Tax

Additional relief measures for businesses affected by the coronavirus

Monique Pisters Monique Pisters

In a press conference on Tuesday evening March 17, 2020, the Dutch government presented new relief measures in order to support Dutch businesses. The measures are aimed to help businesses to continue to pay their employees and to prevent businesses from getting into liquidity and continuation issues. We will discuss these measures below.

Tax measures

Taxation interest
Based on Dutch tax legislation, taxation interest is calculated over the period starting six months after the end of the fiscal year and ends on the ultimate payment date of the assessment. The current rate for taxation interest is 8% for Dutch corporate income tax and 4% for all other taxes. As a support measure this rate will be reduced to 0.01% for corporate income tax as per June 1, 2020 and also to 0.01% for personal income tax as per July 1, 2020.

Interest on overdue tax
If a taxpayer does not pay a tax assessment on time, the taxpayer must pay the tax authorities interest on overdue tax, this rate is currently 4%. As per March 23, 2020 this rate will be reduced from 4% to 0.01% in order to help businesses if they want to request extension from tax payments

Deferral of payment
Another beneficial measure is the easing of the extension of payment with respect to taxes, to facilitate entrepreneurs with liquidity problems. After receiving a specific written request, the Dutch tax authorities will directly grant deferral of payment for Dutch corporate income tax, VAT, personal income tax and wage tax. Individual assessment of the request will take place at a later stage.

No penalties
To help businesses the Dutch tax authorities will not impose penalties for non-payment of taxes or for late payment of taxes. Furthermore, the Dutch tax authorities will reverse any default penalties if they were already imposed.

Provisional corporate income tax assessment
In the normal course of events, a provisional corporate income tax assessment can be expected during the first month of the tax year and is based on the average estimated taxable amounts of the previous book years. If the imposed provisional tax assessment differs significantly from the company’s estimation of the taxable amount, it is possible to file a request for an amended assessment indicating the expected taxable result.

As such companies that expect a reduced turnover due to the coronacrisis it is possible to apply for a reduced provisional assessment both for corporate income tax purposes as for personal income tax purposes. Such request needs to be filed electronically and will be automatically granted by the Dutch tax authorities. Should the amount of the adjusted provisional tax assessment be lower than the amount already been paid in the first three months of this year then the difference will be refunded by the Dutch tax authorities.

Employees

Temporary Arrangement Compensation Labor Costs
Due to extraordinary circumstances, like the coronavirus, companies might have less or no work for their employees. As such the government introduced a new regulation, the ‘temporary arrangement compensation labor costs’ (NOW), aimed to compensate employers for wage costs when they are hit by a loss in turnover as a result of the coronavirus. This regulation will temporarily replace the current “werktijdverkorting-regulation”.

The new measure applies to employees with a permanent and a flexible employment contract. The main features of the new arrangement are as follows.

What is the compensation?
Companies expecting losses of turnover of 20% or more can request for compensation. Employers can be compensated for the wage costs of employees up to 90% of the salary costs. The amount of the compensation depends on the loss of turnover of a company

Under what conditions can employers receive the wage costs compensation?

  • The measure applies to turnover losses which are incurred starting from 1 March 2020.
  • The applicant expects a turnover loss of at least 20% during a period varying from 2 weeks to a maximum of 24 weeks.
  • The employer continues to pay 100% of the salary to the employee.
  • When applying for wage costs compensation, the employer commits not to dismiss employees for budget reasons, at least for the period that the employer is receiving the wage compensation.

After the application, the Dutch government (UWV) will provide an advance payment of 80% of the requested compensation. At the final determination of the compensation, a correction is made in the case of a decrease of the salary, whereby an additional payment or refund could be made.

How to apply for this compensation?
Employers can submit an application for a compensation in wage costs at the Dutch authorities, i.e., the UWV. The wage compensation can be requested for at least 3 months, and under certain conditions can be extended for another 3 months. Applications for the old ‘part time unemployment benefits’ regulation (Werktijdverkorting) which are already filed, will be converted into an application for the new regulation.

Self-employment (ZZP’ers)

Due to the coronavirus self-employed people (ZZP’ers) might see a reduction in their assignments. Therefore the Dutch Government introduced extra financial support in order to stimulate continuance of their business. Self-employed persons can receive additional income support for a period of three months through an accelerated procedure of max 4 weeks. The amount of the income support depends on the income and the household composition and may amount to a maximum amount of EUR 1,500 (net) per month. The arrangement will be executed by municipalities.

Furthermore, the accelerated procedure also applies to a specific loan that can be provided to the business by the government amounting to a maximum EUR 10,157.

Other measures

Finally the Dutch government has announced various other measures that predominantly relate to softening credit conditions and related aspects. Furthermore, a so-called “Emergency Counter” will be introduced where businesses in specific sectors can receive a gift of EUR 4,000 for a period of three months.

More information?

If you wish to receive more information about the coronavirus emergency measures and how these measures can help your company, please contact your Grant Thornton contact person.

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