Coronavirus: Dutch fiscal and financial measures for companies
The Dutch government has announced a number of measures to limit the financial and economic consequences of the corona virus for businesses. Below you can read which measures currently apply.
Special deferral of payment
If you can demonstrate that the corona virus has caused payment problems for your company, you can ask the Dutch Tax Administration for a deferral of payment for income tax, corporate income tax, VAT, wage tax, gaming tax, excise duties, tax on alcohol free drinks, insurance tax, landlord levies, energy tax and other environmental taxes and comparable taxes as levied in Dutch Caribbean territory.
You can therefore submit a written request, or submit the request for deferral of payment online through a special form which can be found on the website of the Dutch tax authorities, upon receipt of the first (additional) tax assessment. After receiving your request the tax authorities will halt all collection measures.
The deferral of payment applies for a period of three months. This period can be extended with a new period of three months. For the request for the second term of special deferral of payment, a statement must be provided by a third expert, such as your accountant or a tax service provider. Please note that such a statement does not have to be provided in case the total tax liability does not exceed € 20.000.
When the extension is granted, any penalties received for non-payment or late payment of wage tax or VAT do not have to be paid. If you nevertheless received a penalty, the penalty will be reversed.
Please note that you still are required to fill all tax returns timely.
Lastly, as of 23 March 2020 the normal collection interest rate for paying after the payment term has passed has been decreased temporarily to from 4% to 0.01%. This applies to all taxes. As such no hefty interest needs to be paid.
Notification regarding inability to pay
With regard to the notification of insolvency, you may no longer have to make this notification separately if you – in connection with corona – request deferment of payment for payroll taxes and / or turnover tax from a legal person that is subject to corporation tax. This applies to both past and future periods. The tax authorities assesses the notification of insolvency and provides separate feedback.
In addition to the existing possibility for unblocking surpluses, it is now also possible to release the g-account up to a maximum amount for which special deferment of payment has been granted for payroll taxes and / or VAT. Companies that hire employees via an employment agency usually use such a g-account. In this way it is ensured that these entrepreneurs have the same liquidity advantages as entrepreneurs without a g-account.
Request for reduction of provisional assessments
Do you expect a lower profit, or even loss, of your business due to the corona outbreak and are you now paying a provisional income tax or corporation tax assessment? Then you can change your provisional assessment so that you immediately pay less tax. Lower your income for this.
Requests to change your provisional assessment must be submitted electronically. We are happy to assist you in adjusting provisional assessments.
The tax authorities lower the interest rate for the late payment of your taxes to 0.01%. This applies to all taxes for which a late payment of taxes interest may be due. The changed interest rate enters into effect for all taxes, except the personal income tax as of 1 June 2020. The interest rate for the personal income tax will be lowered to 0.01% as per 1 July 2020.
Reduction of the usual DGA salary in the event of a decrease in turnover
Entrepreneurs who do business through their own company, for which they often also work, must at least pay in that case tax on a legally determined appropriate salary, the so-called usual wages (€ 46,000 in 2020). This normally also applies if the company achieves less or no turnover. In view of the large loss of turnover in some sectors due to the corona crisis and to limit the economic consequences of the crisis, the government allows that, in 2020, entrepreneurs who do business through their own company and are experiencing a decrease in turnover may assume a lower usual wage, in proportion to the decrease in turnover. The part of the year in 2020 will then be compared with the same period in 2019. The government has indicated that it will publish the exact details of this measure as soon as possible.
Early set-off through tax corona reserve
Within corporation tax, the loss over a year may be set off against the profit of the previous year (carry back). A loss over the year 2020 can therefore be set off against the profit over the year 2019. However, this is only possible after you have filed for 2020 and received a final assessment for 2019. Therefore, it can take a long time before this loss can actually be settled, which can lead to liquidity problems.
You can prevent this situation happening by using the corona reserve. By creating a corona reserve, you can deduct an expected loss in 2020 from the 2019 return. In this way, the loss settlement is brought forward over time. However, the corona reserve may not exceed the profit for 2019. A policy with the conditions for creating the reserve will follow shortly.
