16-04-2020

Fiscal possibilities for entrepreneurs to mitigate the impact of the coronavirus

Fiscale mogelijkheden voor ondernemers tegen impact van het coronavirus

From applying for payment extension to paying taxes to reducing the provisional corporate tax or payroll tax assessment. As an entrepreneur, it is wise to investigate which fiscal options are available to you in order to limit the consequences of the corona crisis for your company as much as possible.

Fiscal possibilities

In addition to our article that we posted on 20/3/2020 we will list some of the recent measures.

The following fiscal options will be examined in this article:

  • Special extension for the payment of tax

  • Separate notification of inability to pay is no longer necessary

  • Reduction of provisional tax assessment for 2020

  • Temporary reduction of collection interest rate and tax interest rate

  • Fiscal unity for corporate income tax

  • Vat-related possibilities

    • All public events and gatherings are cancelled
    • Postponement or issue of vouchers (vouchers)
    • Are cancellation costs regarded as compensation?
    • Uncollectable debts

1. Special tax payment extensions

If you experience financial difficulties as an entrepreneur during this period, you can apply to the Tax Authorities for "special extension of payment" for the payment of your income tax, corporate tax, turnover tax and wage tax. This measure also applies to self-employed professionals and will in any case apply until 19th June, 2020. After the Tax Authorities has received your request, it will stop the collection and you will automatically receive three months' payment extension.

Collection is also suspended for assessments imposed by the Tax Authorities during those three months. Fines for not paying taxes on time do not have to be paid after applying for a postponement. For the first three months of payment extension, you do not have to submit a third party expert's report to the Tax Authorities (e.g. accountant or branch organisation). Would you like to apply for a postponement of payment for a period longer than three months? If, as an entrepreneur, you have a tax debt that is lower than € 20,000, you can obtain a longer postponement of payment by sending for example evidence showing that the turnover/reservations have decreased significantly compared to the previous months. Is your tax debt higher than € 20.000 Euros? In that case, the Tax Authorities will require a statement from a so-called third party expert or branch organisation.

2. Separate notification of inability to pay no longer necessary

On Tuesday evening, 7th April, the Ministry of Finance decided that a separate notification of inability to pay is no longer required for wage tax and VAT. You are no longer required to make this notification separately if you are planning to request a postponement of payment in connection with corona for wage tax and VAT of a legal entity that is subject to corporation tax. This application is also regarded as a notification of inability to pay. This will apply to both past and future periods.

3. Reduction of provisional assessment for 2020

Do you expect a lower profit for 2020 than you had anticipated as a consequence of the corona outbreak? And do you now pay a provisional assessment income tax or corporation tax? This means that you can change your provisional tax assessment for the year 2020 with the Tax Authorities immediately, enabling you to pay less tax. If required, you can change your provisional assessment again at a later date. For example, if later in the year it turns out that the profit appears to be higher than expected than at the moment that the change occurred. This will prevent you from having to pay an additional fee when you make your final assessment.

4. Temporary reduction of collection interest and tax interest

The Tax Authorities have temporarily reduced the collection interest and the tax interest.

Collection interest
If you do not pay an assessment on time, you will normally have to pay 4% collection interest from the moment the payment term has expired. From 23rd March 2020, the Tax Authorities have temporarily reduced this interest rate from 4% to 0.01%. This applies to all tax debts.

The Tax Authorities charge interest if it is able to determine that an assessment was too late, for example because you did not file your tax return on time or for the correct amount. The tax interest rate is normally 8% for corporate income tax and 4% for other taxes. The tax rate is also temporarily reduced to 0.01%. The temporary reduction of the tax interest rate will take effect from 1st June 2020, except for income tax. For income tax, the reduction will take effect from 1st July 2020.

5. Fiscal unity corporate income tax

As an entrepreneur, do you have more than one Dutch based BV? It is under conditions possible that a fiscal unity can therefore provide benefits for corporate income tax.

One advantage of a fiscal unity is that you can offset profits and losses between the mutual BV’s. If you for example expect a loss of € 100K in BV X and a profit of € 100 in BV Y you will not have a taxable profit in case of a fiscal unity.

A fiscal unity also has disadvantages. Whether or not it is advantageous to choose for a fiscal unity for corporate income tax purposes during this period depends on a number of factors. Our advisers can provide insight into the possible advantages and disadvantages of a fiscal unity for your PLC. Please note that a fiscal unity van have retroactive effect of 3 months.

6. Possibilities for a VAT-refund during the corona crisis

Because of the corona crisis, it is possible that you, as an entrepreneur, will have to deal with the negative consequences. For instance, the annulment or postponement of events or gatherings and/or a significant increase in the number of uncollectable debts. In these circumstances, it is possible, in particular cases, to reclaim VAT that has already been paid. This can be beneficial to your liquidity position.

  • Annulment of events or gatherings
    With regard to the organisation of events or gatherings, a (full or partial) down payment is often required. If, as an entrepreneur, you have already been paid the amount of this down payment, you may have already paid the VAT on this down payment to the Tax Authorities. In the event of an annulment, it is possible to reclaim this VAT from the Tax Authorities. This reimbursement is limited to the VAT on the amount you reimburse to your customer. It is important to note that different rules apply to entrepreneurs implementing the travel agency scheme. In addition, you should be aware that a VAT-refund is only possible if you personally reimburse your customer. If the payment is made by, for example, an insurance company, there is no entitlement to a refund of VAT. You can incorporate this VAT-refund in your regular VAT-return. We do however advise you to submit a credit invoice with regard to the refund.

  • Postponement or issuance of vouchers
    If the gathering or event is not annulled but postponed, there are, in principle, no VAT-consequences. In the event that a voucher is issued, specific rules apply with regard to the taxation of VAT. In these situations, it is also possible, subject to certain conditions, to obtain a VAT-refund.

  • Are annulment costs due as compensation?
    Of course, there are also circumstances in which a (full or partial) down payment will not be reimbursed to the customer. In such circumstances, it is also possible (subject to certain conditions) to reclaim VAT from the Tax Authorities. For this purpose, it is important to determine whether the compensation already received, as a result of the cancellation, will be converted into tax-free compensation. Whether this is possible will depend largely on the contractual arrangements. This must therefore be assessed on a case-by-case basis.

  • Uncollectable claims
    Have you prepaid the VAT for invoices which have not been disbursed by the customer and which you understand will not be paid either? In that case, you can reclaim the VAT on 'uncollectable claims' at short notice. In practice, however, it can be difficult to establish how 'irrecoverable' the claim really is and whether the outstanding invoice will not be paid after all. In such circumstances, the VAT can in any event be reclaimed if a year has lapsed since the date on which it became due. A point for consideration when reclaiming VAT is that this occurs in the correct tax period.

Doing business abroad

Entrepreneurs who do business internationally are well advised to keep an eye on the developments in the countries in which they operate. Governments undertake a variety of measures to help entrepreneurs who may also be of interest to you. Should you, as an entrepreneur, have queries about the latest developments abroad, KroeseWevers can put you in contact with local advisers through us Nexia International network.

Questions or more information?

Do you have queries about the tax regulations that you can make use of for your enterprise? Then please contact us. The tax advisers and VAT-specialists at KroeseWevers will help you further.

Fiscal possibilities for entrepreneurs to mitigate the impact of the coronavirus
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