Tax and regulatory

Tax measures

Entrepreneurs get more flexibility within corona tax debt repayment scheme

The support package expired in April 2022 and, as of 1 October 2022, entrepreneurs have five years to repay the accrued tax debt. In order to address the problems entrepreneurs experience in repaying the tax debt, the government sees two possibilities for offering businesses more flexibility in repayment. Entrepreneurs may pay the monthly amounts due quarterly and/or they may use an occasional payment break within the existing payment scheme. This is subject to the condition that the entrepreneur meets the new obligations that arise during the payment scheme on time. The entrepreneur must also submit a written request, supported by reasons, which demonstrates the repayment problems.

In addition, it has already been indicated that the Tax and Customs Administration will be satisfied with a lower debt restructuring amount ('preferential measure') for restructuring agreements concluded between 1 August 2022 and 1 October 2023. In order to further encourage restructuring agreements, TVL and NOW debts will no longer form an obstacle to concluding a restructuring agreement. This will increase the likelihood of a restructuring agreement.

The special deferment of payment of tax debts regime

All BUVB regimes are extended through 31 March 2022; Please note the obligations for received BUVB!

All BUVB regimes - both regular and extended - that had initially ended on 1 October 2021, have been extended until 31 March 2022, for entrepreneurs who still have outstanding debts under the BUVB due to the corona crisis. Entrepreneurs who have already been granted BUVB do not need to take any action, the current tax deferral will automatically continue until that date. It applies to all taxes that are eligible for deferral under the BUVB and for which the payment deadline expires before 1 April 2022. These debts are added to the tax debt that must be paid off in 60 months starting October 1 2022.

Entrepreneurs who have not previously requested a tax deferral or paid the tax debt that has now been deferred can (re)apply for this deferral until 31 March 2022.

If you have been granted a postponement and have not been able to meet your current payment obligations, it is advisable to apply for an extension of the postponement until 31 March 2022 as soon as possible. If you fail to pay one or more taxes on time between 1 April 2022 and 1 October 2022, this will not affect the payment scheme for the tax debt you have accrued during the special postponement of payment due to the corona crisis. You can still make use of this scheme. But if you do not pay your taxes on time, the Tax and Customs Administration can impose fines or take collection measures.

Declaration of third party expert 

Originally, a request for special tax deferral for a period of more than three months and an initial tax debt of more than EUR 20,000 required a declaration by a third-party expert. The third-party expert had to declare, among other things, that there were real payment problems that arose primarily as a result of the corona crisis and, moreover, that the accompanying liquidity forecast was plausible.

With the automatic extension of the payment moratorium from 1 October 2021 to 31 March 2022, such a third-party expert opinion is no longer required.

Restriction on payment of bonuses and dividends and repurchase of shares

As part of the application for the extension of the BUVB for a period longer than three months, the entrepreneur has had to declare that no bonuses will be paid to the board of directors and management of the company, no dividend will be paid and no shares will be purchased. This declaration applies to the period from the submission of the request for extension of BUVB until the withdrawal or expiry of the granted extension. 

It is also important that the payment arrangement can be revoked "if the interests of the State oppose the payment arrangement". This may be the case if the payment of bonuses and dividends or the repurchase of shares jeopardises compliance with the payment scheme.

Regular postponement scheme (non BUVB)

If you are not eligible for the temporary additional postponement after 31 March 2022 (following the termination of the BUVB, thus on 1 April 2022) and you still need a postponement of tax payment, you can apply for a postponement on the basis of the regular postponement scheme. The Dutch tax authorities may request more information and may request securities.

Payback of BUVB debts

Starting 1 October 2022, the tax debt built up by the special deferral needs to be paid off in a maximum of 60 equal monthly installments, with a first installment ultimately by 31 October 2022. Repayment in whole or in part before 1 October 2022 is possible and also in the period up to 1 October 2027. The entrepreneur may in special situations begin to pay back the debts at a later moment, but in any case the tax debts should be fully paid back by 1 October 2027.

Entrepreneurs are given more flexibility in repaying accumulated tax debt. They may repay the monthly amounts quarterly or make use of a one-time payment break of six months maximum within the existing payment scheme. Entrepreneurs must submit a written request for this, which shows the repayment problems. In addition, the condition is that entrepreneurs have fulfilled regular payment obligations, such as monthly sales tax and payroll taxes payments, as of April 1 2022. It is important to note that the recovery interest will be increased in stages as from 1 July 2022, see also below under 'Taxation and recovery interest: phasing out of temporary reduction'.

