In the past weeks the Dutch Ministers and State Secretaries of Economic Affairs and Climate and of Finance and the Minister of Social Affairs and Employment announced a package of measures to reduce the economic consequences of the Covid-19 virus. On April 24th, 2020, additional tax measures have been announced by the State Secretary of Finance.
I. Postponement of payment of taxes, no fines and 0.01% interest
Companies and freelancers who have received a provisional assessment issued by the Dutch Tax Authorities (“DTA”) can apply for a three-month postponement of payment of individual income tax (“IIT”), corporate income tax (“CIT”), VAT, wage tax, excise duties, gambling tax, insurance tax and environmental taxes. No postponement applies for the payment of Dutch dividend withholding tax. The DTA will immediately cease the collection of the aforementioned taxes and will not impose fines. Interest on overdue tax calculated during the term of the postponement, has also temporarily decreased from 8%/4% to 0.01%. Please note that the rate of interest on overdue tax is linked to the rate of the prompt payment discount, meaning there would be no advantage by paying the whole amount of the provisional assessments for IIT and CIT at once. The State Secretary of Finance has announced that is it still possible to claim the old rate of 4% by submitting an objection. A request for postponement of payment under conditions can be considered as a so-called notification of the inability to pay taxes. As such this notification is essential to avoid directors’ tax liabilities, please always consult with your Dutch tax expert on actions required in your specific case.
II. Release of g-account (guarantee account)
The g-account is in particular used by companies active in the temporary employment, secondment and construction sector to pay wage tax and VAT to the DTA. In addition to the existing possibility to unfreeze surpluses, this measure makes it possible to use the funds in the g-account for which the (abovementioned) postponement of payment has been granted. With this measure, companies using a g-account are given the same liquidity advantages as companies without a g-account.
III. Lowering of provisional tax assessments
Lowering of FY20 provisional tax assessments if a lower profit or loss is expected. By adjusting the FY20 provisional tax assessment, a refund of tax paid on previous FY20 provisional tax assessments can be claimed to optimize the cash position.
IV. Postponement of payment of energy tax and surcharge for sustainable energy (“ODE”)
Energy tax and ODE is levied on the suppliers of natural gas and electricity. To increase the liquidity for customers of energy suppliers, the government has provided a postponement of payment of energy tax and the surcharge for sustainable energy. Suppliers of natural gas and electricity have to possibility to not charge energy tax and ODE, nor the VAT, in the months of April, May and June 2020. In October 2020, the energy tax and ODE (including VAT) will be charged and remitted by the energy suppliers via an additional invoice. The postponement only applies to deliveries for which the supplier invoices without advantages. For this reason and also due to implementation costs, it will not be possible for smaller energy suppliers and private individuals to make use of this measure.
New tax measures relevant for MNE’s
I. Corona provision in FY19 accounts and tax return to offset expected FY20 losses due to Corona crisis
To increase liquidity, corporate taxpayers are allowed to take into account a “Corona provision” in FY19 (i.e. lowering the FY19 taxable profit accordingly) to take into account the expected FY20 loss that can be linked to the Corona crisis. The Corona provision may not exceed the FY19 taxable profit (without taking into account the Corona provision) nor may the amount of the provision exceed the expected FY20 loss resulting from the Corona crisis.
As a result of taking into account the Corona provision, taxpayers can claim a refund of FY19 corporate income tax paid by requesting an additional (lower) provisional FY19 corporate income tax assessment.
Legislative changes in relation to this tax measure are currently prepared and more guidance will be provided by Decree. More detailed information is expected soon.
II. Increase of the work-related costscheme “WKR” (tax free allowances for employees) from 1,7% to 3% for 2020
Adopted motions tax measures
I. Extension carry back to set-off losses. Carry back is currently restricted to one year, the government considers to extent this period
I. Emergency measure wages (“Tijdelijke Noodmaatregel Overbrugging Werkgelegenheid – NOW”):
- (Expected) loss in turnover of at least 20%;
- Employer continues to pay full wages, no redundancies;
- Application applies for three months.
- Up to 90% financial compensation wages. Pro rata calculation applies, for example:
- Loss in turnover 100%; 90% financial compensation wages
- Loss in turnover 50%; 45% financial compensation wages
- Compensation (capped at €9,538 per month per employee) + 30% employer cost
- Financial compensation is based on wage tax return, make sure return is filed with the tax authorities
The NOW measure initially applied at group level, however following a recent adjustment taxpayers now have the possibility to apply for the NOW measure at the level of individual group entities (e.g. operational entities suffering a – significant – loss in turnover). For more information, please click here.
II. Financial compensation self-employed individuals up to € 1,500
III. Financial compensation enterprises, one-time gift of € 4,000
I. Guarantee bank loans (A) (“BMKB”) to increase bank debt capacity and optimize financing conditions
- For small and mid-size enterprises (max 250 employees, €50 million turnover or €43 million balance sheet total);
- 75% of bank debt is guaranteed of which 90% by the government;
- Debt limit of €1.5 million applies and the term is limited to 16 quarters.
II. Guarantee bank loans (B) (“Garantie Ondernemingsfinanciering – GO”) to increase bank debt capacity and optimize financing conditions
- Mid and large size enterprises can apply for the government guarantee fund;
- Government provides for a 80% guarantee for large enterprises and a 90% guarantee for SMEs on bank debt and bank guarantees;
- Limit of €150 million per enterprise and the term is limited to 6 years;
- Apply at bank to benefit from the government guarantee.
III. Bridging loans for start-ups, scale-ups and other innovative companies (“Corona-Overbruggingslening – COL”) to increase cashflow
- Start-ups, scale-ups and other innovative companies fully financed with equity and zero bank debts will be able to apply for a bridging loan with the Regional Development Companies (“ROMs”);
- Starting from € 50.000 and limited to € 2 million per enterprise and an interest rate of 3%.
IV. Contribution for healthcare providers not directly involved in the care of COVID-19 patients
V. Guarantee government for working capital of agriculture and horticulture enterprises
VI. Interest reduction on microcredits for self-employed individuals and small enterprises
Other possibilities and points of attention
- Optimizing the tax loss setoff;
- Lowering the customary salary scheme (for directors and major shareholders) for 2020;
- 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.
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.