Please note: from 2020 the Small Businesses Scheme will change. Read all about the new Small Businesses Scheme.

4 times a year (every quarter) you must file a VAT return. This means you have to file your earnings and spendings excluding VAT over a period of 3 months. Then you can deduct the paid VAT (for expenses) from the VAT you have received. The amount that remains is what you initially owe the Tax Authorities (also known as the Dutch Tax and Customs Administration).

Do you have to pay less than € 1.883,- VAT in 2019? Then you qualify for a tax reduction thanks to the Small Businesses Scheme. If you stay under € 1.345,- VAT per year, you may not even have to pay VAT at all.
Note: reducing VAT does not mean that you don’t have to pay any tax at all. Also, take your annual income tax into account. You may be eligible for the self-employed person's tax for income tax purposes.

There are 2 ways in which you can apply the Small Businesses Scheme:

1. You can choose to enter the amount that you would initially owe in the box 'reduction according to the Small Businesses Scheme’ (question 5d) on each quarterly tax return which you can find on the last page. Your tax return will be € 0, which means you don’t have to pay VAT immediately. If - at the end of the year - it turns out that you have exceeded the limit of the Small Businesses Scheme, you still have to pay VAT.

2. A less risky option is putting aside VAT on a separate bank account and only check at the end of the year whether you are covered by the Small Businesses Scheme. If you have gone over it, you have already saved the money and can pay it immediately. If you have nevertheless remained below, you can keep the VAT and fill in the discount for the whole year at section 5d 'reduction according to the Small Businesses Scheme’.

Please note: from 2020 the Small Businesses Scheme will change. Read all about the new Small Businesses Scheme.

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