Small Businesses Scheme prompts Parliamentary questions

A change effective the first of January 2020 is in the offing for KOR, the Small Businesses Scheme, where it concerns the scheme’s turnover tax aspects, in that the annual turnover maximum – below which the business owner in question enjoys exemption from having to pay turnover tax and satisfying the various administrative obligations – is to be raised to 20,000 euros. In the current situation the minimum annual tax payment amounts to 1,883 euros, up to which amount the business in question qualifies for a rebate. Not all businesses that participate in the current KOR scheme will automatically be admitted to the revised scheme, as there is always a possibility that a business’ turnover tax liability net of input tax could exceed the revised scheme’s annual turnover maximum even though it would have been low enough to render the business eligible for application had the old scheme continued to apply.

Those whose businesses enjoyed exemption from administrative duties under the old KOR scheme will automatically transfer to the revised KOR scheme. It will be up to the owner of any business whose turnover for 2020 is expected to exceed the maximum him or herself to liaise with the Tax and Customs Administration in order to have the latter start generating tax returns.

According to a CJEU ruling dated 29 July 2019 concerning the deployment of KOR by a business owner who had been applying the margin scheme, the turnover calculation in scenarios such as this should be based on transactions rather than profit margins. As this interpretation of the Turnover Tax Directive 2006 applies to all Member States, it will also have to be adhered to where the revised KOR Scheme is concerned. According to the Dutch Junior Finance Minister this will involve neither any adjustment of the statutory regime nor any increase in the new turnover maximum of 20,000 euros.

More to read: Turnover tax measures effective 2020

Dutch version: Kamervragen nieuwe KOR