The Dutch government has announced several emergency measures to support companies affected by the outbreak of COVID-19. For our clients, the most important measures are related to tax and wage costs and will apply for a minimum of three months.
Deferral of tax payments and reduction of fines
The Dutch tax authority implemented a less strict policy for requests related to deferral of tax payments and fines for non-filing or late filing of tax returns. The measures are aimed to help companies safeguard their cashflow position.
Companies financially impacted by COVID-19 can obtain deferral of payment of income tax, corporate income tax, wage tax and/or value added tax. They also no longer need to include the required 'third-party expert statement', instead a short statement explaining how COVID-19 impacted their business. The Dutch tax authorities will postpone collecting payment immediately for a period of three months and assessments will take place at a later stage. The request should be sent to the Dutch tax authority, click here to learn more.
No default penalties and reduction of collection interest and interest for unpaid tax
The interest on overdue tax payments, which is normally levied after the term of payment has expired, will be reduced from 4% to 0%. This rule will apply to all tax debts. The rate for interest on tax will also be temporarily reduced to 0%. This reduction will apply to all types of tax subject to interest on tax. In addition, the Dutch tax authority will not impose default fines for non-payment or late payment of taxes.
Reduction of preliminary corporate income tax assessment
If a preliminary corporate tax assessment has been imposed and the taxable profit is likely to be lower than the taxable profit estimated for the preliminary assessment, a reduction of the preliminary assessment may be requested. This creates a right to a refund (if the preliminary assessment has already been paid in full) or allows for a reduction of the monthly tax due (if the preliminary assessment is paid on a monthly basis). COVID-19 may provide an opportunity to take a critical look at imposed preliminary assessments. The Dutch government has announced that the Dutch tax authorities will grant all requests to reduce preliminary assessments.
Temporary Emergency Measure Job Security 'Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud' (NOW)
This temporary measure comes into force with immediate effect. It's in place to provide financial aid to companies, enabling them to cover wage costs if their revenue is impacted by COVID-19.
Wage cost compensation up to 90%
Companies expecting a revenue loss of at least 20% can apply to the Employee Insurance Agency (UWV) for a wage cost allowance of up to 90% of the wage sum. The actual percentage depends on the revenue loss. If necessary, the subsidy period may be extended by another three months. On the basis of the information currently available, the terms for the extended subsidy period may differ from those applicable to the initial subsidy period.
The UWV provides an advance payment of 80% of the requested amount. The actual revenue loss will be determined retroactively, and the allowance adjusted as necessary. The NOW scheme enables employers to continue to pay their employees' wages. Grant of the allowance is subject to the condition that throughout the subsidy period no employees may be dismissed for economic reasons. Subject to conditions yet to be determined, applicants will be required to submit an auditor's report.
The NOW scheme also provides for an allowance in wage costs for flexible contracts. The NOW subsidy doesn't prejudice any unemployment benefit rights accrued. All salaries and wages will continue to be paid in full. In conclusion, the NOW scheme doesn't require the employees concerned to stop working or to stay at home.
It's no longer possible, with immediate effect, to file new applications with the Ministry of Social Affairs and Employment under the previous regulations for reduction in working hours. All applications filed but not yet processed will be processed under the new NOW scheme. Employers can apply for the allowance for a drop in revenue with retroactive effect from 1 March 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.