COVID-19 may cause liquidity issues for companies and entrepreneurs (including so-called "independent worker without employees"). Several tax related measures are implemented in the Netherlands (as well as in other European Union ("EU") Member States) in order to minimise the financial issues related to COVID-19. In addition, the EU introduced export restrictions for certain personal protective equipment that is necessary to prevent the further spreading of COVID-19. Please find below a brief summary of these main measures.
Tax related measures – Dutch Tax Authorities
Deferment of payment
Companies or entrepreneurs will have the possibility to request and obtain a deferment of payment for tax assessments related to personal income tax, corporate income tax, wage tax and value added tax (VAT). Such a request must be submitted in writing to the Dutch Tax Authorities ("DTA"). Initially, the deferment of payment will automatically be accepted for the duration of three months and will also suspend any collection related activities of the DTA once it has received the request in writing. Further, fines for late payments of VAT and wage tax will not be issued by the DTA.
In order for the DTA to fully accept a request for a deferment of payment for a longer period than the three-month as mentioned above, the following conditions should be fulfilled:
- the request concerned should explain the reasons of cashflow issues related to COVID-19; and, - the request concerned should be substantiated with a declaration of a (most likely) third party expert, for example a tax adviser.
Reduction of preliminary tax assessments
In the event that a lower profit is expected due to COVID-19, companies and entrepreneurs can request a reduction of the preliminary tax assessments for the personal income tax and corporate income tax. Such reduction can reflect the expected income and profit levels for the company or entrepreneur concerned, which can reduce current payment obligations. If the amount that has already been paid following the preliminary tax assessment exceeds the revised amount of tax due, the difference shall be refunded.
Reduction of applicable interest rates
Interest are normally due for late payments of tax (normally set at 4%) as well as for late filings of tax declarations (normally set at 8% for corporate tax and 4% for all other taxes) will both temporarily be reduced to 0.01%.
The reduction of the applicable interest for late payments will be applicable as from 23 March 2020. The interest rate for late filings will be reduced as from 1 July 2020 for the personal income tax, and as from 1 June 2020 for all other applicable taxes.
The Dutch customs authorities – part of the DTA – have introduced certain measures to support companies and entrepreneurs that see themselves with issues related to COVID-19. These measures include – for example:
- a customs duty exemption upon import for donated personal protective equipment;
- leniency in the event of non-compliance related to obligations to meet certain time-limits for customs transit as well as the monthly supplementary customs declaration;
- deferment of payment of tax assessments related to customs and excise duties;
Please note that the application of these measures is subject to prior approval from the DTA.
Trade related measures – EU Institutions
The European Commission has introduced export controls measures on essential personal protective equipment that is necessary to prevent the further spreading of COVID-19, and to safeguard the health of medical staff treating infected patients. By means of an implementing regulation, the export from the EU of certain personal protective equipment is subject to an export authorisation. Exporting such equipment without the appropriate export authorisation is prohibited.
Conclusions and remarks
The tax and trade related measures as referred to above are to be regarded as being part of a broader package of measures in order to assist businesses in these difficult times. We refer to our dedicated COVID-19 webpage for an overview of the other relevant measures that were or will be taken in the Netherlands, EU and also in the rest of the world.
Please feel free to get in touch with your contacts at Bird & Bird for additional information and guidance. We are happy to assist you with our network of 30 global offices.