Seeing the forest for the trees during the COVID-19 pandemic is a significant challenge. What rights do you have in the Netherlands as a (non-)Dutch business owner? Access to specific support packages depend on your living and working situation. If you live in France, for example, but pay taxes in the Netherlands, you can use schemes of the Dutch Tax Authorities, such as “special deferment of payment” and “reduction of the provisional assessment.” What kind of help is out there for foreign employees in the Netherlands? What can you do if your Dutch company is located in France? Which financial aid packages apply to you? We have listed relevant financial aids for you.
The WW (Unemployment Insurance Act)
In case you have employees whom you have employed for an indefinite period, you must record their employment contracts in writing to apply for the low unemployment insurance premium. You must indicate that you have done this in the tax return, even if it is still incomplete. For employees who started working before 31 December 2019, you had the option to arrange this until 1 July 2020. Many companies and institutions, such as hospitals, are now dealing with the WW’s premium differentiation. The Dutch cabinet had therefore decided to give employers more time, mainly due to the coronavirus impact.
An immediate record of the employment contract in writing is necessary for employees who entered your company after 31 December 2019. This contract does not necessarily have to be on paper; you can save the employment contract digitally if you have signed and scanned the written agreement or if you set up a digital contract with a qualified electronic signature from you and your employee. Further options are to send the employment contract by e-mail, to which the employee replies that they agree. Another option is to save the employment contract in your HR-system.
Due to the coronavirus, many sectors, such as healthcare, have to deal with much extra overtime. As a temporary scheme, no employer, regardless of the industry, has to pay the high unemployment insurance premium retroactively in 2021. Usually, this was required if employees with a permanent employment contract of <35 hours worked overtime for 30%.
Widening of the free space
Under the work-related expenses scheme, you have the option of spending part of your taxable wages on untaxed allowances, benefits in kind, and provisions for your employees. The free space on your taxable salary, up to and including 400,000 euros, is 3% in 2021. The year before, this was only 1.3%. For amounts of the wage bill above 400,000 euros, the free space remains 1.18% in 2021.
This space offers you an opportunity extension to provide extra support for your employees during the pandemic with the financial scope. You can kill two birds with one stone by purchasing a gift voucher or gift package for your employees. By doing that, you help both your employees and the sectors affected by the crisis.
Reduction of the average wage
If you are dealing with a decrease in turnover due to the corona crisis, you may set the customary wage lower for your payroll tax returns for 2021 and 2020. To do this, you do not need permission from the Dutch tax authorities. However, it would be best if you meet the following conditions: pay attention to the current account debt or dividend, the wages of the holder of substantial interest, and turnover influencing due to special matters (e.g., a strike, merger, or division). You determine the customary wage of 2021 by dividing the “2021 turnover excluding VAT” by the “2019 turnover excluding VAT.” Multiply this amount by the customary of 2019. You can read the 2020 and 2021 calculation overview on the Dutch tax authority website.
Frontier work
Each country has its corona measures, which affect employees who live or work across the border. There are various options for frontier workers; the Netherlands works efficiently with Belgium and Germany. The following applies to the withholding and remittance of payroll tax:
- No changes take place for the home frontier worker
- You can continue to deduct Dutch payroll taxes from your salary
However, what does this situation look like if you are an employer who employed French workers? What if they are forced to stay at home while retaining their salary? To ensure that entrepreneurs who live or work across the border are not left out, the Dutch government has used the Tozo loans. Entrepreneurs can apply for this benefit, for example, from 1 March 2021, with retroactive effect from the previous month (1 February 2021). From 1 October 2020 to 1 April 2021, the third Tozo support package, Tozo 3, is active. Tozo 4 is operational from 1 April 2021 to 1 July 2021. Examples of the Tozo scheme are:
- Do you live in France, but do you have your company in the Netherlands? You can receive a Tozo loan for your working capital of up to 10,157 euros. You can submit your Tozo loan application to the municipality of Maastricht. However, for your livelihood, you have to rely on social assistance in France.
- Do you live in the Netherlands, but do you have a company in France? If you meet the conditions, you can receive a Tozo benefit for your living expenses. However, this cannot be done in your working capital; you must arrange this in France.
If, as a Dutch company, you employ a French employee during the pandemic, you can make use of the relaxation of administrative obligations for payroll taxes. You may not determine the French employee’s identity at this time through a physical ID. Usually, the employee falls under the anonymous rate of 52%. However, you do not have to do this until the 30th or June 2021. You must still apply the employee’s identity correctly as soon as possible. Due to the prescribed working from home and maintaining a distance of 1.5 meters, it can be challenging to comply with all administrative obligations for payroll taxes. In this case, the tax authorities will not impose any consequences.
