Further to the measures already announced on 12 March 2020, the Dutch government earlier this week announced additional extraordinary measures (both tax and non-tax related) to mitigate the economic impact of the corona crisis. Below we will summarize some of these temporary measures.
Deferral of tax payments
As already described in our Tax Alert of 17 March 2020, taxpayers can file a request for an extraordinary deferral of the payment of personal income tax, corporate income tax, VAT and wage withholding tax. The government has announced this week that the conditions for such deferral will be relaxed. Most notably the taxpayer is granted more time to substantiate its financial difficulties. In addition, an important enhancement will be provided in the form of a reduction of interest payable on any tax due, to (almost) 0%. This is significant as under current Dutch tax law interest rates can be in the range of 4% - 8% depending on the specifics and the type of taxes concerned. Penalties for late payment will also not be levied.
Businesses expecting a significant reduction in turnover (i.e. at least 20%) can apply for a reimbursement of salary costs with a maximum of 90% (depending on the lost turnover) for a period of three months. One of the conditions for such reimbursement is that the businesses cannot dismiss employees during this period for economic reasons. This measure replaces the working time reduction arrangement mentioned in our tax alert of 17 March 2020 and provides for a more generous compensation.
In addition, businesses that experience difficulties with attracting bank loans and bank guarantees can apply for a special guarantee finance arrangement set up by the Government. The maximum amount available per business is Euro 150 million and the overall maximum of this arrangement is Euro 1.5 billion.
Furthermore, the Government is expecting to withdraw certain local (municipality) taxes such as tourist taxes.Suggestions by the Dutch Organization of Tax Advisors The Dutch Organization of Tax Advisors (NOB) sent a letter to the Dutch Ministry of Finance with further tax suggestions to mitigate the economic impact of the corona crisis. Also taking into account the measures that were introduced as part of the financial crisis in 2008, the NOB proposed amongst others the following (without repeating the measures already introduced by Government): extending the loss carry forward and carry back rules for corporate income tax purposes, reducing the corporate income tax rate, an immediate depreciation of certain business assets, more budget for stimulating environmentally friendly investments and enhancing R&D incentives. In addition, the NOB proposed measures to reduce the administrative burden of businesses, such as extension of tax return filing deadlines and the introduction of the possibility to file letters of appeal online. Furthermore, the NOB suggests that the Dutch tax authorities take a lenient approach towards the substance requirements that apply for corporate income tax and dividend withholding tax purposes (also as there are currently substantial travel restrictions for board members).
Proposal from the European Commission for a state aid temporary framework
This week the European Commission sent a draft temporary framework to the Member States for consultation. This draft temporary framework permits, for a limited period of time, certain categories of state aid, in order to provide support to the Member States to combat the corona crisis. One of the types of aid that would be allowed pursuant thereto are aid schemes set up by Member States to grant up to Euro 500,000 to a business to address its urgent liquidity needs. This can be done through a direct grant or a tax advantage.
More about the coronavirus
You can read more publications on the impact of the coronavirus on our website. Here you will also find a list of contacts within our organisation who can advise you with questions about the implications of the coronavirus for your company.