A Dutch court has confirmed that KOR businesses may owe reverse-charged VAT on foreign purchases. They cannot deduct that VAT. Low Dutch VAT turnover can therefore sit alongside cross-border costs and an unexpected VAT bill.
Why this matters
The €20,000 KOR threshold covers Dutch VAT-relevant turnover, not every sale in the accounts. Sales taxed abroad may fall outside the calculation. An EU supplier’s services can trigger Dutch reverse-charged VAT. KOR participants cannot deduct VAT on costs or investments. It becomes part of the purchase cost. That can reduce margin and cash for software, advertising, or outside advice.
Example
The case involved a sole proprietor with a webshop using the KOR in 2022. The business bought €71,529 of services from suppliers in Denmark, Ireland, and Sweden. The court upheld €15,021 in reverse-charged VAT and €1,154 in tax interest. The owner accepted that VAT was due, but argued that the KOR had ended. The records showed no Dutch VAT-taxable turnover above €20,000. VAT therefore remained a cost.
XTROVERSO tips
- Separate Dutch KOR turnover. Do not rely on total bank sales or the profit and loss account. Mark each customer invoice that counts toward the Dutch €20,000 threshold. Put sales taxed elsewhere in a separate category.
- List foreign supplier invoices. Separate goods from services. Record the supplier country, invoice amount, VAT treatment, and whether Dutch VAT is reverse charged.
- Use the full purchase cost. Include irrecoverable VAT when reviewing a contract, campaign, subscription, or supplier quote. Use the VAT-inclusive amount for margin and cash planning.
- Check reporting duties. KOR reduces routine VAT work, but foreign purchases can still require a Dutch VAT return. Check the VAT treatment when you enter each invoice.
- Keep proof in one file. Store invoices, contracts, VAT IDs, sales records, and the KOR start or end date together. A later explanation cannot replace missing records.
- Review whether KOR still fits. Compare the administrative saving with VAT lost on costs and planned investments. Since 2025, leaving KOR is more flexible, though notice rules still apply.
Let XTROVERSO review your KOR position, foreign invoices, and cash planning
The data, sourcing, and analysis behind this article were conducted by Linda Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan before publication.
References
- Rechtspraak - Verified judgment and the 2022 KOR outcome
- Belastingdienst - What counts toward the Dutch KOR threshold
- Belastingdienst - Reverse-charged VAT on cross-border purchases during KOR participation
- Belastingdienst - No input-VAT deduction under KOR
- Wettenbank - Changes to KOR rules since the disputed year
- Belastingdienst - EU-KOR is separate from the domestic KOR