NOW (Temporary Emergency Bridging Measure to maintain Employment)
The NOW organization scheme replaces the WTV (Shortening of Working Time). The NOW is a substantial contribution towards wage costs, for which you receive an advance from the UWV (Institute for Employee Insurance). This allowance goes from 80% to 85% of the wage bill. The wage bill exemption remains 10%. If your company has a Dutch business address, you can use NOW. If your company has a French business address, but you and your employees are covered by the Dutch social insurance, you can apply for NOW as well. The application period for NOW 3.2, under modified conditions, is from 15 February 2021 to 14 March 2021. NOW 3.3. will most likely take place from 17 May 2021 to 13 June 2021.
TVL (Allowance Fixed Expenses)
SMEs and self-employers have the option of obtaining a partial allowance for fixed expenses. If you have a structural turnover loss of >30% and meet the conditions, you can request an allowance of up to 90,000 euros from the TVL through the RVO (Netherlands Enterprise Agency). This TVL scheme applies from 1 October 2020 to 30 June 2021.
Fixed travel allowance
If your employees receive a fixed travel allowance, you do not need to adjust this allowance, even if they work entirely or mainly at home due to the pandemic. Until 1 April 2021, the existing fixed travel allowances can still be reimbursed tax-free by the employer, even if these are no longer (fully) implemented. You must meet this condition as an employer: the fixed travel allowances were granted by you before 13 March 2020. If you want to read more information, the Dutch tax authorities have made an FAQ overview about payroll taxes and travel expenses during the corona crisis.
From 1 June 2020, the Dutch government implemented the rule that everyone on public transport must wear a mask. Until 1 April 2021, you may reimburse or provide masks’ costs tax-free to your employees as a targeted exemption.
WHOA (Homologation Private Agreement in Bankruptcy Act)
If you are at risk of bankruptcy due to high debts while still running a viable business, you can agree on a debt settlement with the WHOA without all creditors’ consent. Companies without good survival chances also benefit from this agreement because they can quit without bankruptcy. Besides, you keep control of your company during the WHOA-process. With the WHOA-Roadmap, you can follow the step-by-step path from preparation to an agreement:
- You consult with creditors.
- You make agreements.
- These agreements are recorded in a draft agreement.
- You submit the draft agreement to your creditors and shareholders.
- You organize a vote for creditors and shareholders.
- One week after the vote, you draw up a report on the outcome.
- You submit the composition to the court.
- The court 9homologation) confirms the compulsory) agreement on the proposed debt settlement.
The content and structure of the agreement must, however, comply with the regulations. For example, you must divide your creditors into classes or a hierarchy. The WHOA gives you the freedom to set this up yourself. If you fail to approach one or more creditors, these creditors retain their right to full payment of your outstanding debts. A majority within a class must agree to the proposal. The aim of the agreement must be that your company will be financially healthy again after restructuring. If your company has no survival chances, a better result should be achieved through this agreement compared to bankruptcy. Besides, the agreement must be feasible and well-thought-out, under the legal regulations on the agreement’s decision-making and content. Finally, the agreement must be reasonable; the plan is not intended to put creditors and shareholders in a disadvantageous position and suddenly change your staff’s terms of employment.
Do you have offices, units, or shares in France or the EU? Then you can benefit from a general agreement procedure, thanks to the recognition of the EU member states. The registration and publication of these approval procedures are in the public Insolvency Register. From 1 April 2021, these will most likely be entered in the Trade Register as well.
Whether or not corona still exists, the Dutch government and tax authorities request you to prepare everything in a timely matter. If you request a deferment of payment, you do not have to pay immediately. Send your declaration in good time, even during the crisis, because the UWV needs data to use specific support schemes as useful as possible. If you are entitled to emergency funds, you can rely on these by having your papers in order. As you can see in this article, if you meet the conditions, you have many options for obtaining Dutch government support. The Netherlands mainly cooperates effectively with Germany and Belgium, but there is support available for French workers and companies as well. We especially recommend keeping an eye out on the current information, data, programs, forms, and disruptions via the Dutch government websites. In addition, we are always ready to talk to you and support you.
Related GCA articles:
Corona Countermeasures on Tax Matters Recommended by OECD
Press Conferences in Japan and the Netherlands: Different news, different actions
Sources:
Government of the Netherlands – Belastingdienst – the Municipality of Maastricht– RVO – UWV – KvK
