The Netherlands is experiencing severe consequences from the coronavirus outbreak. PKF Wallast has taken  strong measures to ensure the safety and health of employees as much as possible, but just as important, to ensure we remain able to help and advice our clients and relations in these difficult times. Internal meetings have all been cancelled or rescheduled – if possible to online sessions. We also comply with the latest guidelines from our Dutch institute of public health (RIVM). These will remain in place at least until 6 April 2020 but possibly longer when this date is postponed by the RIVM.

I. Coronavirus – points to consider from a tax perspective


Deferral of payment (latest update: 19 March 2020)


Entrepreneurs who are experiencing problems effecting payments or later find themselves in that situation are eligible to request special permission to defer payments of income tax, corporate income tax, turnover tax and wage tax.


In order to soften the impact of the coronavirus on entrepreneurs, the Dutch tax authorities has announced that deferral of payment will be granted if the entrepreneur sets out in writing the reasons why he/she is experiencing difficulties in effecting payments.[1] This softening of the rules means that once the Dutch tax authorities receive that request,  they will immediately stop collecting the taxes concerned. An individual and substantive assessment of the request will be carried out later. The usual requirements for the granting of a deferral will continue to apply. Those requirements are:

  1. Requests must be sent to: Belastingdienst, Postbus 100, 6400 AC Heerlen

  2. The business concerned must have been healthy and viable at the time the coronavirus broke out. Evidence of this must be provided by an expert (such as your accountant or tax adviser, or your bank).

  3. The company must be experiencing genuine problems effecting payments and those problems must have been caused by the outbreak of the coronavirus. This should be explained in the letter.

Update 19 March: There is no need to substantiate the request - as per criterion 2 above - for deferred payment of taxes for three months deferral periods. Three months of extension will be granted automatically upon request, and no penalties for late payment of wage tax or VAT will be imposed. In case your business needs a longer period to pay deferred taxes the Dutch tax authorities may ask you to provide additional proof of your situation and payment difficulties, such as statements by an external party expert.



Requirements that apply when submitting a request for a deferral of payment


A letter requesting special permission to defer payments must include the following:

  • The letter can be submitted in relation to multiple types of taxation, i.e. income tax, corporate income tax, income tax deducted at source and turnover tax.

  • The letter must clearly state the tax assessments/tax returns concerned, including the tax assessment or tax return number and the amounts outstanding.

  • Declaration only required for deferral of more than three months: The Dutch tax authorities also requires that a letter requesting deferral of payment be accompanied by a declaration from a thirdparty expert (such as an accountant or financial adviser). That declaration must demonstrate that:

    • the business is experiencing difficulties in effecting payments, but does not expect to experience further difficulties in the future

    • the payment problems are of a temporary nature and have resulted from the coronavirus

    • the business is viable.

  • This declaration may include:

    • the company’s (predicted) results for 2019, its (predicted) equity capital as at 31 December 2019 and the company’s forecast results for 2020 before the coronavirus broke out

    • the bank balances and credit facilities at the bank that are available to the company, along any other available sources of financing

    • a liquidity prediction showing that the amount of tax owing cannot be met in the forthcoming period as a result of a fall in turnover or increases in procurement costs and ongoing fixed costs

  • An indication of how much time the company will require in order to make up its payment arrears

  • An indication of the results that are expected once this pandemic has ceased.


It goes without saying that we are happy to help you submit your request for a deferral of payments by helping you draw up liquidity forecasts and other similar documents.



Default surcharge


In order be of even greater assistance to entrepreneurs in the coming period, the Dutch tax authorities will temporarily waive or reverse penalties for non/late payment of taxes..



Reducing the provisional corporate income tax assessment 2020


In the case of corporate income tax, companies whose estimated turnover and taxable profits in 2020 have been revised downwards are eligible to request a reduction of the provisional assessment for 2020, by submitting their application electronically in the usual way. One point to consider in this regard is the interest on tax of 8%, which will apply from 1 July 2021 onwards in relation to the 2020 tax year. Towards the end of 2020/the start of 2021, it will therefore be advisable to examine whether the provisional corporate income tax assessment needs to be readjusted, if the results for 2020 are higher, or are estimated to be higher.





As a result of the impact of the coronavirus crisis, entrepreneurs are advised to take the following actions in connection with Value Added Tax.



