Changes to the Small Business Arrangement (VAT) in 2020

1 year ago

Do you have to pay less than € 1,883 in VAT in 2019? You are probably eligible for a reduction in the VAT to be paid. If it is less than € 1,345, you may not even have to pay VAT at all.  This scheme is called the small business owners arrangement (KOR). Currently, this scheme may only be applied by companies that are driven by natural persons, such as sole proprietorships and vof ‘s.

The new KOR will enter into effect from 2020. This means that you no longer need to charge VAT, but can also no longer deduct it if you have less than € 20,000 in turnover. If you exceed the turnover limit, the scheme will automatically be terminated.

Another difference with the old KOR is that you must first choose to apply the KOR. For 2020, this choice must be made before 20 November 2019. You are then obliged to apply the KOR for 3 years. This can be disadvantageous if you have a loss year in which you have more VAT to reclaim than to pay. In the old KOR, you could still choose to apply this scheme even after the end of the year if it was more advantageous.

If you opt for the KOR in 2020, you no longer need to file VAT returns. However, if VAT is shifted to you, you will have to submit a tax return and this VAT must be paid.

Also note the review period for investments in the past. If you opt for the KOR in 2020, you may have to repay part of the VAT on investments in previous years.

For a large number of old KOR users the new KOR will be no longer interesting and even possibly disadvantageous because one has to choose for a 3 year period in advance. In the old KOR there was still € 1345, – extra income to be enjoyed, which was often untaxed by the low income of the entrepreneur. With the new KOR you cannot get this advantage.

If you are an entrepreneur who mainly sells to private individuals, then the advantage remains. This can even amount to 21% of € 20,000 = € 4,200, – This is only the case if no purchases with VAT are made.

The main advantage of the new KOR is the reduction of  the administrative burden. We advise you to carefully consider the choice for the new KOR.



Stay up to date