I want to participate in the new Small Businesses Scheme as of 2020
As a FreeFlexer, you are an entrepreneur which will give you the right to an exemption of your tax obligations if you have a maximum turnover of € 20,000. If this is the case, then you can apply for this regulation with the Tax Authority (Belastingdienst). This means that you won’t have to charge your clients any VAT since you won’t have to declare your turnover tax anymore. Since you are no longer receiving VAT, other entrepreneurs also can’t charge you any VAT anymore. Which also implies that any costs you might have made for your company are no longer deductible. The application for this new regulation stands for 3 years. There’s no possibility for an early cancellation unless you will have more than € 20,000 in turnover per year.
I don’t want to participate in the new Small Businesses Scheme.
If you choose not to participate, this will entitle that you declare your taxes once every quarter. In this case, you are allowed to use the amount of VAT you’ve spent on the costs of your company and deduct from your overall taxes (also called input tax).
I used the Small Businesses Scheme in 2019, what will change for me?
Were you using the old regulation? Please keep in mind that this new regulation implies you will need to pay all the VAT you’ve received to the Tax Authorities (Belastingdienst). Be sure to set aside the VAT you receive for the coming turnover tax declaration.
Is the new regulation beneficial for me?
Do you find it difficult to declare your taxes? Through participating in the new regulation you won't have to do this anymore. The only downside to this would be that you can’t deduct tax from any products you may have bought which included VAT.
Once you apply for the new regulation, you do so for 3 years. This means that you won’t be able to deduct any taxes from costs you make during those 3 years. There is no possibility for a premature cancellation or change of regulation. Only at the time where you will earn more than € 20,000 in a year, will you be obligated to cancel this regulation through the cancellation form. You will have to start charging VAT to your clients once again.
You expect to earn around the same amount of turnover next year, as you did over the past year. You won’t be making any new investments for your company. You always choose for the direct payment option from Finqle. These costs come with a VAT fee. In the past year you paid up to € 50,- VAT over the factoring costs. Seeing as you are expected to earn the same amount of turnover this year, you could ask yourself the question: would I want to declare my taxes once every quarter for “x” amount of money?
What are the terms and conditions of this regulation?
There are only a few conditions:
You are a VAT entrepreneur.
Your company is located in The Netherlands.
Your turnover is no higher than € 20,000 per calendar year.
How can I apply for the new regulation?
You can apply for the new regulation through the website of the Tax Authority (Belastingdienst). Be sure to apply within a minimum of 4 weeks before the end of the quarter. The new regulation will then start in the following month. You’ll also receive a confirmation letter from the Tax Authority with the exact starting date on it.
By applying for the new regulation, you will agree to participate a minimum of 3 years. Once you’ve applied for this regulation it’s not possible to cancel within that time. This also goes for a big investment you’d like to deduct your taxes from, that will not be possible within those 3 years.
What if my turnover reaches the € 20,000 maximum?
It’s entirely possible that you will earn more than you initially would have thought. From the moment where you’ve reached the maximum turnover, you will be obligated to charge your clients (also those via Temper) VAT on your invoices once again. You will also need to start declaring your taxes once every quarter again. This is why it’s so important that you communicate this immediately through the cancellation forms of the Tax Authority (Belastingdienst) itself.
Are you in doubt whether you can apply for the new Small Businesses Scheme (KOR)? Have a look at the Dutch Tax Authority (Belastingdienst) website to see if you are one of the people that can apply for this regulation.