Coronavirus | Dutch tax measures for businesses
Update - 20 March 2020: The Dutch emergency measures to support Dutch businesses dealing with the Coronavirus have been fine-tuned.
Significant measures include:
- Special deferral of payment obligations for corporate income tax, personal income tax, wage tax and value added tax;
- Revision of provisional 2020 corporate income tax or personal income tax assessments;
- Temporary reduction of recovery interest and tax interest rates from 4% and 8% respectively to 0.01%;
- Temporary deferral of payment for energy tax and renewable energy surcharge for certain enterprises;
- Relief of certain conditions for lower unemployment insurance contributions; and
- Upcoming new regulations for compensation for wage costs of employees under which an allowance of up to 90% of wage costs can be granted.
The announced measures will in principle be in force for the next three months. This period may be extended.
Deferral of tax payment obligations and revision of provisional assessments
The special deferral of tax payment and the revision of provisional tax assessments are existing arrangements of which the application will be temporarily simplified. In addition, these measures are boosted due to the simultaneously announced reduction of both the recovery interest and the tax interest from rates of 4% and 8% respectively to a rate of 0.01% on an annual basis.
Special deferral of tax payment obligations
Businesses facing liquidity issues as a result of the Coronavirus impact, can request a special deferral of payment obligations for corporate income tax, personal income tax, wage tax, and value added tax. Once a tax return has been filed by the taxpayer and the Dutch Tax Administration have issued a tax assessment, the request for special deferral of tax payment obligations can be filed with the Dutch Tax Administration. According to the Dutch Tax Administration a request for deferral of payment for payroll taxes and value added tax must be filed once the additional tax assessment is received.
The requirements for the deferral are:
- It is sufficient to state in the request that the Coronavirus is the reason for the payment inability;
- Mentioned deferral will be granted automatically for three months;
- No expert statement is required for this three months period; and
- An extension of the deferral after three months is possible, but will be subject to an information request from the Dutch Tax Administration, which may require the taxpayer to provide an expert statement at such time.
Please note that it is not yet clear whether the deferral of tax payment obligations also applies to excise duties.
A request to defer tax payment obligations qualifies in certain situations as a notification of payment inability. However a separate notification with the Dutch tax authorities of (expected) payment inability in advance could avoid director liability. This applies to wage tax, value added tax, excise duties and some other indirect taxes.
We will keep you updated on further changes to the measures.
Reduction recovery interest rate to 0.01%
The recovery interest rate will be reduced from 4% to 0.01% on an annual basis. This measure will take effect on 23 March 2020 and will apply to all taxes due.
No payment default penalty
The Dutch Tax Administration will not impose penalties for not paying wage tax or value added tax in time. Imposed penalties for late payments will be reversed.
Revised provisional 2020 tax assessments
Businesses that expect a lower or higher taxable profit for 2020 due to the Coronavirus impact can request a revised provisional corporate or personal income tax assessment for 2020. A refund will be provided if the revised tax assessment is lower than the taxes that have already been paid in the first months of 2020.
Reduction tax interest rate to 0.01%
The tax interest rate will be reduced to 0.01% on an annual basis (currently 8% for corporate income tax and 4% for other taxes). As a result, the risk of tax interest due to a misjudged estimate of the expected taxable profit should be remote. The temporary rate reduction will be effective as of 1 June 2020 for all taxes except for personal income tax, for which it will be effective as of 1 July 2020.
Deferral of energy tax and renewable energy surcharge
The levy of energy tax and renewable energy surcharge will be temporarily deferred for with a usage of more than 10,000 kWh in electricity or 5,000 m3 in natural gas on a yearly basis. The measure is aimed at creating more liquidity for companies that use substantial amounts of electricity or gas, such as the floricultural industry. As energy tax and the surcharge are levied from the electricity sector (who on-charge it to the users), the government will discuss with the electricity sector how to make sure that this measure will effectively lead to more liquidity for the users.
Measures unemployment insurance contribution
Per 1 January 2020, the lower unemployment insurance contribution is due by the employer for employees with an employment agreement for an indefinite period if the employment agreement has been captured on paper and has been signed by employer and employee. With regard to employees already employed for an indefinite period per 31 December 2019, the lower unemployment insurance contribution is due, if the employment agreement of these employees is captured on paper before 1 April 2020. The government extended this deadline to 1 July 2020.
Additionally, the government will introduce a relief for cases in which employees with an employment agreement for an indefinite period will make more than 30% overtime due to the Coronavirus. Without this relief, the higher unemployment insurance contribution would be due by employees with retroactive effect. The government now approves for the lower contribution to apply during 2020.
New regulation compensation wage costs
Effective immediately a new regulation (Tijdelijke Noodmaatregel Overbrugging voor Werkbehoud) will replace the current reduction of working hours scheme.
Businesses expecting a loss of turnover of at least 20% with effect per 1 March 2020 can apply to the UWV for a wage allowance (hereafter: the Wage Subsidy), that compensates wage costs (up to a maximum of 90% of the wage costs, the actual percentage depending on the loss of turnover) for a period of three months with the possibility to prolong for another three months (hereafter: the Subsidy Period).
The Wage Subsidy is related to the expected loss of turnover. The following examples have been provided:
- loss of turnover 100% → Wage Subsidy: 90% of the wage costs;
- loss of turnover 50% → Wage Subsidy: 45% of the wage costs;
- loss of turnover 25% → Wage Subsidy: 22.5% of the wage costs.
At this stage it is not yet clear whether the Wage Subsidy will be limited to the maximum daily wage which the UWV always applies when providing social security benefits to (former) employees, such as unemployment benefits and long-term illness benefits. The maximum daily wage currently amounts EUR 219.28 per day or EUR 4,769.34 per month.
If a business already applied for the reduction of working hours scheme, this application will automatically be regarded as an application for the Wage Subsidy. These businesses will be asked to provide additional information.
The UWV will provide an advance payment of 80% of the requested Wage Subsidy which enables businesses to continue the salary payments to their employees, subject to the declaration that no employees will be dismissed for economic reasons during the Subsidy Period.
The Wage Subsidy can also be requested with regard to temporary employees, provided that they will also remain employed during the Subsidy Period. Temporary employment agencies can also apply for the Wage Subsidy. For larger requests, an auditor’s report will be necessary.
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Klaas WiersmaPartner Attorney at law
Klaas Wiersma, attorney at law, is a member of the Employment & Benefits practice group. He has over 19 years’ all-round experience in employment law, with a particular focus on the employment aspects of, mostly international, M&A-deals, co-determination procedures, restructurings and collective dismissals, and cross-border employment.T: +31 20 578 59 60 E: firstname.lastname@example.org