In most cases, VAT on expenses is tax-deductible for entrepreneurs. In some cases, this applies to cancellations too. Entrepreneurs who have incurred expenses for activities that have subsequently been cancelled are advised to document those expenses and to find out whether the VAT is tax-deductible.


Irrecoverable debtors

Entrepreneurs who have already paid VAT but have not been paid by their customer can reclaim the VAT under the heading of “irrecoverable debtors” once it is established that the entrepreneur will no longer be paid. Entrepreneurs must reclaim such amounts in time. In practice, it can be difficult to determine when a debtor will  not pay or is not going to pay. Whatever the situation, a right to reclaim VAT is deemed to exist one year after the time at which the payment falls due.


Changing the tax period for VAT

Entrepreneurs are free to change their tax period for VAT. It may be advisable for entrepreneurs who anticipate a need to reclaim VAT to submit returns on a monthly basis. In addition to requesting a deferral of payment, entrepreneurs who expect that they will need to pay VAT may find it sensible to switch to quarterly returns.


Tax entity for VAT purposes

If the Dutch tax authorities has issued an assessment decision for the fiscal unity for VAT purposes, all members named on the decision are jointly and severally liable for amounts of VAT owed by the tax entity concerned. Entrepreneurs who have received an assessment decision for a fiscal unity for VAT purposes are advised to review it. By anticipating any liquidity problems that may arise, they can examine what measures they will need to take.


Doing business with other countries

Entrepreneurs who do business with other countries are advised to monitor developments in countries where they are active. At the moment, governments of individual countries are taking different measures in order to assist entrepreneurs – these measures range from payment deferral schemes to (temporary) reductions in tax rates. Entrepreneurs who would like more information about the latest VAT developments in other countries can ask PKF Wallast to put them in touch with local PKF offices in those countries.



Fiscal unity for corporate income tax purposes


A fiscal unity for corporate income tax purposes also provides advantages, such as the mutual offsetting of profits and losses of the various companies during the tax year concerned. A fiscal unity does, however, have a number of disadvantages. One of those that applies while the fiscal unity is in place is that all of the subsidiary companies that form part of the fiscal unity are jointly and severally liable for the corporate income tax that is (formally) owed by the parent company. In addition, the Dutch tax authorities may offset a tax refund received by any company that forms part of the fiscal unity against amounts of tax owed by a different company that belongs to the same fiscal unity. This ability to offset is not just restricted to corporate income tax, but also encompasses other types of taxation such as wage tax and VAT.


Depending on the actual situation, it may therefore be advisable either to place companies in a fiscal unity, or not, as the case may be. Please be careful: Under certain conditions, entering into or breaking up a fiscal unity can also lead to the immediate taxation. When taking decisions of that type, always seek assistance from your adviser.



Notifying your inability to pay in good time


For company directors, there is a risk that they will be held jointly and severally liable for items such as unpaid amounts of wage tax and VAT. In order to limit that risk, it is extremely important that the Dutch tax authorities (the Receiver) is notified in good time and in writing of any inability to pay any amounts of wage tax and/or VAT that are owing. There is a possibility that a request for a deferral of payment may not be regarded as a notification of the inability to pay! In view of the significant financial and personal risk involved, it is therefore necessary that all cases involving an inability to pay be notified correctly and in good time. Generally speaking, an inability to pay will certainly have arisen if a request for a deferral of payment has been submitted.


If an entity has fulfilled these obligations to submit notification, a director will only be found liable if the non-payment of tax owing is the result of manifestly improper management on his/her part during the period of three years prior to the time at which notification is submitted. However, a director will be liable if notification is not submitted on time and in the correct manner, as it will be assumed that the failure to effect payment is his/her fault. In such situations, the period of three years will be deemed to apply up to the date on which the entity is in default. If a director is able to provide evidence that the failure of the entity to fulfil its obligation is not attributable to him/her, that assumption will be withdrawn. In practice, however, providing such evidence is very difficult, which is why notifying an inability to pay correctly and in good time is essential! It goes without saying that we will be happy to assist you with that.



Economic measures in connection with the coronavirus [2]


On 12 March 2020, Ministers Wiebes, Hoekstra and Koolmees sent a letter to the Lower House of the Dutch Parliament containing Economic measures in connection with the coronavirus. The measures in that letter include the following:

  • Subject to certain conditions, companies affected by the impact of the outbreak of the coronavirus may be eligible for the current short-time working scheme.

