Fiscal measures of the coronavirus pandemic
The coronavirus pandemic will have profound economic consequences for Dutch businesses. In this article, BDO will inform you of the fiscal measures made available by the Dutch Tax Authorities when enduring liquidity issues as a self-employed person. They have also included information on how certain measures can help individuals.
The following measures are for self-employed persons:
Deferral of payment
We have all just filed or are about to file our personal income tax return of 2019. Perhaps you already know that the final assessment will include an amount still to be paid and you are holding off on filing your income tax return until you no longer can.
Well, there is no need for that as the Dutch government has announced that you can apply for a special payment extension of the final assessment of personal income tax, corporate income tax, VAT and payroll tax, provided that you indeed have or foresee liquidity issues because of the current crisis.
You can write the Dutch Tax Authorities a letter stating that you have liquidity issues due to the Coronavirus. You will then automatically be granted a 3-month payment postponement and the Dutch Tax Authorities will put on hold any measures in place to collect payment immediately upon receiving of your request.
If you expect the three months not to be sufficient, you can request a postponement for a longer period of time. However, in that case, an expert statement, for instance from an accountant or branch organisation, is required to substantiate your liquidity issues.
Revision of provisional assessment 2020
Deferral of payment as mentioned above is not possible for provisional income tax assessments of 2020 with a date prior to November 1, 2020. However, it is possible to revise the provisional income tax assessment when you expect your income to be less.
The Dutch Tax Authorities will be compiling the new assessment within a few weeks. If the taxes that are due based on the new provisional income tax assessment are lower than the amount you have paid during the first three months of 2020, you will receive a refund.
Temporary changes to tax collection interest and tax levy interest
When you cannot pay a final tax assessment in time, you are usually facing 4% tax collection interest from the moment the payment period has expired. Tax collection interest is also due when deferral of payment has been requested. As this could discourage requesting a postponement, the Dutch government announced that as of March 23, 2020, the tax collection interest has been lowered to 0.01%.
Tax levy interest is charged when the Dutch Tax Authorities are not able to issue a tax assessment in time, for instance, because a tax return was filed too late or for an amount that was too low or because an objection was filed. The tax levy interest is 8% for corporate income tax and 4% for all other taxes. This rate has also been reduced to 0.01% as of June 1, 2020 (for income tax as of July 1, 2020).
No default penalties for failure to pay
In the coming period, the Dutch Tax Authorities will not be imposing default penalties for late payments. Default penalties already imposed will be reversed.
Social assistance benefits & working capital loan
If you are at risk of falling below the minimum level of social income, you can apply for the special coronavirus measure to receive social assistance benefits for a maximum period of 3 months. The conditions are as follows:
- Your company must be registered in the Netherlands Chamber of Commerce prior to March 17, 2020.
- You must comply with the hour criterium of 1225 hours worked per year as an entrepreneur.
When you meet these criteria, your income will be supplemented up to the social minimum, which is 1.500 euros net for married persons and 1.050 euros for singles older than 21. You could also obtain a working capital loan of a maximum of 10.157 euros at a 2% rate for a 3-year period. Until January 1, 2021, there is no repayment obligation.
In case the aforementioned measures are not sufficient and you need help more urgently, the Dutch government has made an emergency facility available. The facility is meant for the ones who work in hospitality, beauty salons and other establishments who have been forced to cease their activities immediately. It regards a one-time amount of 4.000 euros for a period of 3 months.
Most of the aforementioned measures do not apply to individuals. However, there are still certain measures that could benefit them.
Deferral of payment
Even though a deferral of payment is always available, individuals might not be aware of this option. For personal income tax assessments, you can file a request for deferral of payment for a period of four months by calling the Dutch Tax Authorities. The following conditions must be met:
- You have not previously received a deferral of payment for this assessment or other outstanding assessments due to payment problems.
- The total sum of owed taxes is lower than 20.000 euros.
- You have no outstanding assessments for which an enforcement order has been issued.
- The assessment is not a provisional assessment for the personal income tax of 2020, which is dated before November 1, 2020.
Temporary emergency measure bridge for maintaining jobs
Employees could be afraid of losing their job or part of their salary due to the pandemic. The Dutch government wishes to avoid this as much as possible and has therefore made available an emergency fund for employers as compensation for the costs of wages.
Employers can apply for this compensation for a period of three months, provided that the anticipated drop in turnover is at least 20% and the following conditions are met:
- No staff is made redundant during the period compensation is received for economic reasons
- A best-efforts obligation to not decrease the total wage sum, meaning employees will keep their salary as much as possible
Even though parents are not able to make use of childcare services right now unless you have a “vital profession”, the Dutch Tax Authorities ask parents to keep paying as per usual. When payments continue to be made, the parents keep their right to childcare allowance. Part of the payment for childcare regards the parents’ own contribution. The Dutch government’s intention is to compensate parents in this regard as much as possible. Further information will follow shortly.
Consequences for your social security position
Lots of people are working from home due to coronavirus. This could be in another country than where the employee usually works, which could in its turn influence where the employee is covered by social security. The SVB has announced that from a Dutch perspective, they will not take these temporary changes due to coronavirus into consideration when determining a person’s social security position.
If you need assistance with filing a request as mentioned above or would like more information, please do not hesitate to get in touch with BDO. They are happy to assist!