Source: De Ondernemer.nl
Are you self-employed and your turnover is less than 20,000 euros? Then it's good to know that the small business sales tax scheme is changing as of January 1, 2020. You can choose not to pay VAT and not file a VAT return. To take advantage of the new exemption immediately, you must register with the tax authorities before Nov. 20.
The small entrepreneur scheme (KOR) in the VAT regulations is changing as of Jan. 1, 2020. Instead of the current tax reduction for small business owners, there will now be a VAT exemption. You can use this if your turnover remains below €20,000.
Current regulation
Under the current rules, you deduct the VAT you paid yourself from the VAT you charged your customers. If the amount remaining is less than 1,883 euros, you only have to pay some or none of the VAT. You may also be granted an exemption from administrative obligations.
Exemption
From 2020, a turnover-related exemption from VAT will apply. You can use this if your turnover excluding VAT in a calendar year does not exceed €20,000. Turnover from VAT-exempt services does not count towards the turnover limit. This includes, for example, medical services, sports services and services by writers and journalists.
For whom?
Besides natural persons (sole proprietorships) and partnerships of natural persons such as a partnership or vof, legal persons such as associations, foundations and BVs can also opt for the new KOR. Legal entities are excluded from the current KOR.
Voluntary choice
Whether or not to participate in the new KOR is voluntary, it is not an obligation. You may judge for yourself what works best in your situation by weighing the pros and cons.
The advantage of participating in the KOR may be clear: you no longer have to charge or remit VAT. You no longer have to file a VAT return. That saves on administrative costs.
Do you mainly have private individuals and organizations that cannot offset VAT as customers? With the same sales price as before use of the new KOR, your margin will be higher. Then the new KOR is interesting for you.
Choosing the VAT exemption also has a downside. For business investments or expenses, you cannot offset the VAT paid as withholding tax.
Do you have many business customers? When using the new KOR, you cannot offset VAT on purchases and business expenses. So your "purchase price" will be higher. To keep the same margin you have to increase your selling price-without VAT. For business customers, your product then becomes less interesting.
Small or part-time entrepreneur
An additional disadvantage may be that it is obvious to your customers that you are only a small or part-time entrepreneur with, in any case, less turnover than 20,000 euros. They understand it immediately or you get questions about it and have to explain why you do not charge sales tax.
The choice you make applies for three years or until when you exceed the limit of 20,000 euro turnover. When your turnover exceeds 20,000 euros in a calendar year, you must immediately notify the Tax Office. From that date, you will start filing VAT returns again because the exemption expires. For the next three years you can no longer use this scheme.
Compete?
If you want to be eligible for the new KOR as of January 1, you must register with the Tax and Customs Administration before November 20. Later application is also possible. The effective date will then shift to the next period. That means that you will participate from April 1, 2020.
For more information: consult the website of the Tax Office. Here you will also find some worked out examples.
Source: De Ondernemer.nl
