For our international clients, we have updated our English news about the Dutch support measures below.
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— Thursday, 21 May —
The first support package (previous text below), presented in mid-March, comes to an end on 31 May. On Wednesday, 20 May a second support package for entrepreneurs was announced. This largely extends the measures for a further three months (from June to August). What changes will the new package introduce? There will now be more compensation available for fixed costs, the redundancy penalty under the Temporary Emergency Bridging Fund for Employment (NOW scheme) will be removed and seasonal businesses will be offered a helping hand. In addition, a partner test will be introduced under the Temporary Bridging Scheme for Independent Entrepreneurs (Tozo).
We are keen to ensure we provide up-to-date information. As we are writing, however, the government is constantly announcing new additions or improvements to (new) schemes. The overview in this Coronavirus Newsletter is based on the information available as at 8 p.m. on Wednesday, 20 May.
Under the Reimbursement of Fixed Costs for SMEs scheme (in Dutch: Tegemoetkoming Vaste Lasten MKB (TVL)) companies can obtain compensation for their fixed costs. This will be capped at € 20,000 for the next three-month period. The level of the compensation received will depend on the size of the company, the level of its fixed costs and the drop in turnover suffered, which must amount to at least 30%. This requirement makes the scheme less accessible, as under the existing Contribution for Entrepreneurs in Sectors Affected by COVID-19 scheme (TOGS) it was necessary for a company’s turnover to have fallen by at least € 4.000 and the company must have at least € 4.000 fixed costs. The new scheme is also open to the same affected sectors that were eligible for the TOGS scheme. These include catering, recreation, gyms, events, fairs, gambling halls, venues and theatres. The compensation paid under the new scheme will also be free of tax.
Under the extended NOW scheme (NOW 2.0) a number of changes have been made. One example is the removal of the redundancy penalty. In addition, conditions apply to dividend payments and bonuses, and seasonal businesses are being offered a helping hand.
Companies that have suffered a drop in turnover can obtain a contribution towards their payroll costs. This NOW scheme reimburses up to 90% of the payroll costs of companies whose turnover drops by at least 20%. The maximum compensation of 90% applies if a company loses all of its turnover. If the drop in turnover is smaller, the compensation is reduced proportionately. This means that if a company sees its turnover fall by 50%, it can receive compensation for 45% of its payroll costs.
The drop in turnover is determined over a three-month period, for which the company can choose 1 June, 1 July or 1 August as the starting date. In the case of applicants who are taking advantage of the NOW scheme for a second time, the turnover period must fit in with the timeframe chosen for the first scheme period.
Under NOW 2.0 the level of the wage bill is derived from the wage bill for March. Any subsidies that entrepreneurs receive within the context of the coronavirus crisis are counted as turnover for the purposes of both NOW 1.0 and NOW 2.0. As a result, entrepreneurs who also receive a contribution on the basis of the TOGS scheme receive a lower contribution via the NOW scheme.
The government hopes that the extended contribution towards payroll costs for June, July and August will be open for applications from 6 July. It is now possible to apply for the payroll costs subsidy under NOW 1.0 until 5 June (previously 31 May).
The fixed (flat-rate) mark-up is being increased from 30% to 40%. In this way the NOW scheme will also contribute towards costs other than payroll costs.
An adjustment has been made to NOW 1.0 with a view to supporting seasonal businesses that increased their workforce between January and March. The wage bill for March will now be taken as the frame of reference instead of the unrepresentative wage bill for January.
If the wage bill from March to May is more than three times the wage bill for January, the wage bill from March to May is taken as the basis for calculating the final subsidy. The wage bills for April and May will then be capped at the level of the wage bill for March, with 15 May as the reference date. This new calculation method will automatically apply to all employers who have a higher average wage bill over the period from March to May compared with January (including capping).
