To KOR or not to KOR?

[Yannis]

Hello everyone!

 

I am starting as a freelancer on the 1st of August (eenmanszaak). I have already contacted the KVK and have also had a chat with them over the possibility of going under the KOR scheme. I will most probably not be making more than €20,000 on the first fiscal year (with some chances that this might also happen on the 2nd year of my operations) so I am covered as far as that criterion is concerned. However, there are some things that haven't been made clear yet.

 

I was hoping you could help me through the examples I have!

 

a) I will be offering Marketing services to a company within the EU. In order to do so I will sometimes need to be extremely mobile, thus I need a laptop although I already have a PC. This laptop will be used entirely for business purposes. If I start freelancing under the KOR scheme that means that I would have to buy the laptop with VAT and that VAT will not be returned to me as a company expense (from what I gathered).

 

b) It is a possibility that I am asked to book my own tickets and hotel/AirBnB rooms to the places I need to travel for work (still within the EU). Although not the rule, this could happen through personal funds which will later be reimbursed by the company to which I offer my services. How would I declare that this is not profit, but an actual reimbursement that won't count towards the €20,000 mark of the KOR scheme?

 

c) I also plan to start a very small webshop (not drop-shipping) with most - if not all - of my raw material purchased from within the EU (Greece, Poland), but later sold locally, in the Netherlands; I already know I wouldn't have to pay VAT to these suppliers since the purchase is happening in between EU states. Although there are no real expenses I can think of locally, I am still very skeptical as to whether or not it would be justified to follow the KOR scheme. If I don't get tax returns/rebates because of KOR, then I also lose VAT relief from services and material I would need to source locally (most importantly: tax advisor, delivery costs, office supplies).

 

What do you guys think? If something is not clear I am more than willing to elaborate further!

 

Thank you so very much for your time!

 

Yannis

[shoptillyoudrop]

KOR is a bad idea when your services are B2B.

That makes your expenses a lot higher since you cannot claim the VAT back.

 

So: don't do that. 

[TwaBla]

45 minuten geleden, shoptillyoudrop zei:

KOR is a bad idea when your services are B2B.

 

Second that!

[Yannis]

53 minutes ago, shoptillyoudrop said:

KOR is a bad idea when your services are B2B.

That makes your expenses a lot higher since you cannot claim the VAT back.

 

So: don't do that. 

Thank you so much for the heads up. Is it really as bad as I think it is? Not being able to claim any VAT back?

In the case that I don't go under the KOR scheme, what would be the legal/tax frame I would have to research to prepare myself?

[shoptillyoudrop]

34 minuten geleden, Yannis zei:

(...) what would be the legal/tax frame I would have to research to prepare myself?

 

You could study how VAT works in your specific situation (what kind of VAT you can reclaim and for what kind of expenses).

 

Or hire an intermediate that can fix it for you.

 

Or ask someone else (in the “FFF-scene”: Friends, Family, Fools…) to do it for free on your behalf.

 

Or…: Wait until someone on HigherLevel is prepared to outline all details for you in the summer-heat.

 

 

[Roel J]

this is a good place to start

 

https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/business/vat/vat

 

first tip: if you buy in EU, you do not pay vat to supplier any VAT but you do have to declare it on your  quarterly return. you have to pay but can also claimback later in the form.

so that is different from what you said. in the end you do noot have any cost but you ave to put it on taxreturn

 

more general info you can find here
https://business.gov.nl/

[Gast Wigbolt]

Please note that KOR is related/maximised to 20k turnover or sales volume...

 

...non-discussion.

 

You have to make much more than 20k in 5 months to get by in The Netherlands. Also as a starter...

 

...what is your hourly rate for international marketing services?

 

BR,

Wigbolt

25 juli 2022 aangepast door Wigbolt

[Yannis]

1 hour ago, Gast said:

Please note that KOR is related/maximised to 20k turnover or sales volume...

 

...non-discussion.

 

You have to make much more than 20k in 5 months to get by in The Netherlands. Also as a starter...

