Due to the coronavirus the Dutch government decided to take extra economic measures to protect jobs and income and to mitigate the impact on the self-employed workers, the small and medium-sized enterprises (SMEs) and large enterprises. These measures are taken on top of the measures already taken by the Dutch government to mitigate the consequences of the coronavirus for entrepreneurs. Please find below an overview of the main measures.
Reduction in working time
The reduction in working time arrangement (in Dutch: wtv-regeling) has been revoked immediately and a temporary emergency measure bridging for job retention (in Dutch: Tijdelijke noodmaatregel overbrugging voor werkbehoud) is being developed.
What does the temporary emergency measure bridging for job retention do?
Employers who are faced with at least 20% expected loss of turnover can apply - in relation to the loss of turnover – to the UWV (the Dutch Employee Insurance Agency) for a period of 3 months for a compensation in wage costs amounting to a maximum of 90% of the total wage costs. This period can be extended once by another 3 months (under conditions to be further determined).
Employers should continue to pay 100% of the wages to the employees involved.
UWV will provide an advance payment of 80% of the requested compensation. This allows companies to continue paying their employees. It is a condition that no employee may be fired for economic reasons during the subsidy period.
The actual loss in turnover will be determined retrospectively. For large applications an audit report is required. When the compensation is determined definitively, an adjustment will be made if there has been a decrease in the total wage costs. Based on the information to be provided, it is possible to determine retrospectively whether the advance payment has been too high or too low, and to determine the final amount of compensation. This may lead to an additional payment or repayment.
For whom can compensation be requested?
The arrangement provides for support in the form of compensation for the wage costs of permanent employees and employees with a flexible contract insofar as they remain employed during the application period. Employers can therefore also continue to employ employees with flexible contracts with the aid of the wage costs compensation. Temporary work agencies can also apply for compensation for agency workers employed by the agency.
When can an application be submitted?
Entrepreneurs can apply for the compensation for a decrease in turnover from 1 March onwards. The temporary emergency measure will be put in place as soon as possible. As soon as it is clear from what moment on applications can be submitted to the UWV, this will immediately be widely publicized.
What happens to WTV applications that have already been submitted?
Applications for WTV that have already been submitted are considered as applications for the new arrangement; additional information will be requested from the applicants.
Extra temporary measures for established entrepreneurs, self-employed workers
The Dutch government will provide for a temporary arrangement for three months that will be made available as soon as possible to support independent entrepreneurs with financial difficulties.
The arrangement is implemented by municipalities. Support may be claimed in the form of additional livelihood support and / or a business capital loan.
The income support for livelihood supplements the income to the social minimum and does not have to be repaid. Nor is there an asset or partner test.
A business capital loan at a reduced interest rate can be applied for to solve liquidity issues.
Unemployment insurance premium differentiation
As of 1 January 2020, as a result of the entry into force of the Balanced Labor Market Act (in Dutch: Wet arbeidsmartk in balans), employers pay a low unemployment insurance premium for permanent contracts and a high unemployment insurance premium for flexible contracts. This scheme also stipulates that employers must pay the high unemployment insurance contributions retroactively for permanent employees who have worked overtime more than 30% in a calendar year. Because this provision can now lead to unintended effects in sectors where the coronavirus requires a lot of extra overtime (for example in the healthcare sector), this will be adjusted.
Furthermore, the period that employers has been provided with to draw up a permanent employment contract in writing, which shows that an employee was already employed permanently on 31 December 2019, to meet the conditions for the low unemployment insurance premium, is extended from 1 April 2020 to 1 July 2020. The reasoning is that it will not be practically possible for all employers to meet this requirement in the coming weeks.
An emergency counter is being developed for the contribution in the form of a donation for the first need to entrepreneurs who have been directly affected by government measures to combat the coronacrisis and who see their turnover wholly or largely disappear. These include food and beverage businesses and other establishments that are forced to cease most of their activities. The allowance concerns a one-off lump sum of € 4,000 for a period of three months. The conditions are currently being drafted.
Tax measures to stimulate cash flow
Special deferral of payment
It is possible to opt for a special deferral of payment with the Dutch tax authorities. This may include deferment of payment of Dutch personal income tax, corporate income tax, value added tax and payroll tax. The entrepreneur, or his adviser, no longer need to immediately motivate, by way of a statement from a third-party expert, that the entrepreneur has got into payment problems due to the coronavirus. Collection will be stopped upon receipt of the request. The requests will be further assessed substantively at a later date.
Tax interest and recovery interest
The recovery interest will be temporarily reduced from 4% to 0.01%. In addition, the tax interest rate will be reduced to 0.01% as soon as possible for all tax debts. Currently the tax rate is 8% for corporate income tax and 4% for other taxes. It is expected that the tax interest rate will be reduced from 1 June 2020 and for the personal income tax from 1 July 2020.
Temporary regulation no default penalty
In the coming period (this period is not specified) the Dutch tax authorities will refrain from imposing default penalties for late payment. In addition, imposed default fines are reversed. We note that so far there is no reference to extension of the term for the timely submission of the tax return.
Decrease preliminary assessment
If applicable, preliminary personal income tax and corporate income tax assessments for the year 2020 may be reduced upon request.
Reclaim VAT paid
If customers can no longer meet their obligations, under certain conditions VAT may be reclaimed.
Provisional loss relief
If a loss is likely to be incurred and a profit has been realized in the previous year, provisional loss relief can be requested under certain conditions. You do not have to wait until the return has been finalized. The provisional loss decision amounts to a maximum of 80% of the deductible loss.
Other measures to stimulate cash flow | Regulations liquidity problems
In the first place the Dutch State Secretary of Economic Affairs and Climate indicated that companies can jointly seek solutions in the form of bridging loans, suspension of repayments and interest payments and suchlike. In addition, the guarantee for MKG loans will be extended. In the current scheme, this is 50% of the financier's credit. The government deposit is 90%. The 50% guarantee credit will be stretched to 75% guarantee credit. This temporary measure will apply until April 1, 2021.
For SMEs and medium-sized and large enterprises, the Guarantee for the Entrepreneur Financing Scheme (in Dutch: Garantie Ondernemersfinanciering-regeling) has been widened from 400 million to 1.5 billion. Under this scheme, a 50% guarantee is provided on bank loans and bank guarantees.
Agricultural and horticultural companies
For the agricultural and horticultural sector, a more favorable scheme for the guarantee of SMEs agricultural loans will apply temporarily.
For the tourist sector, it is being considered in consultation with the Association of Dutch Municipalities whether the collection of provisional tourist tax assessments can be halted.
Please do not hesitate to contact us if you have any questions.
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