Payment break mortgage obligation
If you are (temporarily) unable to pay your mortgage as a result of the corona crisis, you can request a payment break from your mortgage provider. The payment arrears that you incurred as a result of the payment break in 2020 must, according to the current legal regulations, be made up by 31 December 2021. In response to the corona crisis, the government has decided to temporarily relax this statutory regulation if you have registered the payment break between 12 March and 30 June, the payment break starts on 1 July at the latest and the payment break lasts no longer than 6 months. After the payment break, it is permitted to agree a new annual repayment sum with the mortgage lender. To catch up with the arrears, you can choose from the following options:
- You divide the arrears over the remaining term of the maximum term of 360 months of the loan.
- In consultation with the lender, split the remaining loan into 2 parts. In that case, the existing annual repayment schedule will continue to apply to the remaining principal sum, without the arrears. For the repayment arrears, you take out a separate (mortgage) loan, with your own repayment schedule.
Note: The unpaid interest is not deductible in your income tax return 2020.
Postponement of the bill on excessive borrowing from a private company
The proposed law regarding the ‘Law on excessive borrowing from a private company’ will not be applicable before 1 January 2023.
The bill aims to discourage tax deferral from managing directors. Postponing the bill for a year gives managing directors more time to prepare and pay off their own company debts.
Employment Bridging Emergency Fund (NOW)
The existing Working Time Reduction ruling (WTV) is revoked. In its place the temporary measure Employment Bridging Emergency Fund (NOW) is established. The NOW application desk is open. You can apply for the scheme up to and including 31 May 2020. We are happy to help you with the application.
Under the NOW the government will subsidize the salary obligations of the employer up to a maximum of 90%. The financial support will be granted for three months, which period can at least be extended once with another three months. The central requirement is that the entrepreneur has plausible arguments that – as per March 1st, 2020 – a decrease in turnover of at least 20% can be expected.
Adjustment NOW regulation
In the original NOW regulation it is stipulated that the required decrease in turnover is calculated on the group level. Because turnover can vary between subsidiaries in larger groups, this can lead to unreasonable results if the required turnover decrease of at least 20% at group level is not achieved, while the turnover decrease at the level of an individual operating company is dramatic. Therefore, on April 22nd, the government has adjusted the regulation, so that applicants can choose to base the application on an individual subsidiary’s turnover.
Please note that in such cases additional conditions will apply: The group will have to commit to not distributing dividend or bonuses in 2020, and not re-purchase its own stock. Moreover, the company has to reach an agreement with the concerned worker’s union, or in case of less than 20 employees, an employee’s representative body, that jobs will be maintained. Also, there may not be a so-called personnel company in the entire group. Additional requirements will apply to the required accountant’s statement, which are still being developed.
An essential condition will be that during application of the subsidy the employer will not apply for dismissal of employees on economic grounds. The further conditions for the NOW scheme in the context of the Dutch emergency package for companies are as follows:
- Calculate revenue loss
How do you calculate your loss in turnover as a result of corona?
Compare 1 / 4th of the annual turnover 2019 with the turnover (expected) for March-April-May 2020. If a decrease of more than 20% can be derived from this, you are eligible for the NOW scheme.
If this period is not representative (eg because your turnover is highly seasonal), you can also take the turnover (expectation) from the period 1 or 2 months later as a starting point.
- How are labor costs calculated?
The reference period for the wage costs will (in principle) be the first month of 2020. The payroll information is derived from the UWV’s (Executive Institute for Employee’s Insurances) own systems. There is an upper limit to the individual salary to be taken into account of € 9,538, the salary above this threshold is not taken into account for the calculation of the subsidy. The wage costs are calculated using a fixed multiplier of 1,3 times the salaries.
The application procedure for NOW will have a shorter lead time than the WTV procedure. The emergency measure will also apply for employees on a zero-hour contract.
Broadening the guarantee for SME loans (BMKB)
From 16 March 2020 to 1 April 2021, the SME credit guarantee (BMKB) scheme will be extended to help SMEs that are affected by the coronavirus secure bank guarantees and bridge financing. This measure will make it easier and faster for banks to extend credit.
The government estimates that with this first step, € 300 million in additional financing is immediately available for entrepreneurs who are affected by the corona outbreak. With this measure, the guarantee runs from 50% to 75% of the credit given by the financing party. A number of other conditions are also being relaxed.
Mitigation of financial and tax consequences of coronavirus
These tax and other regulations offer opportunities to mitigate the financial and tax consequences of the corona virus for companies and entrepreneurs.
Do you want to know which measures are relevant for you and your company? Please contact our tax advisors. They follow developments closely and are happy to assist you.