Relaxed tax measures due to coronavirus
The Dutch government has implemented a number of tax measures in order to meet the needs of entrepreneurs who are experiencing financial difficulties as a result of the corona crisis. This includes the option of applying for a tax payment deferral and reducing provisional 2020 tax assessments. In addition to detailed information about these measures, we will also be providing answers to frequently asked questions. Finally, we will address a number of other tax aspects which are related to the corona crisis.
Tax payment deferral
Applications for the special payment deferral must be filed in writing, or by means of an online form provided by the Tax Authorities. As soon as the application has been received, any tax collection measures will be halted. You are not obliged to pay any fines regarding late payment of the taxes for which you have requested a deferral. The Baker Tilly tax advisors are available to assist you in filing the application for a payment deferral for tax assessments, and they can advise you on the consequences of the deferral. Additionally, we can provide you with insight into the consequences, with regard to your working capital, of the payment deferral for tax assessments. Take a look at a number of Frequently Asked Questions here:
- For which taxes can you request a special payment deferral from the Dutch Tax Authorities?
- Does the special deferral only apply to the current year’s taxes?
- What are the conditions for being granted deferral of payment?
- Can I apply for the deferral of payment in connection with the consequences of the coronavirus from the Tax Authorities by telephone?
- Will interest become payable in case of deferred payments?
- I am a director of a BV and the BV can’t pay the value added tax / wage tax /
excise duties / gaming tax / consumption tax / environmental tax. What should I do?
Reducing the provisional 2020 tax assessments
Have you, as an entrepreneur, already received a provisional 2020 income tax assessment or 2020 corporate income tax assessment and you now expect the profits to be lower? It would then be advisable to adjust the level of estimated 2020 profit by submitting a request to reduce the provisional tax assessment. A revised assessment usually follows within three to four weeks of submitting a request for change. The initial assessment must, in principle, be paid until the new assessment is available. It is, however, possible to request a payment deferral for the initial assessment.
Other relevant tax aspects
VAT and cancelled events
Baker Tilly has identified possibilities for reclaiming VAT already paid from the Dutch Tax Authorities in a number of situations. This can be particularly beneficial if the entrepreneur is not refunding the amounts received back to the ticket holders. Read more…
The government wants to defer the levying of the energy tax and/or the Sustainable Energy Surcharge (SES) in certain cases. It has been agreed that the energy suppliers can pay the energy tax and SES for the supply of natural gas and electricity during the months of April, May and June 2020, as well as any applicable VAT, at a later time than usual. The government has announced that the approval will be formulated in a decree.
Provisional loss adjustment for 2020
The provisional loss adjustment is one tax aspect to bear in mind. If you are expecting a loss for the 2020 financial year, this can be offset against any profits for the 2019 financial year. When submitting the 2020 return, you can offset 80% of the provisional loss against the 2019 profits, providing the 2019 assessment has been definitively established.
Reduction in customary wage
Are you a Director/Major Shareholder and do you carry out activities for your BV? Then you would normally have to pay wage tax on a minimum salary, the so-called customary wage. The minimum customary wage in 2020 is € 46,000.
A lower wage than the customary wage would be acceptable if you can demonstrate that the continuity of your BV’s business would be jeopardised when paying such a wage. You may well be able to argue that the corona crisis has resulted in a lower customary wage for you in 2020.
If your BV’s business is currently struggling with financial problems as a result of the corona crisis, but is expected to start recovering again later in 2020, the Tax Authorities may state that you should have received the regular customary wage in 2020.
Deferral of mortgage payments
If you have a mortgage for your own home, the interest on that mortgage is deductible from your taxable income under certain conditions. One of the conditions for mortgages which form part of the new regulation, which took effect from 1st January 2013, is that the mortgage is minimally repaid on an annuity basis over a maximum of 30 years.
Various banks are currently indicating that customers can temporarily postpone mortgage repayments for their own homes as a result of the corona crisis.
If you have a mortgage which forms part of the new regulation which took effect on 1st January 2013 and which therefore needs to be repaid either on a linear or annuity basis, it is important for you to make up any deferred repayments in time, in order for you to maintain the interest deduction. In that case, you must have repaid the mortgage at the end of the following calendar year to such an extent that the principal mortgage amount is at the same level as agreed in the repayment schedule at that time. Not doing so will result in the full interest on that mortgage no longer being deductible from your income.
