The coronavirus COVID-19 is currently restricting the day-to-day lives of almost every household in the Netherlands. A lot of entrepreneurs are facing an uncertain time, due to declining turnover and recurring payment obligations. The government has therefore announced measures to mitigate the financial consequences of the coronavirus for entrepreneurs and to improve their cashflow.
In addition, there are a number of existing measures for entrepreneurs to consider to improve their cashflow, such as the reduction of provisional tax assessments for individual income tax and corporate income tax.
In a time like this, it is of great importance for your cashflow management to advance tax refunds or to postpone current tax obligations where possible. We will therefore inform you on the new and existing measures in this newsletter.
Taxand wishes you good luck and health the coming uncertain period and we remain available to assist you. We have initiated a health and continuity procedure in order to continue to serve our clients remotely in the best way possible. Your trusted partner will therefore remain available to you if you have any questions or wish to consult about current affairs or your situation regarding COVID-19.
Measures Tuesday, March 17, 2020
On March 17, 2020, the government announced to take exceptional economic measures due to COVID-19. The aim is to protect job and incomes, in addition to health, and to mitigate the financial consequences for SME entrepreneurs, large companies and freelancers as much as possible. The measures provide for billions of euros in support every month, for as long as necessary.
The new measures currently are as follows:
- Employment Bridging Emergency Fund (NOW) for wage costs allowance;
- Extra support for independent entrepreneurs;
- Relaxation of deferral of payment of tax and reduction of fines;
- Extension of the Guarantee for Entrepreneur Financing;
- Interest-rate reduction for small entrepreneurs on microcredits Qredits;
- Temporary guarantee arrangement for agricultural and horticultural companies;
- Consultation on tourist tax and culture sector;
- Compensation scheme for affected sectors.
Below we will address the most relevant of the abovementioned measures, as well as relevant existing measures. However, as no situation is the same, we are happy to discuss with you what the best strategy is for you and / or your company.
Employment Bridging Emergency Fund (NOW)
Entrepreneurs that employ staff and expect a turnover loss of at least 20% can claim a compensation towards wages for a period of 3 months from the Employment Bridging Emergency Fund (Noodfonds Overbrugging Werkgelegenheid (NOW)). This measure also applies to the wage costs of employees with flexible contracts, such as on-call workers. It is possible to claim a maximum of 90% of the wages, depending on the turnover loss. UWV will provide an advance of 80% of the requested contribution in order to allow companies to continue to provide their staff with a salary. It is expected that this measure will also apply to on-call workers and zero-hour contracts.
Conditions to claim NOW:
- Entrepreneurs claiming NOW, will not be allowed to request permission to dismiss employees on economic grounds during the period for which you receive compensation;
- Expected turn over loss of at least 20%;
- For the duration of 3 months, with the possibility to extend it once, with another 3 months (extra conditions may apply to an extension application);
- The Employment Bridging Emergency Fund is a compensation for missed turnover as of 1 March 2020 onwards.
- A statement from a third party expert is required in order to make claims that exceed a certain amount (the height of which is yet to be established).
Special payment extension
Companies and freelancers who have received a provisional assessment from the Dutch Tax Administration (DTA) and are experiencing payment difficulties due to COVID-19, can apply for the special extension of payment of individual income tax, corporate income tax, VAT and wage tax. The DTA will immediately cease the collection of the taxes due and will not impose fines. Interest on overdue tax calculated during the term of the postponement, has also temporarily decreased from 4% to 0.01%. The interest on any other tax payables will also decrease to 0.01%. The request should be filed together with a third-party expert statement. This statement should demonstrate that:
- The request is regarding current payment issues and not regarding expected / future payment issues;
- Your payment problems are of a temporary nature due to COVID-19;
- Your payment problems will be resolved by a certain date;
- Your business is viable, that is, it was not dealing with payment issues prior to COVID-19.
We are happy to support you with the application for special payment extension.
Broadening of Guarantee for Entrepreneur Financing scheme (Ministry of EZK)
Companies experiences problems in obtaining bank loans and bank guarantees can use the Guarantee Business scheme (GO). The government announced to increase the GO’s guarantee ceiling from 400 million up to 1.5 billion euro. With GO, the government helps both SMEs and large companies with a guarantee of 50% on bank loans and bank guarantees (minimum 1.5 million and maximum 50 million euro per company).
Reduction of provisional assessment
In case you expect lower profits or income due to COVID-19, and you received a provisional assessment for individual income tax or corporate income tax, you can file an updated provisional tax return, stating the expected lower income or profit on the provisional assessment in order to pay less tax immediately.
Other possibilities and points of attention
- Optimizing the tax loss setoff;
- Reconsider the VAT declaration period (e.g. from month to quarter or vice versa);
- Invoice dates around the end of the VAT declaration period;
- Reclaim VAT on unpaid invoices;
- Determination or termination of fiscal unity for VAT;
- Prevention of fiscal director’s liability;
- Timely notification of inability to pay tax debts;
- Chain and hirer’s liability.
For more details, please consult the information for entrepreneurs website of the Dutch government
In case there are questions about this topic or the application of the measures that the government has taken in your specific case, or if you would like to discuss other measures to consider, please feel free to contact us by e-mail:
- questions from family businesses / individuals, foundations / associations: Niels Meloen (email@example.com);
- questions from multinationals / employers: Thomas Dijksman (firstname.lastname@example.org);
- questions about VAT obligations: Richard Meerstra (email@example.com).
If you would rather like to consult us by phone, please call us on +31 (0) 20 435 64 00, and we will connect you with the right tax expert.