ADDITIONAL DUTCH FINANCIAL, TAX AND IMMIGRATION MEASURES IN RESPONSE TO THE CORONAVIRUS
On Tuesday evening 17 March 2020, the Dutch government announced new and adjusted measures in order to support Dutch businesses, corporate companies, employees and self-employed persons. The measures are additional to the measures already announced on 12 March 2020 and stimulate that funds can be kept within the business via helpful tax measures, compensation and additional credit possibilities.
The outbreak is also disrupting cross-border travel and rules related to immigration are changing rapidly. Global- and local employers are faced with issues as to how to manage their foreign employees whilst trying to continue their business operations.
We will briefly discuss the most important tax- and immigration measures below.
FINANCIAL AND TAX MEASURES
1. Introduction of temporary arrangement compensation labour costs (NOW)
The current regulation ‘part time unemployment benefits’ (werktijdverkorting) will be ceased effective immediately. Requests already filed will be handled under a newly introduced arrangement (whereby additional information may be requested). Under this new introduced ‘Temporary Arrangement Compensation Labour Costs’ (NOW), companies expecting losses in turnover of at least 20%, could request compensation at the ‘Executive Institute for Employee’s Insurances’ (UWV) for a period of three months in respect of salary costs (maximum of 90% of the salary costs, depending on the turnover loss).
The compensation concerns the salary costs of permanent and flexible employees, under the condition that they continue to be employed during the respective period.
Employers continue to pay 100% of the salary of the employee. Further guidance in respect of the calculation is not yet published into detail, but from an initial perspective it seems that the compensation is as follows: turnover loss (per 1 March 2020) x 90% x salary costs.
The UWV will provide an advance payment of 80% of the requested compensation. As of a certain amount of compensation an accountant statement is necessary. At the final determination of the compensation, a correction is made in the case of a decrease of the salary, whereby an additional payment, or a repayment could be applicable.
The period of three months could be extended once for an additional three months. Additional conditions may apply in this respect.
The NOW will be opened as soon as possible and will replace the current ‘part time unemployment benefits’. As mentioned, if you have already filed a request under the
current legislation, this request will be handled as a request under the NOW. The compensation could be requested with retroactive effect to 1 March 2020.
2. Additional support for entrepreneurs / self-employed
A temporary arrangement will be introduced for entrepreneurs, among others self-employed persons, in order to stimulate continuance of their business. The arrangement will be executed by municipalities.
Self-employed persons can receive income support for a period of three months. The request time will be reduced from 13 weeks to 4 weeks. The amount of the income support depends on the income and the household composition and may amount to a maximum of € 1,500 (net) per month. The income support is a gift.
This accelerated procedure also applies to a specific loan that can be provided to the business by the government amounting to maximum €10,157. The loan can be provided against a lower interest rate and an extended repayment obligation.
3. Increase of extension of payment in respect of taxes
After receiving a specific written request, the Dutch Tax Authorities will directly grant extension of actual payment for VAT, personal income tax, Dutch wage tax and Dutch corporate income tax. An individual analysis will be performed later by the Dutch tax authorities. Further, it is not necessary to immediately provide the normally obliged ‘third party statement’ as a supplement to the request.
4. No default penalties
In order to temporarily support companies, any default penalties for non- or late payment of taxes will be waived. Moreover, the Dutch Tax Authorities will reverse any default penalties if they were already imposed.
5. Relaxation of collection interest and interest on underpaid tax
In principle, if an assessment is not paid in time, 4% collection interest (invorderingsrente) applies if the payment term is due. To stimulate that companies can request extensions for tax payments, the collection interest will be reduced from 4% to 0.01% per 23 March 2020 for all taxes.
The current interest rate on underpaid tax (belastingrente) e.g. with respect to provisional tax assessments (see below) is 8% for Dutch corporate income tax, and 4% for other taxes. In order to support companies, per 1 June 2020, the interest on underpaid tax will be reduced to 0.01% (per 1 July 2020 in respect of personal income tax).
6. Request to reduce provisional assessments
In principle, companies pay taxes based on a provisional assessment (Dutch corporate income tax or personal income tax). Companies that expect a reduced profit due to the corona crisis, may apply for a reduced provisional Dutch corporate income tax or personal income tax assessment. Such a request needs to be filed electronically and will be automatically granted by the Dutch tax authorities. In case the amount on the adjusted provisional assessment would be lower than the already paid tax in the first three months, the difference will be repaid by the Dutch tax authorities.
7. Other non-fiscal measures
The Dutch government has announced several other (non-fiscal) measures that mainly relate to softening credit conditions and related aspects. In addition, a so called ‘Emergency Counter’ will be introduced where entrepreneurs in specific sectors can receive a gift of € 4,000 for a period of three months.
IMMIGRATION AND LEGAL MEASURES
1.Residence permit consequences temporary arrangement compensation labour costs (NOW)
Our office is receiving the question whether the ‘Temporary Arrangement Compensation Labour Costs’ (NOW) will jeopardize the residence- and work authorisation. The answer to this question is “no” the status will not be jeopardized as employers continue to pay 100% of the salary of the employee whilst the UWV provides an advance payment of the requested compensation. Pension contributions will continue and accrual is not disrupted.
2. Valid temporary residence permit (“MVV”) and residence permit issuance
Under Dutch immigration law, it is mandatory to pick up the issued residence permit card whilst in the possession of a valid MVV. For those nationals whom have travelled into the Netherlands with a valid MVV and whereby issuance of the residence permit has been suspended (at this point up to April 6th) due to the fact that an appointment cannot be made, please do not worry. It is possible to make a new appointment to pick up the issued card even if the MVV has expired.
3. Restriction for travelling
All Schengen area borders will be shut down (proposal March 11th at 18:00 hours) for those travelling to the EU for non-essential travel. EU nationals and their family members, diplomats, EU long-term residence permit holders, essential staff, frontier workers, MVV-holders and individuals transporting goods will be exempted from the restriction to travel. If you are in the possession of a visa, please take the following steps:
- If you are unable to travel to the Netherlands with your visa, please inform the Dutch Consulate in your main place of residence that you will not make use of this visa. Your visa will then be withdrawn allowing for a new application when necessary.
- If you are already in the Schengen area (and cannot travel out) please contact the local Immigration Authority (IND) and request an extension of the visa in order to avoid an overstay.
Please contact Leon van Baal (tax) or Hélène Jonker (immigration) if you have any questions regarding the above. We are happy to assist and can be reached by phone, Whats-app or email. Holding meetings by conference calls or Skype are of course also possible.
As our Prime Minister mentioned, “together we will overcome this difficult period. Pay attention to each other”. We can only agree to these words!