If you are eligible for the small business arrangement, you can find here how much tax reduction you can get for turnover tax. If the VAT that you owe in one year is less than €1883, - you are eligible for the small business arrangement. With this you can get a reduction on the turnover tax / VAT you pay. If you stay under €1345, - in VAT per year, you may not have to pay VAT at all. Note: reducing VAT does not mean that you do not have to pay tax. Don’t forget about your annual income tax too. For the income tax you may be eligible for the self-employed deduction (zelfstandigenaftrek). 

Four times a year (so every quarter) you have to file a VAT return. You fill in online what you have earned in that quarter excluding VAT and what you have spent excluding VAT in that quarter. You then calculate the VAT amount over both amounts (21%) and deduct the VAT amount that you have issued from the VAT amount that you have received. The amount that remains is what you owe in the first instance to the tax authorities. However, if this amount is less than €1883 per year, you are eligible for the small business arrangement (kleineondernemingsregeling), so a reduction on the VAT you have to pay. If you stay under € 1345, - per year in VAT, you do not have to pay it at all.

There are two ways in which you can apply the small business arrangement. You can choose to enter the amount that you would initially owe in the quarterly declaration in the 'reduction according to small business arrangement (vermindering volgens Kleineondernemersregeling)’ box on the last page. If your tax return will then be 0 you do not have to pay VAT immediately. If it turns out at the end of the year that you have exceeded the border of the small business agreement you will still have to pay the VAT.

We advise you to put your VAT aside on a separate account and only look at the end of the year if you are eligible for the small business agreement. If you have exceeded it, you have put it aside and you can pay it right away. If you have remained below it, you can ask the tax authorities to refund your undue VAT.

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