Additional conditions for bonuses
A company that takes advantage of the NOW scheme this year may not distribute any dividends to shareholders, pay any bonuses to its board and/or management or buy back any of its own shares. The condition that no transactions of this nature may be effected in 2020 will apply up to the shareholders’ meeting in 2021 when the financial statements are adopted. Dividends, bonuses and shares for 2019 are not subject to this condition. ‘Bonuses’ is also understood to cover profit-sharing and other forms of bonus payment. This ban only applies to companies that are receiving a contribution for which a declaration from an accountant is required. The situations in which such a declaration is required will be announced later.
Redundancy penalty removed
Under NOW 2.0 the redundancy penalty imposed on an employer who makes employees redundant for commercial reasons while receiving the NOW subsidy is being removed. This applies to redundancy applications submitted to the Employee Insurance Agency (UWV) between 1 June and 31 August 2020.
If companies wish to apply to make more than 20 people redundant for commercial reasons, they must consult with trade unions on the proposed redundancy for a period of four weeks. This is required under the Collective Redundancy (Notification) Act. The statutory protection in the event of redundancy remains in force, which means the employer is still obliged to make a transition payment.
Further training and retraining mandatory
Employers who apply under NOW 2.0 will be subject to a best-efforts obligation to encourage their employees to participate in further training and retraining. The aim is to limit the number of compulsory redundancies as a result of the coronavirus crisis as much as possible. To this end, the government is making a € 50 million training package available under the name ‘NL leert door’ (‘The Netherlands keeps learning’). This package, the further details of which are yet to be worked out, will include development advice and online training specifically geared towards career steps that are relevant to the needs of the labour market.
Support under the Temporary Bridging Scheme for Independent Entrepreneurs (Tozo) for self-employed persons in financial need will also continue. The supplementary income support provided to help with living costs is being extended until the end of August 2020. Under the Tozo scheme a person’s income is supplemented up to the level of the minimum social income and this does not have to be paid back.
Conditions tightened to include partner test
Unlike Tozo 1.0, Tozo 2.0 will include a partner test. If the partner’s income results in the family income exceeding the minimum social income, under the new scheme a self-employed person will therefore no longer receive any income support. However, there will still be no means test: the viability of the business will not be considered and the so-called ‘kostendelersnorm’ (cost standard divisor) will still not be applied. The cost standard divisor means that if several adults are living together, the benefit payment is lower, as it is assumed that the costs will be shared. This will therefore not apply under the new Tozo scheme either.
Working capital loan
It will also still be possible to obtain support in the form of a working capital loan of up to € 10,157 at a reduced interest rate.
Entrepreneurs can submit applications for Tozo 2.0 to the local authority in their municipality of residence from 1 June to 31 August.
The period during which affected entrepreneurs can apply for a deferment of tax payments has been extended until 1 September 2020. Any default penalties for late payment do not have to be paid. The rates of tax interest and late payment interest have been reduced to 0.01% until 1 October 2020 for all types of tax.
In addition, the other tax measures introduced, namely the relaxation of the hour criterion for self-employed persons, the mortgage payment holiday, the VAT exemption for medical aids and the VAT exemption for the loaning out of healthcare personnel, are being extended until 1 September 2020.
Entrepreneurs will be immediately granted a three-month deferment of payments on submission of their first application. An application only needs to be submitted once for this three-month period.
Entrepreneurs who apply for a deferment of more than three months may not pay out any dividends or bonuses or buy back their own shares.
A deferment granted for more than three months will last until the deferment is withdrawn, which will not be before 1 September 2020. Upon expiry of the deferment entrepreneurs will be offered an appropriate payment arrangement. What this payment arrangement will involve is not yet clear.
The additional, expanded or more accessible loans and guarantees that were available to small and medium-sized enterprises, start-ups and scale-ups under the first emergency package will continue. This relates to the coronavirus modules of the government-guaranteed scheme for loans to SMEs (BMKB) and Corporate Finance Guarantee Scheme (GO), the new Small Loans Coronavirus Guarantee Scheme (KKC) and the increased budget for the SEED Capital scheme.