  • By the end of March, the Dutch Ministry of Economic Affairs and Climate Policy aims to have implemented a temporary expansion of the scheme for government-guaranteed loans to small and medium-sized enterprises (‘Borgstelling MKB-kredieten’ (BMKB)). Meanwhile, State Secretary Keijzer has announced that this scheme has been expanded and will already enter into force on Monday 16 March 2020. Under this scheme, companies will be able to increase their bank loans more quickly, or obtain a connection loan from the bank.

If you wish, we can help you determine whether you are eligible for one of these schemes.



II. Coronavirus – points to consider from a legal perspective


The coronavirus is having a major impact on companies’ business operations, but that impact varies significantly from company to company. Some companies have been forced to temporarily close their doors. Other companies are not receiving the products they require or are not able to make deliveries to customers of their own. All types of employment law problems are also arising. In this part of our update, we will take a closer look at a number of legal matters.


What we are noticing is that the situation is changing every day. So if you have any questions about legal or tax matters, please get in touch with us!



Temporary Emergency Bridging Measure for Sustained Employment (NOW)


Up until 18 March 2020 companies that temporarily had insufficient work available as a result of the coronavirus were able to apply to the Dutch Ministry of Social Affairs and Employment for permission to implement labour-time reduction (“Werktijdverkorting”, Wtv-scheme) as a means of ensuring that their employees can hold on to their jobs. Employers who wished to implement labour-time reduction were able to apply for a permit from the Ministry of Social Affairs and Employment.


The labour-time reduction scheme has been abolished with immediate effect as of 18 March 2020. The Ministry of Social Affairs and Employment announced an alternative, temporarily scheme specifically covering coronavirus affected situations: the Temporary Emergency Bridging Measure for Sustained Employment (NOW). Applications due to the coronavirus filed before 18 March under the abolished Wtv-scheme are ‘transferred’ to the new scheme (no new application is required, however the Dutch government will send these employers a request for additional information).


The new scheme will allow more employers to apply, to prevent as much employees as possible from being laid off and act faster towards entrepreneurs which experience the negative effects of the corona virus on their business.


The Temporary Emergency Bridging Measure for Sustained Employment (NOW) will soon be open to apply for by entrepreneurs who expect to experience at least 20% of revenue loss. Revenue loss will need to be substantiated later and will only be regarded as from 1 March 2020. These employers can get a three month employment cost allowance with a maximum of 90%, related to the revenue loss percentage. An additional allowance period of three months (six months in total) could be granted upon request too. A crucial criterion for the application of this scheme is for the employer to NOT apply for redundancy permits on economic grounds, during the application of this scheme.

Employers have to continue to pay wages in full to their employees during this period.


The compensation for wages an employer can claim depends on the turnover loss. For example:

  • If the turnover loss is 100%, the compensation will amount to 90% of wages;

  • If the turnover loss is 50%, the compensation will amount to 45% of wages;

  • If the turnover loss is 25%, the compensation will amount to 22.5% of wages.


Employers can apply for the NOW to the Dutch Employee Insurance Agency (UWV). This is currently not possible yet. It is expected the NOW will be open to apply for within one or two weeks.


Based on the application the UWV can pay employers an advance of 80% of the expected compensation. The actual turnover loss will be determined afterwards, after which a correction can be made.


Finally we wish to point out the Dutch government is still working on the details of the NOW. For this reason we do not yet know if the NOW will be available for foreign employers with (Dutch) employees working in the Netherlands. We will off course keep track of any announcements made by the Dutch government regarding the NOW.



Redundancy on economic grounds 


Please note that a fundamental condition of the NOW (see above) states that employers are not allowed to request permission to dismiss employees on economic grounds during the period for which the compensation is received! This means redundancy on economic grounds by requesting the UWV for permission is only possible (i) if no NOW-compensation is being received or (ii) after the period during which NOW-compensation has been received has ended.


A fundamental decrease in the amount of work available as a result of the coronavirus may constitute one of the grounds for employees to be made redundant on economic grounds. One possible approach that may be adopted involves employers attempting to reach severance agreements with employees that will result in their contract of employment being terminated by mutual consultation or consent. If this proves unsuccessful, however, the employer will need to ask the Employee Insurance Agency (UWV) for permission to make employees redundant.

