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
You can apply for a special payment deferral from the Dutch Tax Authorities over the next three months, if you are unable to pay your taxes on time. This relaxed deferral policy will apply until 19th June 2020. Applications for special payment deferral must be submitted in writing, or via an online Tax Authorities form. Tax collection measures will be discontinued immediately after receipt of the application. You will not need to pay any fine for the late payment of taxes for which payment deferral has been requested.
- 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?
- How long can I be granted deferral of payment for and do I need to provide security?
- 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 payment difficulties have arisen, or are expected to arise in the near future, due to the corona crisis, then it is possible for all entrepreneurs to apply for special payment deferral from the Dutch Tax Authorities for the following taxes for the next three months:
- income tax;
- corporation tax;
- value added tax (VAT);
- wage tax;
- gaming 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;
- comparable taxes in the Caribbean Netherlands.
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.
- An application for payment deferral should be submitted in writing. The application can now also be submitted via the website of the Dutch Tax Authorities with the use of an online form.
- One application will be sufficient for the deferral of all types of outstanding tax debts. You will automatically be granted a three month payment deferral; this applies to the outstanding debt at the time of the application and to any newly emerging debts related to the aforementioned taxes over the next three months. You therefore do not need to constantly apply for a new deferral.
- Additional requirements will need to be met if you are applying for a payment deferral of more than 3 months. The Dutch Tax Authorities will inform you of what additional information is required.
- If the total tax debt for which you are requesting a deferral is less than € 20,000, providing documents which show the turnover figures or the orders/bookings have significantly decreased compared to previous months should suffice.
- If the total tax debt for which you are requesting a deferral is € 20,000 or more, a statement from a third party expert will be required. The government’s initial reports stated that this third party statement had to show that your company is viable and that the payment problems are of a temporary nature. However, the government has now indicated that it wants to make the third party statement as simple as possible and will soon be providing more detailed information regarding this.
Deferral can be requested for a short period of time (three months, for example), but longer periods are possible too. As the government has called for any bureaucracy around payment deferrals to be kept to an absolute minimum, it seems logical that the Dutch Tax Authorities will not require any securities in short-term deferral cases. However, there is currently no certainty on this point.
The maximum period for which deferral of payment is normally granted is 12 months. The Dutch Tax Authorities may require payment security in the form of a bank guarantee or a mortgage. You may also be required to submit a repayment proposal. Given the scope of the government’s measures, it would appear these points will be dealt with flexibly. However, there is currently no clarity as to how the Dutch Tax Authorities will be specifically dealing with this.
The collection of taxes will stop if you are applying for a maximum deferral of 3 months. The Dutch Tax Authorities seem not be requiring any payment security in such cases.
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.
Recovery interest will become payable if an assessment is paid later than the normal time limit. This recovery interest will be temporarily reduced from 4% to 0.01% with effect from 23rd March 2020. This applies to all tax debts.
The rate of the tax interest will also be temporarily reduced to 0.01%. Tax interest is calculated if an assessment is established late, for example because the tax return has not been submitted with the DutchTax Authorities in time, or not for the correct amount. The tax interest was 8% for corporate income tax and 4% for other taxes.
The temporary reduction of the tax interest percentage will take effect from 1st June 2020. The only exception to this is the reduction of the tax interest percentage in income tax, which will take effect from 1st July 2020.
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. Reporting an inability to pay is deemed to be timely if it takes place within 14 days after the taxes should have been paid.
The VAT on these costs were initially going to be excluded from deduction as a result of the BUA (Turnover Tax Deduction Decree). However, no staff provision has taken place, as the event is not actually taking place. We are therefore of the opinion that the BUA is not applicable and that the right to deduct the VAT on costs which were initially related to staff provisions should not be corrected.