV’s can also participate. 

Consequences when you participate in the Small Entrepreneur scheme 

• You do not deduct/reclaim paid VAT on business expenses and investments. In certain situations, you will have to revise the previously deducted VAT. 

• You do not mention VAT on your invoices. You don’t even have to send invoices anymore. However, you still can send invoices if you want to do so or when your customers request for one. 

• Participation in the new Small Entrepreneurs scheme reduces your administrative obligations for VAT (however not for the Income tax!). No more invoices to send and no more VAT-tax returns to submit. 

Signing up for the new Small Entrepreneurs scheme (KOR) You can register via the request form (on the site of the Tax office) or through your tax adviser. If you want to start directly at 1st January 2020, make sure that request form has been received by the Tax office before the 20th November 2019 or that you notify your tax advisor at the 13th November 2019 at the latest. If you pass your request form after this date, it will take the Tax Authorities 4 weeks to process your registration. 

PLEASE NOTE: Participation in the new KOR is valid for 3 years! After 3 years, your participation will automatically continue. Interim termination is only possible if: 

• Your turnover will exceed € 20.000,- in one calendar year. 

• You are automatically registered as participant of the new Scheme by the Tax Authorities, due to the fact you had already dispensation for your administrative obligations on 31st December 2019. 

It is not possible to decide on a yearly basis whether to participate or not! 

Do you get normally a refund of VAT every year? Or are you planning to invest quite much in the near future? Then this might be a consideration for not participating (yet) in the new Scheme. 

Unsubscribing from the new Small Entrepreneurs scheme (KOR) 

Do you want to unsubscribe from the new Small Entrepreneurs scheme? This can only be done with the unsubscribe form (on the site of the Tax office) or through your tax adviser. There are certain cut of dates for this!

Visit the Belastingdienst website for more information

• Please note that it will take the Tax Authorities 4 weeks to process your deregistration. So, unsubscribe at least 4 weeks before the date you want to deregister! Starting the deregistration is only possible on the 1st day of the return period. 

PLEASE NOTE: Have you opted out? Then you have to wait for 3 year before you can reapply. 

AND THEN THIS: The VAT-identification number will also change! Up til now, the VAT-identification number consists of: NL, the BSN and B.01 added on the end. Since the use of the BSN is no longer allowed under the Privacy Act, all current VAT-identification numbers need to be replaced and therefore every VAT entrepreneur will soon receive a new VAT-identification number. 

PLEASE NOTE: Do not forget to change your VAT-identification number on your invoices, quotations and possibly on your website.

Need more information? Please contact your tax advisor, accountant or https://care4tax.nl/en/

Official information: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/btw/hoe_werkt_de_btw/nieuwe-kleineondernemersregeling/

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