Small Business VAT Exemption 2026: Who qualifies, benefits and pitfalls

The Small Business VAT Exemption (KOR – Kleineondernemersregeling) is the VAT exemption for entrepreneurs with low turnover. If you register, you no longer invoice VAT to your customers and you don't file a VAT return. Sounds great — but there's a catch.

Who qualifies for the Small Business VAT Exemption?

You can register for the exemption if:

• You are established in the Netherlands
• Your expected turnover stays below €20,000 per calendar year
• You haven't already deducted VAT on major investments you made within the review period (5 years for movable property, 10 years for real estate)

You register via the Dutch Tax Authority (Belastingdienst) portal. Once registered, you're locked into the scheme for at least 3 years — that's an important pitfall to watch.

The big advantage: simple and cheaper for your customer

For consumers (B2C), the Small Business VAT Exemption is a major advantage: your invoice is 21% lower than the same invoice from a non-exempt competitor. Are you a personal trainer, hairdresser, or beauty specialist with private clients? Then you can be relatively cheaper without earning less yourself.

The major pitfall: no VAT deduction

As an exempt business, you can no longer deduct VAT on your business purchases. That's the price you pay. For some sectors this is acceptable; for others it's a disaster.

A worked example:

• Freelance photographer buys €5,000 in camera equipment annually + €2,000 in software/subscriptions
• Without exemption: deducts €1,470 VAT on those purchases
• With exemption: that €1,470 is gone

If you're just under the €20k turnover limit, you probably won't make back that loss through VAT-exempt invoices.

When is the Small Business VAT Exemption really beneficial?

• Hobby-to-business transition. You're testing the market, still have minimal business costs.
• Services with low purchase costs. Tutoring, coaching, journalism, translation work.
• Pure B2C. Your customers can't reclaim VAT anyway, so they see your lower price as pure savings.

When is the Small Business VAT Exemption a bad choice?

• B2B entrepreneurs. Business customers don't care about VAT (they get it back anyway). Your "advantage" is invisible to them.
• High purchase costs. E-commerce shop, agency with software stack, photographer with expensive equipment.
• Expecting growth. Above €20k you must return to standard VAT — extra administrative burden.

The €20,000 threshold: watch for breaches

Do you exceed €20k during the year? Then the exemption lapses immediately, and you must invoice VAT again from that point on. That means: send correction invoices to existing clients + convert your invoicing system. A lot of work, so monitor your turnover monthly.

Unsure whether the Small Business VAT Exemption benefits you? Calculate your expected VAT deduction for a year in advance — if it's higher than roughly €2,000, think carefully before registering.