Wednesday 15 July 2020

Covid-19 and your taxes: an update on the latest government measures

The Dutch tax authorities have come up with a revised package of measures to help the self-employed, freelancers and small firms who may have been hard hit financially by corona virus. Here are the most important updates:

For companies

TOGS (Tegemoetkoming Ondernemers Getroffen Sectoren) is for businesses in specific industries with fewer than 250 employees. A one-time – tax free – cash payment of €4,000 will be provided to business owners experiencing a sudden revenue loss due the current crisis in the period 1 March – 1 June.

TVL (Tegemoetkoming Vaste Lasten) is the successor to TOGS. Businesses in the specific industries under TOGS experiencing a continued revenue loss of 30% or more may receive an allowance of up to €50,000 per 4 months to cover fixed expenditure (excluding payroll expenses). The Dutch cabinet is working on the final details. Application for TVL can be filed shortly.

NOW 1 (Noodmaatregel Overbrugging voor Werkgelegenheid) is for employers who experience a revenue loss of 20% or more. For these employers up to 90% of their payroll expenses may be refunded by the government via local job centres UWV.

NOW 2 is the successor to NOW 1 for the period 1 June – 1 October. The support measure is similar to NOW 1, but now no penalty applies if an employer lay-off up to 20 employees due to financial distress. For lay-offs beyond 20 employees, agreement with unions or works councils is required for a penalty waiver. Applications for NOW 2 can be filed as of 6 July.

For small firms, the self employed and freelancers

TOZO 1 (Tijdelijke overbruggingsregeling zelfstandig ondernemers) is a top-up income provision for small business owners whose income drops below the Dutch social welfare minimum of around €1000 for a single person, €1,500 for a couple. In addition, you may apply for a bridging loan up to € 10,517.

TOZO 2 is the successor of TOZO 1 for the period after 1 June. This support measure is similar to TOZO 1, but you are now only eligible if your income combined with that of your partner does not the Dutch social household minimum – around €1,500. Applications for TOZO 2 can be filed with your local authority, and you do need to apply, even if you are already receiving TOZO 1.

TOFA (Tijdelijke Overbruggingsregeling voor Flexibele Arbeidskrachten) is a new support measure for freelance, temporary or flexible (zero) hours workers. The Dutch cabinet is currently working on the details. Eligible flexible hour workers will receive a taxable allowance of €550 per month over the period 1 March – 1 June. This measure, which will be backdated, should become available as of 22 June.

COL (Corona-OverbruggingsLening) is a bridge loan facility for start-ups, scale-ups and innovative SMEs, which do not have loan capital from external financiers. More information can be found here. The site offers limited information in English but you can file an application in English.

Minimum working hours for the self-employed. Sole traders can claim extra tax credits (Zelfstandigenaftrek, startersaftrek) to reduce their taxes, provided they spend at least 1,225 hours per year on their business. This criteria (urencritrium) remains in place up to October, but will be applied irrespective of the number of hours you actually spent on your business. Contact your tax advisor for updates.

General tax issues

Payment deferral: The tax office has announced a further delay of tax payments for entrepreneurs. Applications for a delay in your business tax payments (bijzonder uitstel van betaling) filed during the first round expired on 1 June.

Around now (mid June) the tax office will publish the relevant form you can file for a further delay in your business tax payments till 1 October.

The tax payment delay applies to all business tax payments. Your tax advisor can apply on your behalf. The Dutch tax office has temporarily reduced interest charges from 4% to 0.01% for late payment.

Reduce your provisional tax return: If you expect a lower income (profit) due to the current situation and you pay taxes on provisional basis, you should now lower your income estimates so you will pay less tax. File for a provisional tax return to have the provisional tax payments lowered.

Reduced VAT for online fitness lessons: Normally, personal trainers or other fitness instructors should charge 21% btw on top of their service fee. However the tax office has lowered this to 9% btw for the coming months, so online fitness classes will become cheaper for private individuals.

Help with your home office: If you are working for an employer from home, your employer now has more leeway in reimbursing you for the cost of setting up a home office free of tax. The work-related cost scheme (werkkostenregeling) allows for up to 1.7% of the employer’s payroll expenses to be reimbursed to employees free of tax. This ceiling has been raised to 3% for 2020. Check with your HR department or tax advisor.

Salary cuts for company owners: If you manage your own a BV, or limited company, in the Netherlands, you are required by law to pay yourself a gross salary of at least €46,000 under normal circumstances.

The tax office is now relaxing this rule, proportionate to your company’s loss in turnover. Ask your payroll administrator or tax advisor how to lower your income. You can retroactively apply for a reduced salary.

If you need help with company taxes and the impact of Covid-19, Blue Umbrella can help you. Ring (+31) 0 20 268 7560 or send an email to info@blueumbrella.nl

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