The Coronavirus Bridging Loan (COL), which helps to improve the liquidity position of innovative companies (start-ups and scale-ups), will be allocated an additional € 150 million over the next three months due to the large number of applications received.
We have endeavoured to compile these texts as reliably and as carefully as possible. Our organisation cannot be held liable for any inaccuracies they may contain or the consequences thereof.
— Tuesday, 28 April 2020 —
Important – check our more recent information above!
The government has taken additional measures to support entrepreneurs during the coronavirus crisis. For example, directors/major shareholders can reduce their customary salary further, the fixed budget under the work-related expenses scheme has been increased and the Contribution for Entrepreneurs in Sectors Affected by COVID-19 scheme (TOGS), which offers support of € 4,000, has been relaxed, as has the hour criterion for purposes of the self-employed person’s allowance. In addition, companies have been given the option of already forming a ‘coronavirus reserve’ and the introduction of the ‘DGA’ (director/major shareholder) tax has been postponed. In this newsletter we also cover a number of other points that may be of interest to you.
We are keen to ensure we provide up-to-date information. As we are writing, however, the Dutch Government is constantly announcing new additions or improvements to (new) schemes. The articles below are based on the information available as at 4.30 p.m. on Tuesday, 28 April.
The government will once again be taking additional fiscal support measures to mitigate the negative impact of the coronavirus crisis for entrepreneurs in particular. The six measures in question were announced on Friday, 24 April.
Lower customary salary for directors/major shareholders
If you are a director/major shareholder, you are obliged to declare a ‘customary salary’ as the salary you receive from your company. In 2020 this customary salary would ordinarily have to be at least € 46,000. It can also be set at 75% of the salary for the most comparable position or at the level of the highest salary received by your company’s employees, if one of them earns more than € 46,000. It had previously been decided that the customary salary could be set at a lower level as a result of the coronavirus crisis. Now it has been announced that the customary salary may be reduced in proportion to the drop in your turnover. The measure will be structured in a similar way to a comparable measure used to determine customary salaries during the credit crisis around 2009. A condition at that time was that a dividend could not be paid out instead of a customary salary. According to calculations by the government, the measure should result in an average benefit of € 6,200 per director/major shareholder.
Relaxation of hour criterion
Entrepreneurs who are subject to income tax are entitled to take advantage of all kinds of facilities, such as the self-employed person’s allowance, to qualify for which you usually have to dedicate at least 1,225 hours a year to your business. To prevent entrepreneurs from losing access to these facilities if their business has come to a standstill or has very low activity as a result of the coronavirus crisis, for the period from 1 March to 31 May 2020 the tax authorities will assume that they have dedicated at least 24 hours a week to their business, even if these hours have not actually been worked. This relaxation of the facility will also apply to seasonal businesses, e.g. in the catering sector. On average, according to government estimates, this will result in a benefit of € 1,800.
Fixed budget under work-related expenses scheme increased
Under the work-related expenses scheme allowances and benefits in kind can be granted to employees free of tax. The work-related expenses scheme has a fixed budget of 1.7% of the wage bill up to € 400,000 and 1.2% on the excess amount. The employer only pays 80% tax via the final levy if the allowances and benefits in kind granted during a year exceed this fixed budget. For 2020 it has been decided that the fixed budget for the first € 400,000 of the wage bill will be increased to 3%. In these difficult times this will enable employers to offer their employees additional untaxed remuneration, such as a gift voucher or bonus, without the employer becoming liable for the 80% final levy. Thanks to this increase, an employer will be able to allocate up to an additional € 5,200 in allowances and benefits in kind to the fixed budget.
Offset losses via ‘coronavirus reserve’
Companies that pay corporation tax on their profits, such as private limited companies (BVs), are being allowed to include an expected loss in their 2019 tax return this year (and therefore earlier than would normally be the case) by forming a ‘coronavirus reserve’. This is subject to the condition that this coronavirus reserve does not exceed the profit for 2019. According to government estimates, this means that, on average, a company will receive € 25,000 in 2020 instead of in 2021 as a result of refunds on provisional tax returns for 2019.
