Coronavirus: Dutch fiscal and financial measures for companies
The Dutch government has introduces 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
Until December 31, 2020, it is still possible to request a special deferment of payment or to extend the deferment already granted.
The (extended) deferral of payment applies in principal until 31 December 2021. For the request for the extention 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. It is expected that the reduction of the interest rate will apply until 30 December 2021.
A special payment arrangement applies to the tax debt accrued during the period of the deferment of payment. This concerns the debt that arose in the period from March 12, 2020 up to the date on which the special deferral of payment ends.
The payment arrangement can be described as follows:
- In principle, the tax debt is repaid in 36 monthly equal installments.
- The first installment must be paid no later than July 31, 2021, each subsequent installment is due one month later.
This means that the accrued tax debt must be paid in full by July 1, 24 at the latest.
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 for declaration periods ending after 1 February 2020. The request for a special postponement of payment until 31 December 2020 will in that case be regarded as a notification of inability to pay. 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. Unlocking remains possible as long as and insofar as the entrepreneur enjoys a special deferment of payment (this is until 1 January 2021 at the latest) and complies with current payment obligations and repayment obligations. The relaxed policy will expire definitively on July 1, 2024.
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 temporary reduction in the tax rate to 0.01% has been reversed as of October 1, 2020. From this date, the tax interest for all types of tax (including corporate income tax) is 4%.
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.
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.
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 31 December, the payment break starts on 1 January 2021 at the latest and the payment break lasts no longer than 12 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:
- As soon as possible after the end of the payment break, a new annuity schedule will be established that will spread the recovery of the repayment 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.
Looking for more information about the NOW? Visit our webpage ‘Employment Bridging Emergency Fund (NOW and NOW 2.0) (in Dutch), or contact us at +31 88 – 2055000.
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.