Temporarily not repaying your mortgage in 2020 is therefore not a problem, providing you have repaid as much as you should have repaid on the mortgage by 31st December 2021. This means that you, once you have been granted a postponement of your mortgage repayments, will need to repay extra to continue to use the interest deduction.
It can be argued that a Director/Major Shareholder who has taken out a similar mortgage for his own home with his own BV also has options for temporarily not repaying the loan.
Frequently Asked Questions
Every assessment should basically be paid within the period stated on the assessment. However, if the payment difficulties were caused by the coronavirus, all entrepreneurs have the opportunity (until 31 December 2020) to request a special payment deferral from the Tax Authorities for the following taxes:
- personal income tax;
- corporate income tax;
- value added tax (VAT);
- wage tax;
- gambling tax;
- insurance tax;
- landlord levy;
- environmental taxes (energy tax/sustainable energy surcharge tax, coal tax, waste tax, tap water tax);
- excise duties (mineral oils, oils and tobacco);
- consumption tax of non-alcoholic drinks.
An application for a payment deferral for, for example, VAT and wage tax, can only be made if an assessment has been imposed.
A payment deferral will be granted upon request if businesses are temporarily unable to meet their payment obligations in respect of customs duties.
Entrepreneurs with a G-account will be able to release the G-account up to the amount for which a special payment deferral has been granted. This will give them the same options as entrepreneurs without a G-account. Instructions for applying for the (additional) release have been posted on the website of the Dutch Tax Authorities.
No, special deferral of payment applies to all outstanding years.
- You have until 31 December 2020 to apply for the payment deferral for taxes. It is also possible to prolong a previously granted payment deferral until 31 December 2020.
- If you wish to prolong a previously granted 3 month payment deferral, additional requirements apply. For example, the current payment difficulties must warrant a deferral of more than 3 months. Additionally, you are not permitted to distribute dividends or bonuses over the year 2020. The payment deferral can be requested until 31 December 2020, and ends ultimately on that date. After 1 January 2021, the Tax Authorities offer a payment scheme with which you can pay the tax debt gradually. This payment scheme will run from 1 July 2021 until 1 July 2024.
- If you apply for a payment deferral for a tax debt in excess of € 20,000, you will need to provide a statement from a third party expert, in addition to the previously mentioned requirements. This is also the case if you were previously granted a payment deferral for a tax debt in excess of € 20,000 and wish to prolong this deferral. This statement should include the following elements:
- A statement that it is plausible that there were real payment difficulties at the moment the application was filed, or that payment difficulties are to be expected in the short term.
- A statement that it is plausible that these payment difficulties were caused primarily by the corona crisis.
- A liquidity forecast which is considered plausible by the third party expert. This forecast should be drawn up based on the facts and circumstances known at the time when the application for payment deferral is filed.
The third party expert should indicate in the explanatory notes to the statement, which documentation or information was provided by the entrepreneur.
Can I apply for the deferral of payment in connection with the consequences of the coronavirus from the Tax Authorities by telephone?
No, an application can only be submitted in writing (a letter by post), or with the use of the Dutch Tax Authorities’ special online form.
If a tax assessment is not paid within the regular payment term, collection interest is due. Additionally, tax interest is normally due in cases where a tax assessment is issued too late, for example if the tax return was not filed with the Tax Authorities on time, or if the reported amount was too low. As part of the corona-related tax measures, the tax interest rate was lowered to 0.01% until 1 October 2020. As of 1 October 2020, the tax interest rate for all taxes is 4%. The collection interest rate is 0.01% until 31 December 2021.
I am a director of a BV and the BV cannot pay the VAT / wage tax / excise duties / gaming tax / consumption tax / environmental tax. So what happens now?
Late payment of turnover tax / wage tax / excise duties / gaming tax / consumption tax / environmental tax can lead to joint and several liability for you as a director if the inability to pay was not reported to the Dutch Tax Authorities on time. The notification of the inability to pay no longer needs to be filed separately if, in your role as director, you have applied for the corona-related payment deferral for wage taxes and/or VAT. The Dutch Ministry of Finance has indicated that a request for the special corona-related payment deferral will in principle also be regarded as a notification of the inability to pay.