We wish to point out, however, that discussing the possibility of voluntary severance with employees is not without risk. Our recommendation would be that employers should not start holding such discussions until after they have submitted a (provisional) application to the UWV to make employees redundant. Under the terms of the law, employers are subject to a ban on termination (redundancy ban) if an employee is sick. This ban does not apply, however, if a request was already submitted to the UWV before the employee reported sick.  If consultations with an employee lead to an agreement, the procedure with the UWV for the employee concerned can be withdrawn.


Redundancy on economic grounds that is subject to the approval by the UWV is subdivided into a number of economic grounds, such as the poor financial situation of a company, a reduction in working hours, a full or partial cessation of activities, restructuring, etc.


The employer is however obliged to abide by the current rules governing redundancy on economic grounds. This means, for example, that the employer must take account of the age bracket principle (the employer is not free to choose which employees are eligible for redundancy). The employer must also provide evidence that it is seeking to make employees redundant on economic grounds and that the situation is not expected to improve in the short term.


Once the employer has fulfilled all of the criteria, the UWV will give permission for the employer to make the proposed employees redundant. The employer will however be required to take into account the (remaining) notice period that applies. The employer will also be required to make the transition payment to those employees who are made redundant. If an employer is required to make more than twenty people redundant, it must also hold consultations with the trade unions.


An employer will only be permitted to terminate a contract of employment if redundancy is being sought on economic grounds and if the employee concerned cannot be transferred to another suitable position, whether retraining is required for that position or not.



HR questions in connection with the coronavirus


The outbreak of the coronavirus has given rise to a great many questions amongst employers. We will not be able to answer all of those questions in this memo. The reason for this is that the answer to a question often depends on the situation, but that situation is changing constantly.


Let us give an example:

One question concerns a situation in which an employee in quarantine as a result of the coronavirus is entitled to continue receiving his/her salary. If the employee is sick and is in quarantine for that reason, he/she will be entitled to continue receiving his/her salary. If the employee is not (yet) sick, however, the situation is not so clear. If an employee has been on a business trip and is required to go into quarantine as a precautionary measure as a result of having undertaken that trip, the employer will be required to continue paying that employee’s salary. After all, the employee has been exposed to the risk of infection in the course of his/her work. But if the employee is required to go into quarantine as a result of holiday travel and the employer warned the employee in advance not to travel to a country that was the subject of an official negative travel advice, the employer may take the view that the cost of the period spent in quarantine must be borne by the employee.


Another question concerns employees who have no form of day-care in place for their child once the child’s school or day-care has closed down. When the employee has no alternative than to be with the children himself / herself than he / she may claim emergency leave (from one day to a few days) for that purpose. If the employee is unable to arrange day-care, the question then arises as to whether the employee will be required to take the necessary time from his/her holiday entitlement or will be entitled to make use of his/her entitlement to take short-term care leave. If the child itself is not sick, the question then arises as to whether an employee is entitled to take care leave in the first place. At the moment, it is assumed that this is possible. Different rules may however apply in accordance with the employer’s personnel handbook and/or the Collective Labour Agreement. Short-term care leave can be taken for no more than two weeks a year; the employee will then continue to receive 70% of his/her salary (or the minimum wage, if this is higher).

If an employee wishes to or is required to stay at home for longer, the employer and the employee will need to agree the arrangements governing matters such as taking unpaid leave or taking time out of the employee’s leave entitlement. This may not be necessary, however, as the employer and employee may be able to reach an agreement regarding different work (that can be performed at home) or different working hours (at a time when another person can take care of the child).


Duty of care

It is extremely important that employers take all precautionary measures to prevent individuals becoming infected with the coronavirus. The employer is responsible for ensuring that its employees are able to carry out their work in surroundings that are as safe as possible. If employees risk becoming infected with the coronavirus as a result of their work, it is the employer’s responsibility to do everything in its power to prevent infection taking place.


If the employer has not done everything it can to protect its employees from becoming infected, the employer will have failed to fulfil its responsibility. If the employer is found liable, financial consequences may arise. In this case, the employer will, as a minimum, be required to adhere to measures recommended by the National Institute for Public Health and Environmental Protection (RIVM), in order to fulfil its duty of care.





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