Postponement of Act on taxation of excessive loans received by shareholders from their own company
The legislative proposal relating to the taxation of excessive loans received by shareholders from their own company, commonly known as the ‘DGA’ (director/major shareholder) tax, is being postponed by a year until 1 January 2023. Under this proposal a director/major shareholder will be required to pay tax on debts to his or her own company that exceed € 500,000, leaving debts used to finance his or her own home out of consideration. The postponement means that directors/major shareholders will have an extra year, until 31 December 2023, to pay off debts to their company of more than € 500,000 and in this way avoid paying tax on them.
Deduction of mortgage interest not at risk if repayments temporarily suspended
For mortgages taken out with effect from 2013 the deduction of mortgage interest is subject to a repayment obligation. As a result of the coronavirus crisis, banks are now offering their customers the option of suspending their interest payment obligation and repayment obligation for a maximum period of six months. To prevent the right to deduct mortgage interest being lost as a result, the repayment obligation is being relaxed. This means that the rules are being relaxed in relation to catch-up repayments. It will be possible to spread these over the remaining term of the mortgage or agree on a separate repayment schedule.
The conditions that apply to loans under the government-guaranteed scheme for loans to SMEs (BMKB) and the one-off grant of € 4,000 under the Contribution for Entrepreneurs in Sectors Affected by COVID-19 scheme (TOGS) are being relaxed further. This was decided by the government on Tuesday, 28 April. By relaxing the rules in this way, it will be possible to provide even better support to entrepreneurs who suffer losses as a result of the coronavirus crisis.
Expansion of BMKB scheme
Under the BMKB scheme the government guarantees loans to entrepreneurs, allowing banks to issue loans more quickly. The government has already increased the level of the guarantee to 90% for SMEs and 80% for larger companies in connection with the coronavirus crisis. The scheme will be expanded further and will also be applicable to bridging loans and overdraft facilities with a term of up to four years instead of two.
In addition, it will be easier for entrepreneurs to access the BMKB, as an application can also now be assessed by means of a turnover test and not just on the basis of a detailed liquidity forecast. It is not yet clear what form this test will take.
The TOGS scheme is also being relaxed further. Under this scheme entrepreneurs in sectors that have been particularly affected by the crisis, such as catering, can receive a tax-free grant of € 4,000. Up to now this grant has been based on a company’s principal activity, but is now also available if a registered secondary activity of an entrepreneur satisfies the conditions.
An additional condition applies in such a case, however: based solely on the registered secondary activity, the entrepreneur must suffer a drop in turnover of at least € 4,000 over the period from 16 March 2020 to 15 June 2020 and must also have fixed costs of at least € 4,000 over that period.
The Temporary Emergency Bridging Fund for Employment (NOW scheme) is being expanded for groups. Operating companies whose turnover drops by more than 20%, but are part of a group that does not meet this condition, can now apply under the NOW scheme, subject to certain conditions.
Employers who experience a drop in turnover of at least 20% will have up to 90% of their payroll costs reimbursed via the NOW scheme. It no longer matters whether the drop in turnover can be attributed to the coronavirus crisis or other reasons, such as the PFAS and nitrogen problem. The drop in turnover is calculated by comparing 25% of the turnover for 2019 with the turnover generated from March to May 2020. However, employers can also take a period starting one or two months later as a basis for determining their drop in turnover.
Problem with calculating drop in turnover for groups
In the case of groups the turnover for the whole group is taken as a basis. One problem that results from this is that groups within which staff from one company cannot be deployed in other companies (or only to a limited extent) will in some cases not receive any compensation due to the decline in turnover being calculated on a per-group basis. This would be the case, for example, if one group company loses all of its turnover, but the drop in turnover for the group as a whole is less than 20%. This problem has now been resolved by the expansion of the NOW scheme.
