Relaxed tax measures due to coronavirus

The government implemented a number of tax measures to meet entrepreneurs who are experiencing financial issues due to the coronavirus. For instance, deferment of payment of tax assessments can be requested and 2020 provisional assessments can be reduced. In this article you can find answers to frequently occurring questions and we address some other tax aspects that are related to the coronavirus.

Questions and answers

1. I received a provisional income tax assessment / corporation tax assessment over 2020 and I now expect it to be too high. Should I continue paying the taxes?

If you expect the profit over 2020 to be lower than the profit mentioned on the provisional assessment then you can have the provisional assessment reduced. After a request for change has been submitted, a revised assessment usually follows within three to four weeks. Until the new assessment is available, the initial assessment must basically be paid. It is, however, possible to request deferment of payment of the initial assessment.

2. Should I also still pay my other tax assessments?

Every assessment should basically be paid within the time limit mentioned on the assessment.

However, if payment difficulties arise or shall arise in the near future due to the coronavirus then it is possible for all entrepreneurs to request special deferment of payment for the coming three months with the Dutch Tax Authorities for all income tax, corporation tax, turnover tax (VAT) assessments and payroll taxes. For special deferment a written request should be sent to the Dutch Tax Authorities. For the content and additional conditions see question 4) below.

Immediately after receipt of the request the collection measures are discontinued. You do not need to pay a fine for late payment of VAT or payroll taxes.

If you are not experiencing any difficulties now or in the near future yet but you do expect them to arise in the longer term then the assessment must be paid up to that moment. Only when payment difficulties become relevant can you qualify for special deferment.

3. Does the special deferment only apply to taxes in the current year? 

No, special deferment applies to all yet outstanding years. 

4. What are the conditions to obtain deferment of payment?

You should submit the request for deferment of payment in writing. You must explain in the request how you ended up or shall in the near future end up in payment difficulties due to the outbreak of the coronavirus. On 19 March last the government decided that a request for deferment of payment of at most three months is honoured without further administrative requirements. If a longer deferment is requested then the Dutch Tax Authorities may require additional information, e.g. in the form of an opinion of a third-party expert. What exact information shall in that case additionally need to be supplied will be communicated shortly by the Dutch Tax Administration.

5. How long can I obtain deferment of payment and do I need to provide security?

Deferment can be requested for a short period of time (for instance three months), but also longer. Because the government requested to reduce the bureaucracy relating to the deferment of payment to a minimum, it seems to be logical that in case of a short deferment the Dutch Tax Authorities will not require securities. However, at present there is no certainty on this point.

The maximum period for which deferment of payment can usually be granted is 12 months. In this respect the Dutch Tax Authorities may require security for the payment in the form of a bank guarantee or mortgage right. It may also be required that you submit a repayment proposal. Having regard to the scope of the measures of the government it seems that these points shall be handled flexibly. However, at the moment it is not clear how the Dutch Tax Authorities shall handle this specifically.

6. If I requested deferment do I continue paying the assessments for which I requested deferment until I receive a reaction from the Dutch Tax Authorities?

If you submitted a request then, for the time being, you do not need to pay the tax assessments for which you requested deferment. The Dutch Tax Authorities discontinue the collection. The substantive assessment of the request takes place later. You automatically receive a reaction. Until then you do not need to pay the relevant assessments.

7. Can I request the Dutch Tax Authorities for deferment of payment in connection with the consequences of the coronavirus by telephone?

No, a request can only be submitted in writing.

8. Is interest payable in case of deferment of payment?

If an assessment is paid later than the normal time limit then recovery interest is payable. From 23 March 2020 the said recovery interest is temporarily reduced from 4% to 0.01%. This applies to all tax liabilities.

The rate of the tax interest is also temporarily reduced to 0.01%. Tax interest is calculated if an assessment is established late, for instance because the return is not submitted to the Dutch Tax Authorities in time or not for the correct amount. The tax interest was 8% for the corporation tax and 4% for other taxes.

The temporary reduction of the percentage of the tax interest takes effect from 1 June 2020. The only exception to this is the reduction of the percentage of the tax interest in respect of the income tax, which shall take effect from 1 July 2020.

9. I am a director of a BV and the BV cannot pay the turnover tax / payroll taxes / duties / games of chance taxes / consumption taxes / environmental taxes. Now what?

Paying turnover tax / payroll taxes / duties / games of chance taxes / consumption taxes / environmental taxes late may result in joint and several liability for you as a director if the payment inability was not reported to the Dutch Tax Authorities in a timely fashion. A notification of payment inability was submitted in a timely fashion if it takes place within 14 days after the taxes should have been paid.

10. As an entrepreneur can I reclaim the VAT already paid on cancelled events from the Dutch Tax Authorities?

In a number of situations we see options to reclaim the already contributed VAT from the Dutch Tax Authorities. This can be particularly favourable if the entrepreneur does not repay the amounts received from the ticket holders.

11. Can I, as an employer, deduct the VAT on costs with regard to cancelled staff events?

Initially, the VAT on these costs would be excluded from deduction due to the effect of the BUA (Dutch Turnover Tax (Deduction) Decree). However, because the event is actually not taking place, no staff provision took place. As a consequence we are of the opinion that the effect of the BUA can be set aside and the right to deduction of the VAT on costs that were initially related to staff provisions should not need to be corrected.

Other tax aspects

Energy tax

In certain instances, the government wants to defer the levy of the energy tax and/or the levy of the Sustainable Energy Surcharge (SES). The government is examining how substance can be given to this.

Provisional 2020 loss set-off

A tax aspect to keep in mind is the provisional loss set-off.

If you expect a loss over the 2020 financial year then you can set this loss off against the profit of the 2019 financial year. When submitting the 2020 return you can set 80% of the provisional loss off against the 2019 profit, provided that the 2019 assessment was established definitively.

Postponement of mortgage repayments for your home

If you have a mortgage for your own home, the interest on that mortgage is deductible from 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’s 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 mortgage interest on that mortgage no longer being deductible from your income from that moment on.

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 make use of the interest deduction.

It can be argued that a tax payer who has taken out a similar mortgage for his own home with his own BV (private company) also has options for temporarily not repaying the loan.

Finally

We keep you informed if further measures are announced.

Do you still have questions about the tax measures regarding the coronavirus? Then you can contact our corona help desk on 038 425 86 00.