Supportive measures for Dutch businesses that suffer losses associated with Coronavirus: A brief overview
25 March 2020
In response to the Coronavirus epidemic, the Dutch government has introduced a new scheme for reduced-time working, to aid businesses and individuals impacted by COVID-19. The new scheme replaces the old one known as the Employment Bridging Emergency Fund (Dutch: Noodfonds Overbrugging Werkgelegenheid). This is subject to the condition that companies cannot dismiss their employee and that they continue to pay the employee’s salary during this period. This scheme also applies to flexible workers and employees with a zero-hour contract. The approximately 1.2 million self-employed persons without employees will also receive assistance. This scheme, which applies to three months of aid, supplements the income of independent entrepreneurs up to the social minimum (social assistance benefit level). Those receiving this aid do not have to refund this amount. All entrepreneurs have the right to apply for special postponement of tax payment. Collection by the tax authorities will stop immediately, and the application will be verified later. The government will make ten to twenty billion euros available for the support of these measures in the coming three months.
In addition, an emergency information desk will be introduced in the form of a gift, which will allow for relief to address entrepreneurs’ most pressing needs. This constitutes an emergency facility in addition to the other measures in this letter. In particular, this concerns catering and other establishments that are forced to cease most of their activities; for example, hair salons, spas and other enterprises that may wind up in trouble as a result of the 1.5-metre distance requirement. Their income will reduce to a large extent, whilst their overheads simply continue and, in many cases, their expenses have already been made. Furthermore, it will be difficult for them to recover this lost income once the COVID-19 outbreak has ended. This relief is subject to the condition that it concerns companies with a physical establishment outside a private residence. It concerns a one-off fixed amount of €4,000 for the period of three months and applies only if your business complies with the abovementioned conditions in regard to type and sector. The conditions are currently being expanded on and updated as necessary.
Loans and subsidies
- As an entrepreneur, do you expect a loss of sales (at least 20%)? If so, you have the right to apply for an allowance towards wage costs from the Employee Insurance Agency (UWV) for a period of three months (for maximum 90% of the wages owed, depending on the loss of sales). The UWV will provide an advance of 80% of the allowance requested. The actual loss of sales will be determined at a later moment. This scheme applies to decreases in sales as from 1 March 2020; an auditor’s report is required in connection with large applications.
- The allowance provides for the wage costs of permanent employees and employees with a flexible contract as long as they remain employed during the application period. This period can be extended once within three months. This will help you to continue to pay your employees.
- The Dutch tax authority allows you to request special deferral of payment due to the impact of the Coronavirus. This applies to all assessments of income tax, corporate tax, turnover tax (VAT/BTW) and payroll taxes.
- In your payment deferral request application, you explain that you have come across payment problems due to COVID-19. You will automatically receive a 3-month extension of payment. For some, a payment delay of 3 months may be too short a time period. You can also request an extension for a longer period. In that case, additional information is required, and possibly a statement from a third-party expert.
- You will not have to pay any fines in connection with failure to pay turnover tax or wage tax on time. The interest on overdue tax, which normally accrues after the payment term has expired, will be reduced temporarily from 4% to almost 0%. The interest on tax rates will also be reduced temporarily to almost 0%. This reduction will apply to all taxes to which an interest on tax rate applies. The government will adjust the interest on tax rates as soon as possible.
- The provisional assessment may be reduced if you expect lower profits as a result of the outbreak of the Coronavirus, and if a provisional income tax assessment for 2020 or a corporation tax assessment for 2020 has already been imposed.
Generous banking policies
- In addition to the Dutch government’s extensive support package, banks have also come up with joint measures to support their business customers. Businesses that are fundamentally healthy can receive a six-month grace period on their current loans. Those participating include ABN AMRO, ING, Rabobank, de Volksbank, Triodos Bank and BNG Bank.
- The banks’ joint approach offers business customers in all sectors extra financing of up to 2.5 million euros. Banks will closely monitor further developments for groups with a higher liability. This can lead to extra steps in consultation with the ministry and the supervisors. This concerns a minimum scheme that enables banks to provide additional customisation for business customers.
- Out of the three main national banks in the Netherlands, ABN AMRO goes the furthest in suspending repayment obligations. For the previously mentioned target group, not only the repayment obligation but also the interest payments are suspended for a standard period of six months. If customers do not want to make use of this, they must report it.
- An arrangement will also be made for entrepreneurs who are in danger of getting into trouble with their private finances; for example, if they are unable to pay their mortgage. Both Rabobank and ING have opened an online portal in which entrepreneurs can submit their request to postpone repayments. Please note that applications will be assessed individually and in order of receipt.
As the situation continues to evolve, the Dutch government may propose further supportive measures for business. If you are a Dutch business owner or international business with operation in the Netherlands and would like to know more about any of the topics raised in this news article, please contact us.
By Axel van Schendel, HLB Netherlands
Get in touch
Whatever your question our global team will point you in the right directionStart the conversation
Sign up for HLB insights newsletters
Malaysia: Tax and financial measures associated with COVID-19
An overview of the tax and financial measures associated with COVID-19 announced by Malaysia.
Panama: Tax and financial measures associated with COVID-19
An overview of the tax and financial measures associated with COVID-19 announced by Panama.