 

...what is your hourly rate for international marketing services?

 

BR,

Wigbolt

Hey Wigbolt!

 

Thank you so much for your points!

 

I will only be working minimal hours for the time being so I will definitely not make 20k on turnover/sales volume, by the end of this year. From my discussion with the KVK and the belastingdienst I understand that in the case that I (hopefully with more clients) surpass that, I need to immediately inform them and get taxed on the very service/item that surpasses the mark and from that point forward.

 

I start small, but I don't intend to stay below 20k. I have been living in the Netherlands for the last 7 years and I do understand the struggles and cost of life and I also do have some personal capital to keep me afloat until I decide whether or not freelancing is for me.

 

My main concern is to understand whether or not I should start working under KOR, especially in relation to VAT and the VAT exemptions it offers.

 

Yannis

[Yannis]

2 hours ago, shoptillyoudrop said:

 

Or ask someone else (in the “FFF-scene”: Friends, Family, Fools…) to do it for free on your behalf.

 

Or…: Wait until someone on HigherLevel is prepared to outline all details for you in the summer-heat.

 

 

I think my intentions were misunderstood. I m not looking for freebies, but I do want to do my own research before I hire a tax advisor so I can speed up some processes.

 

I can't claim to be proficient in tax/legal matters, but any link to resources others find valuable should suffice and are definitely a point towards the right direction.

 

Y

[Ron van der Kolk]

5 uur geleden, Yannis zei:

b) It is a possibility that I am asked to book my own tickets and hotel/AirBnB rooms to the places I need to travel for work (still within the EU). Although not the rule, this could happen through personal funds which will later be reimbursed by the company to which I offer my services. How would I declare that this is not profit, but an actual reimbursement that won't count towards the €20,000 mark of the KOR scheme?

So you would like your client to pay you untaxed as a person for travel expenses and taxed as a business for your marketing services? I'm afraid the tax office will see the whole exchange as a business transaction, as the expenses are clearly made in lieu of paid work. That means the travel expenses have become part of your services, and the "reimbursement" will have to be counted as turnover (not profit, as it is crossed out against the expenses). 

[Joost Rietveld]

Look at it like this:

 

For VAT purposes your company is just a conduit between your clients and the tax offices. As long as your clients can deduct the VAT on your services as input VAT then you have nothing to gain by opting in for the KOR. If you sell to them for 100 ex 21% VAT, they pay you 121 of which you pay the tax offices 21. Leaving you with 100. They claim the 21 VAT back as input VAT, so their cost of also 100.

 

In fact, things just get worse for you since you can't deduct any of your input VAT yourself, meaning an increase of your expenses by (usually) 21%.

 

The KOR can come in handy if your clients can't deduct any input VAT themselves, like consumers or entrepreneurs with a VAT exemption, because you can offer them lower rates, since your prices aren't raised with 21% VAT. So selling a product for 100 under the KOR means that the 100 is what they are paying, in stead of 121.

[Peter73]

I think it's also good to keep in mind that VAT may sound scary, but it's not that it's that much complicated. So I wouldn't bother too much about it and just forget about that KOR since it on one hand doesn't add real value and on the other hand does have some downsides for you. 

[Yannis]

On 25/07/2022 at 22:08, Joost Rietveld said:

The KOR can come in handy if your clients can't deduct any input VAT themselves, like consumers or entrepreneurs with a VAT exemption, because you can offer them lower rates, since your prices aren't raised with 21% VAT. So selling a product for 100 under the KOR means that the 100 is what they are paying, in stead of 121.

Sorry for the late reply and thank you for this distinction Joost! Makes a lot of sense this way!

[Yannis]

On 25/07/2022 at 22:05, Ron van der Kolk said:

That means the travel expenses have become part of your services, and the "reimbursement" will have to be counted as turnover (not profit, as it is crossed out against the expenses). 

 

Sorry for the late reply Ron. It's very hard for me to understand tax matters, but this sentence made it very clear for me! Thank you!