The Dutch government introduced tax measures related to coronavirus

The spread of the coronavirus around the world has put everybody in front of a very challenging situation. Besides its impact on people’s health, which is the priority number one to deal with, it also means significant issues for the economies. The Dutch government announced measures to support the Dutch economy and to help businesses with respect to the expected economic setback.

Read about these measures in the article bellow prepared by Taxperience, a Patron member of the CDCC.

On 17 March 2020, the Dutch government announced additional measures to support the Dutch economy and to help businesses with respect to the expected economic setback resulting from the Coronavirus. Although there is still a lot of uncertainty, hereafter we provide you with a summary of those measures and how we can help you to apply these measures in practice.

TEMPORARY EMERGENCY MEASURE FOR WORK RETENTION

The short-time working scheme (werktijdverkorting) was discontinued with immediate effect. This is replaced by the temporary emergency bridging measure for work retention (work retention scheme). The exact details will become clear within two weeks.

Companies expecting at least 20% less turnover can request with the UWV (Dutch Employee Insurance Agency) for permission to apply the work retention scheme. If approved, the Dutch government will pay an allowance for wage costs (see below). This scheme is valid for a period of 3 months, but may be extended thereafter. The condition for using this scheme is that the company does not dismiss any employees for economic reasons during the period in which the scheme applies. The employer must also continue to pay full wages.

The amount of the allowance for wage costs depends on the drop in turnover, capped at a maximum of 90% of the wage bill. On the basis of the application, the UWV will provide an advance payment equal to 80% of the expected contribution. Afterwards, the actual decrease in turnover will be determined. An auditor’s report is required for applications over and above a specific amount that is yet to be determined. An adjustment will be made when the compensation is finally determined if there has been a reduction in the wage bill.

This new scheme is disconnected from the Unemployment Act and no longer affects the accrued WW rights (unemployment allowance entitlements) of employees.

Flexible workers

The work retention scheme also applies to wage costs for employees for whom the employer has no obligation to continue to pay wages. Think of employees with an on-call contract. Temporary employment agencies can also apply for an allowance for wage costs for temporary employees who are employed by them. In this way, companies can bridge this difficult period without having to let such personnel go.

Application

The precise details of this new scheme, such as the answer to the question of how to apply for it, will follow shortly. Entrepreneurs who had already submitted an application under the old scheme (werktijdverkorting) (there were already 78,000 applications) will also be covered by the new scheme. It is important to keep track of the loss of turnover as a result of the Corona virus since 1 March 2020.

SPECIAL DEFERRAL OF PAYMENT

 For Dutch personal income tax, corporate income tax, value added tax and wage tax, it is possible to obtain, under conditions, a deferral of payment.

 In order to help businesses cope with liquidity problems the Dutch government has decided to grant businesses, on request, a special deferral of payment. Levy of these taxes shall be stopped as soon as a substantiated written request for special deferral is received by the Dutch tax authorities. The request will be manually assessed at a later date.

You must provide an expert’s statement within four weeks. The exact details to be included in this expert’s statement are expected shortly.

If you wish to take advantage of this postponement, please reach out to your contact at Taxperience. We will then examine the possibilities and, if eligible, submit the request.

 

INTEREST REDUCTION & VERZUIMBOETE 

Tax collection interest and tax levy interest reduced to 0.01% and no payment default penalty imposed.

If an assessment is not paid in time, normally 4% tax collection interest will have to be paid from the moment the payment term has expired. In order to facilitate business owners to easily apply for deferment of payment, the government will temporarily reduce the tax collection interest from 4% to 0.01% as from 23 March 2020 onwards. This rate reduction will apply to all tax debts. In addition to tax collection interest, tax levy interest is reduced Tax levy interest is charged, for instance, if a tax return is not submitted to the Tax Authorities in time or for an incorrect amount. The rate of tax levy interest is 8% for corporate income tax and 4% for other taxes. In order to accommodate entrepreneurs, the government will also temporarily reduce the tax levy interest rate to 0.01%. The temporary reduction of the tax rate will take effect from 1 June 2020. The only exception is the temporary reduction of the tax levy interest rate for Dutch personal income tax, which will take effect from 1 July 2020.

The Dutch tax authorities indicated that it will not levy any default penalty for non-payment (in

time) and to reverse the fines levied. This is in conjunction with the Special Deferral of Payment. Since these requests need to be handled manually, the processing terms may increase. Therefore, we recommend to file a request to the Dutch tax authorities timely and correct in respect of which we are more than happy to assist.

 

REQUEST REDUCTION OF PROVISIONAL ASSESSMENT

Reduction of preliminary personal income tax assessments or corporate income tax assessments is possible

Via preliminary personal income tax assessments and corporate income tax assessments, the Dutch tax authorities levy the expected personal income tax or corporate income tax, in instalments, throughout the year. The preliminary tax payments are subsequently offset against the Dutch tax charge following from the final tax declaration. If a business expects to realize a lower taxable profit as a result of the Corona virus, it is possible to adjust the preliminary personal income tax assessment or corporate income tax assessment. As a result, the tax charge due decreases immediately. The Dutch tax authorities will grant these requests.

Please note that if a tax is due when making the final declaration and this declaration is made after 1 May for Dutch personal income tax or 1 July for Dutch corporate income tax, the Dutch tax authorities may charge interest on the exceeding amount. This interest rate is 4% for Dutch personal income tax and 8% for Dutch corporate income tax. This interest will temporarily be reduced as indicated above.

Taxperience can draft and submit the application for reduction of preliminary personal income tax assessments or corporate income tax assessments for you. Please reach out to your contact person.

 

OTHER MEASURES

In addition to some fiscal measures, other economic measures have also been announced.

Also other measures to counter the adverse economic implications of the Corona virus have     been announced by the Dutch government, which include an one-off donation  based  on  a  fictious amount of EUR 4,000 for a period of 3 months for businesses in respect of which the Corona virus measures have an extreme direct impact on their  turnover  numbers  and which  meet specific criteria, financial support for Q-Credits up to a maximum amount of € 6 million (Q- Credits is a Dutch foundation supporting start-ups and small  business  enterprises),  the  expansion of the Guarantee of SME credits, Guarantee of SME – farmers credits, adjustment of  the WW premium (unemployment insurance premium), and extra temporary support for independent entrepreneurs (such as self-employed persons) via the municipality.

 

Finally, it is clearly indicated that additional measures will be taken if necessary.

If you have any questions about these extensions of the arrangements, please call or email us.