If the payback period of five years is too short for the taxpayer, a specific group of companies may request that the payback period for their BUVB debt be extended from five to seven years. This is not a generic extension of the payback period, but is aimed at viable companies that are currently in bad financial shape and with a debt higher than 10,000 euros.

Not all companies that have accumulated a BUVB debt are eligible for the additional extension to the payment scheme. The following three groups are not eligible:

1. Companies that have made use of the tax deferral but are not in bad financial shape.
2. Companies that have built up a high (corona) tax debt, but have made little or no profit in the years preceding corona.
3. Companies with an outstanding (corona) tax debt lower than 10,000 euros.

Entrepreneurs who want to claim the extension are requested to submit a motivated request for extension in which the necessity and feasibility of the extension are demonstrated. The entrepreneur has to make a plausible case that the tax debt cannot be repaid within five years but can be repaid within seven years. In addition, entrepreneurs must send a number of documents to substantiate the request. A distinction is made here between (a) a tax debt between 10.000 euros and 50.000 euros, and (b) a tax debt exceeding 50.000 euros. In all cases, a motivated request and a liquidity prognosis are requested. For debts of 50.000 euros or more, annual documents and a statement from an expert third party who has already assessed the extension request and the viability of the business are also requested.

Furthermore, the general condition is that newly arising payment obligations are fulfilled and that there is no precorona debt for which coercive recovery measures have been taken unless a postponement has already been granted for this debt. The Dutch Tax Authorities may always request additional information.

Adjusting provisional assessment, offsetting during deferment and Eased collection

Entrepreneurs now pay tax on the basis of a provisional assessment of income tax or corporation tax. Entrepreneurs who expect lower profits in 2020, 2021 or  2022, due to the corona crisis can apply for a reduction in the provisional assessment, so that they will pay less tax immediately. These requests will be granted by the tax authorities. If the entrepreneur has paid more tax than the amount due after the request is granted, he will be refunded the difference.

The recipient does not apply set-off during the period of deferment and the period of the payment arrangement with any tax refunds (unless the entrepreneur requests this or the interests of the State are harmed). This is the case, among other things, if the recipient fears abuse, which endangers the possibility of redress.

Annulment of payment default penalty

You can be fined if you do not pay your tax, do not pay it in full or do not pay it on time. The Tax and Customs Administration will annul this fine if you meet the following conditions: You have applied for and been granted a special postponement of payment with a late payment penalty because you have not paid your tax return. This is a fine for the period in which the relaxed deferral policy applies. In concrete terms: a fine for the period February 2020 or later.

In that case, you do not have to pay the fine. And you do not have to object to it either.

Please note that from 1 April 2022, the relaxation for payment default penalties (for the period 12 March 2020 up to the date on which the deferment of payment ends) will lapse and, for example, the non-payment or late payment of wage tax or payment of VAT for the March 2022 tax period will be fined according to the regular policy.

Deferment of payment for import duties

The special arrangement for deferment for payment (BUVB, including the limited extension) was and is not applicable to import VAT, excise duties, the consumption tax for non-alcoholic drinks and the coal tax, insofar as these taxes are levied in accordance with customs legislation on imports.

Deferment of payment of vehicle tax (BPM)

A special deferment of the payment (BUVB) of vehicle tax (in Dutch: BPM) is possible for licence holders (entrepreneurs who regularly apply for passenger car registrations and pay the tax afterwards on a monthly or quarterly basis), for the period May 2020. The BUVB of BPM runs through 30 June 2021.

Tax interest and of recovery interest: phasing out of temporary reduction

The temporary reduction in recovery (tax collection) interest to 0.01 per cent took effect on 23 March 2020 and applies until 30 June 2022. The recovery interest rate will be increased in steps of 1 percentage point as from 1 July 2022 instead of immediately to 4 per cent as previously planned. The steps are as follows: 

• on 1 July 2022 to 1 per cent, 
• on 1 January 2023 to 2 per cent, 
• on 1 July 2023 to 3 per cent and finally 
• on 1 January 2024 to 4 per cent.

Also the tax interest rate was reduced to 0.01 per cent for all taxes from 1 June 2020 (with the exception of income tax, for which the reduction has been in force since 1 July 2020) and has returned to its original level of four per cent from 1 October 2020. The corporate tax interest rate is set at four per cent for the period from 1 October 2020 to 31 December 2021, instead of the original level of eight per cent.

For the Caribbean Netherlands the temporarily reduced recovery interest rate of 0 per cent applies until 31 December 2021. This is in line with the deadline that applies to the European Netherlands.