The expansion means that independent legal entities, e.g. private limited companies, within a group will from now on be able to apply under the NOW themselves. This is subject to the conditions outlined below.
A number of additional safeguards are also being incorporated into the NOW scheme to prevent fraud. During the period over which the drop in turnover is measured no orders may be transferred from a company that is taking advantage of the NOW to another company within the group. In addition, changes in inventories will be allocated to turnover. These safeguards are currently being worked out in more detail.
When does it enter into force?
The amendment will be published as soon as possible. This will also indicate when the scheme will enter into force.
4. Lower wage bill during NOW? Be aware of retrospective correction!
What are the consequences under the NOW if your wage bill between March and May is lower compared with your wage bill in January this year? This can have a significant negative impact. Be aware of this, as in these times you will not want to find yourself having to pay back the subsidy you received under the NOW scheme retrospectively.
What amount has to be deducted if your wage bill is lower?
If you apply under the NOW scheme (the main condition is a drop in turnover of at least 20%), up to 90% of your payroll costs will be reimbursed by the government. It should be noted that there is a difference between your wage bill and your payroll costs. Payroll costs are approximated by adding the flat-rate percentage of 30% for additional employer’s contributions to your wage bill.
Regardless of the level of the subsidy awarded, 90% of the reduced wage bill is deducted retrospectively from the amount to be subsidised if the wage bill between March and May is lower than the wage bill in January. This means that for each euro by which the payroll costs are lower, the employer receives € 0.90 less in subsidy.
An employer has an estimated drop in turnover of 50%. He therefore receives a subsidy of 90% on 50% of his wage bill. If his wage bill in January was € 1,000,000, this results in a total expected subsidy determined under the NOW of € 1,755,000. An advance is paid at a level of 80%: € 1,404,000.
Over the period from March to May the wage bill is € 600,000 lower. This results in the subsidy being reduced by € 702,000. The ultimate amount of the subsidy is therefore (€ 1,755,000 – € 702,000) = € 1,053,000. This means that the advance payment allocated was too high and a repayment has to be made.
If, after the end of a year, it becomes clear that an employee has exceeded his or her contractually agreed working hours by more than 30%, the unemployment insurance contribution must be adjusted with retroactive effect. As a result of the coronavirus crisis, it has been decided that, for 2020 only, this adjustment does not have to be made.
Contracted hours exceeded by more than 30%?
If the number of hours for which an employee receives a wage (paid hours) exceed the contractually agreed hours (contracted hours) by more than 30% in the payroll tax return for the calendar year concerned, an adjustment must be made from the low (2.94%) to the high (7.94%) unemployment insurance contribution. A different situation only applies if at least 35 hours a week have been agreed. In such a case the above rule does not apply and, within the limits set by the Working Hours Act, unlimited overtime may be worked without the employer being required to switch from the low to the high unemployment insurance contribution.
This rule is now having unintended consequences in sectors that need employees to work a considerable amount of additional overtime as a result of the coronavirus crisis, such as healthcare. The Labour Foundation has therefore asked for the rule to be amended. The government has promised to change it temporarily, i.e. for 2020 only.
A targeted sectoral measure would be extremely onerous to implement. For this reason it has been decided that a generic exception covering all employers will apply for 2020 in relation to adjustment of the unemployment insurance contribution in the above situation. A generic solution also avoids any uncertainty with regard to who falls under the exception and who does not.
In concrete terms this means that, for 2020, employers do not have to adjust the unemployment insurance contribution on the basis of the situation outlined above.
To make this possible, the Decree adopting an order in council implementing the Social Insurance (Funding) Act and a number of other Acts (‘Besluit Wfsv’) is being amended. The regular situation regarding adjustment of the contribution will take effect again on 1 January 2021.
From 29 April 2020 start-ups and scale-ups can approach Regional Development Agencies (ROMs) for a bridging loan: the Coronavirus Bridging Loan (‘Corona-Overbruggingslening’ (COL)). This additional facility is needed, as such companies, being new customers, are having difficulty obtaining finance from banks due to the coronavirus crisis.
