VAT Rates, Exemptions and KOR

PublishedMarch 16, 2026

UpdatedMarch 23, 2026

ByJolande Geerts

Short answer

In the Netherlands the main VAT rates are 21%, 9% and 0%, but some activities are exempt instead of zero-rated. Small businesses can also choose the KOR, a VAT exemption scheme that can reduce administration but also blocks ordinary input-VAT deduction.

For expats, the right answer starts with the activity itself, not with turnover or bookkeeping software. First classify the supply, then decide whether KOR, ordinary VAT filing or a special exception is the right route.

Who this article is for

expats running a Dutch sole proprietorship, freelance practice or small BV
founders who need to know whether they should charge VAT at all
business owners comparing ordinary VAT filing with the KOR

Start with the activity, not with the turnover

Business.gov.nl explains that the Dutch VAT system works with three rates: 21%, 9% and 0%. The general rate of 21% applies unless a reduced rate, zero rate or exemption is specifically available.

Examples on the official pages show that some goods and services can fall under 9%, and certain cross-border supplies can fall under 0%. The 0% rate is still part of the VAT system. That point matters later when you look at deduction rights.

Exempt is not the same as 0%

This is one of the most important practical distinctions.

a 0% rate usually keeps you inside the VAT system
an exemption often means you do not charge VAT for that activity in the ordinary way

Why that matters: if you are in a 0% situation, input VAT recovery can still be available under the normal rules. If you are exempt, the right to deduct VAT on costs can be limited or blocked. So two businesses can both issue invoices without charging ordinary VAT, while their deduction position is completely different.

The KOR: what it does and who can use it

Belastingdienst states that the KOR is a VAT exemption for entrepreneurs established in the Netherlands with turnover of no more than €20,000 per calendar year. It can apply to sole proprietors, partnerships and legal entities such as associations, foundations and BVs, as long as the conditions are met.

If you use the KOR, you:

do not charge VAT to customers
usually do not file VAT returns
cannot reclaim VAT on business costs and investments

That makes the KOR attractive for some low-cost service businesses, but a poor fit for businesses that expect equipment purchases, startup costs or other meaningful VAT-heavy spending.

KOR is a trade-off, not a default upgrade

Business.gov.nl explicitly warns that the KOR is not always financially beneficial. That is especially relevant for expats who expect setup costs, technology purchases, fit-out costs or other early investments.

There is a second practical risk: when you start or end participation in the KOR, prior VAT deductions may need to be reviewed. Belastingdienst gives concrete examples where entrepreneurs must reassess earlier deducted VAT because their activities become exempt under the KOR.

Application timing and what happens if turnover rises

You apply for the KOR digitally through Mijn Belastingdienst Zakelijk. Business.gov.nl says you should apply at least 4 weeks before the start of the next return period.

If your turnover later exceeds €20,000, you must notify the Tax Administration immediately and ordinary VAT obligations return. So the KOR is not something you choose once and then ignore.

Filing and bookkeeping if you are not in the KOR

If you stay in the ordinary VAT system, Business.gov.nl explains that quarterly filing is common, although monthly or annual filing can also exist in some situations. You generally settle VAT by offsetting VAT received from customers against deductible VAT on business purchases.

The VAT-return guidance also highlights a few operational points that expats often underestimate:

you need the correct VAT rate before you invoice
input VAT deduction usually requires a compliant invoice and business use
year-end corrections can be needed for private use of business goods or services

2026 change worth flagging now

The Business.gov.nl VAT-rates page notes that overnight accommodation moved from 9% to 21% from 1 January 2026. That is exactly the kind of rule change that can make an old spreadsheet or copied invoice template wrong.

If your business touches hospitality, accommodation or vouchers linked to overnight stays, this should be checked explicitly rather than assumed.

Common expat scenarios

Freelancer with almost no costs

A freelancer with mostly private customers and very low costs may find the KOR attractive because the admin reduction can outweigh the lost VAT deduction.

Startup with equipment purchases

A new business that expects laptops, machinery, furniture or fit-out costs often needs a different answer. The inability to deduct input VAT can make the KOR expensive.

Mixed or cross-border activity

If you sell cross-border, use platforms, or work partly inside and outside the EU, do not assume the KOR removes all VAT questions. In some cases you still need one-off VAT reporting or separate review of the transaction type.

What to do now

classify each service or product before deciding on a VAT rate or exemption
check whether you are comparing a real exemption with a 0% rate, not mixing them up
run the KOR decision on both turnover and expected input-VAT recovery
apply for KOR early enough if you choose it, and monitor turnover during the year
keep invoices and bookkeeping aligned with your actual VAT position from day one

Common mistakes

assuming 0% VAT and exempt supplies have the same consequences
choosing the KOR based only on turnover and not on expected investment costs
forgetting that prior VAT deductions may need review when starting or ending KOR
using outdated rate assumptions for sectors affected by 2026 changes

Official sources

Tags:

Tax