KOR Decision Guide: How to Calculate Whether It Saves You Money

In my previous articles we looked at: - how the KOR works: KOR (Dutch Small Businesses Scheme): Rules, Requirements and VAT implications - which revenue counts towards the €20,000 threshold KOR Turnover Explained: What Counts Towards the €20,000 Limit?; and - which international VAT obligations may still apply under the KOR KOR and International VAT: The Obligations That Don’t Disappear.

Understanding the rules is important, but it doesn't answer the question most entrepreneurs really care about:

Will the KOR actually save me money?

The answer depends on factors such as: whether your customers benefit from lower prices, how much input VAT you would no longer be able to reclaim, and how much administration you can realistically save. The examples below show how these factors can produce very different outcomes, even for businesses with similar turnover.

Before You Compare

The examples below focus on the ongoing impact of administration costs and VAT recovery.

They do not include:

• possible VAT revision on investments made before joining the KOR;
• VAT obligations relating to international transactions; or
• the effect of planned future investments.

These factors can materially affect the outcome.

For example, an entrepreneur who plans to purchase a laptop, camera, vehicle or other business equipment may lose more VAT recovery under the KOR than the administrative savings are worth.

Similarly, VAT previously reclaimed on recent investments may need to be revised and partly repaid after joining the KOR.

For more information, see:

• KOR and International VAT: The Obligations That Don’t Disappear
• KOR and Previous Investments: When Must You Repay Deducted VAT?

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Assumptions used in all three examples

• Annual turnover remains below €20,000.
• All relevant sales and expenses are subject to 21% VAT.
• Regular VAT bookkeeping costs €80 excluding VAT per month.
• Under the KOR, self-managed bookkeeping software costs €20 excluding VAT per month.
• B2C entrepreneurs pass the VAT exemption on to customers through lower prices.
• Revenue is therefore shown excluding VAT under both systems.
• No adjustment has been made for personal income tax.
• No adjustment has been made for possible VAT revision on previous investments.
• No significant investments are planned during the comparison period.

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Example 1: A B2C Service Provider With Low Costs

Situation

A part-time yoga teacher provides VAT-taxable lessons to private individuals.

• Annual revenue excluding VAT: €12,000
• Other expenses excluding VAT: €500
• VAT on expenses: €105
• Customers: private individuals

Under the regular VAT system, a €100 lesson costs the customer €121. Under the KOR, the teacher can offer the same lesson for €100.

Calculation	Regular VAT system	KOR
Revenue excluding VAT	€12,000.00	€12,000.00
Other deductible expenses	€500.00	€605.00
Bookkeeping or software	€960.00	€290.40
Profit before tax	€10,540.00	€11,104.60

The KOR profit is €564.60 higher.

This is calculated as: - Administrative cost advantage: €960 − €290.40 = €669.60 - Irrecoverable VAT on expenses: €105 - Profit advantage: €669.60 − €105 = €564.60

Conclusion

The KOR provides two benefits:

1. The yoga teacher can offer consumers a lower price.
2. The profit before personal taxes is approximately €565 higher.

This is the type of low-cost B2C business for which the KOR can work well.

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Example 2: A B2B Service Provider With Low Costs

Situation

A freelance consultant works exclusively for VAT-registered businesses.

• Annual revenue excluding VAT: €18,000
• Other expenses excluding VAT: €300
• VAT on expenses: €63
• Customers: VAT-registered businesses

The consultant’s customers can generally reclaim the VAT charged to them. Therefore, the KOR does not give the consultant a meaningful price advantage.

A fee of €1,000 plus VAT normally still costs an eligible business customer €1,000 after VAT recovery.

Profit comparison	Regular VAT system	KOR
Revenue excluding VAT	€18,000.00	€18,000.00
Other deductible expenses	€300.00	€363.00
Bookkeeping or software	€960.00	€290.40
Profit before tax	€16,740.00	€17,346.60
The KOR profit is €606.60 higher.

This is calculated as: - Administrative cost advantage: €669.60 - Irrecoverable VAT on expenses: €63 - Profit advantage: €669.60 − €63 = €606.60

Conclusion

The KOR produces a profit advantage of approximately €607 per year, mainly because of the lower administration cost.

However, unlike the yoga teacher, the consultant gains no meaningful pricing advantage because business customers can normally reclaim VAT themselves.

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Example 3: A B2C Etsy Retailer With High Material Costs

Situation

An Etsy retailer sells handmade products to private individuals.

• Annual revenue excluding VAT: €18,000
• Materials, packaging and other expenses excluding VAT: €8,000
• VAT on expenses: €1,680
• Customers: private individuals

The retailer uses the KOR to offer lower consumer prices. A product that would cost €121 including VAT under the regular VAT system can be offered for €100 under the KOR.

However, the retailer buys substantial amounts of materials and packaging. Under the KOR, the VAT on those purchases cannot be reclaimed.

Profit Comparison	Regular VAT system	KOR
Revenue excluding VAT	€18,000.00	€18,000.00
Materials and other expenses	€8,000.00	€9,680.00
Bookkeeping or software	€960.00	€290.40
Profit before tax	€9,040.00	€8,029.60
The KOR profit is €1,010.40 lower.

This is calculated as: - Administrative cost advantage: €669.60 - Irrecoverable VAT on expenses: €1,680 - Profit difference: €669.60 − €1,680 = −€1,010.40

Conclusion

Although the retailer sells to private individuals and can offer lower prices under the KOR, the high level of material costs makes the scheme financially disadvantageous.

The retailer saves €669.60 in administration costs but loses €1,680 in VAT recovery. The result is a profit disadvantage of approximately €1,010 per year.

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Comparison at a Glance

Example	Customer type	Expense level	Customer price benefit	Approximate before-tax KOR result
Yoga teacher	B2C	Low	Yes	€565 benefit
Consultant	B2B	Low	No meaningful advantage	€607 benefit
Etsy retailer	B2C	High	Yes	€1,010 disadvantage

Key Lesson

B2C does not automatically mean that the KOR is financially beneficial, and B2B does not automatically mean that it is financially disadvantageous.

A proper comparison should consider:

• whether customers benefit from a lower price;
• the amount of VAT that can no longer be reclaimed;
• the cost of administration under both systems;
• any VAT revision on previous investments;
• any significant investments planned in the near future; and
• whether turnover is likely to remain below the KOR threshold.

The examples above focus on the first three factors. In practice, previous or planned investments can sometimes have a larger impact than the annual administration savings.

Calculate Your Own Situation

The examples above illustrate common scenarios, but every business is different.

To estimate the impact using your own figures, use the KOR Calculator, which considers: - revenue from different sources; - administration costs; - lost VAT recovery; - planned future investments; and - your expected turnover.

Frequently Asked Questions

General information, not tax advice. I am not a tax adviser (belastingadviseur); for your own situation, consider asking a qualified one.