Existing schemes insufficient
Up to now, companies in the above category have largely been financed by means of equity, such as retained earnings, or venture capital. However, they have only been able to take advantage of the credit facilities made available to date as a result of the coronavirus crisis to a limited extent.
Contribution from shareholders expected
The value of the loans that the ROMs will provide will range from € 50,000 to € 2,000,000. For amounts above € 250,000 cofinancing of 25% is expected from shareholders or other investors.
The interest rate on the loans is 3%. A premium of 2% per year is also paid in the case of loans above € 500,000. The loans have a term of three years, but can be repaid early without any penalty.
For loans of up to € 500,000 the aim is to process applications within four to nine working days. In the case of applications exceeding € 500,000 the aim is to come to a definitive decision within three working weeks.
Not for all sectors
Certain sectors are excluded from the scheme. These are the retail, catering and small business services sectors. Independent entrepreneurs also do not qualify for the credit facility. This is because such businesses can also approach an ordinary bank or Qredits for finance.
For more information see the website of the Regional Development Agencies
The contribution towards payroll costs that can be obtained via the NOW scheme does not have to be reduced by any wage expenses subsidy (LKS) that an employer may be receiving for employees with an occupational disability. This has been announced by Tamara van Ark, State Secretary of Social Affairs and Employment.
Under the NOW scheme employers can get up to 90% of their payroll costs reimbursed by the government if their turnover drops by at least 20%. This scheme replaces the short-time working scheme and has been set up as a consequence of the coronavirus crisis. The drop in turnover does not have to be connected with the coronavirus crisis.
Wage expenses subsidy
The wage expenses subsidy is intended for employers who hire a person with an illness or disability. This subsidy can be obtained for employees who are unable to earn the minimum wage and makes up the difference between the wage value and the minimum wage. It is intended for employees who fall within the target group of the job arrangement for persons with an occupational disability (‘banenafspraak’).
Contrary to previous plans, the wage expenses subsidy will not be deducted from the compensation received under the NOW. The fact that this will result in a double contribution towards payroll costs is something that the State Secretary is prepared to accept, partly because the costs are limited.
Notification obligation no longer applies
As a result of the above change, the employer is no longer obliged to notify the local authority, which is responsible for implementing the wage expenses subsidy for employees with an occupational disability, of its application for a subsidy under the NOW scheme.
Entrepreneurs who live in the Netherlands, but whose business is situated elsewhere in the EU, or vice versa, partly qualify for the Temporary Bridging Scheme for Independent Entrepreneurs (Tozo). In future, persons of state-pension age will also be eligible for support under the Tozo scheme. This was announced by State Secretary Tamara van Ark on Friday, 24 April.
Entrepreneurs who have been affected financially by the coronavirus crisis are entitled, under certain conditions, to support to help cover their living costs and/or working capital. To prevent self-employed persons who work across the border from falling between two stools, the government has expanded the scheme.
What do you get where?
Self-employed persons who live in the Netherlands and have their business elsewhere within the EU are therefore entitled to support with their living costs. They must rely on the country in which this business is located for working capital support.
Conversely, self-employed persons who live elsewhere in the EU, but have their business in the Netherlands are entitled to receive working capital support. They must rely on their country of residence for support to help cover their living costs. The necessary conditions must, of course, also be met in these situations.
Application processed centrally
The application for self-employed persons who do not live in the Netherlands will be processed centrally via a single local authority. It is not yet known which local authority this will be.
Working capital support also for persons of state-pension age
Following a motion in the Lower House, arrangements have been made to ensure that self-employed persons of state-pension age also qualify for support with working capital. They are not eligible for support to help cover their living costs.
When does the scheme enter into force?
The scheme is expected to be published in the near future, after which the groups of entrepreneurs in question will be able to submit their applications.
We have endeavoured to compile these texts as reliably and as carefully as possible. Our organisation cannot be held liable for any inaccuracies they may contain or the consequences thereof.