On Friday the 24th of April, the government announced six new (tax) measures to support entrepreneurs. On the 9th of May, the state secretary announced the more detailed interpretation of these measures. We will gladly tell you more about the six measures.
1. Fiscal corona reserve in the 2019 company tax declaration
Are you liable to pay company tax? Then you can already take an expected loss into consideration in the 2019 company tax declaration, by forming a so-called corona reserve. Subject to certain conditions, this corona reserve may be used for the entire or part of the 'corona related loss' expected for the financial year 2020. The corona reserve is aimed at an improvement of the liquidity. The state secretary has determined the following conditions for the approval of this:
- The expected corona related loss cannot exceed the total loss that the taxpayer expects for the financial year 2020.
- The allocation of money to the corona reserve of the financial year 2019 has a maximum of the profit gained in the financial year 2019 as it would have been determined without forming this reserve.
- The reserve will be added to the profit no later than in the financial year 2020.
In case of a split financial year, a fiscal corona reserve may be formed in the last financial year that ends in the period from 1 January 2019 until and including 31 March 2020.
Calculate the advantage of your corona reserve
If you are interested in a direct overview of the advantage of your corona reserve, you can easily calculate it with our Quickscan (Excel). If you have any questions about this, please contact us, without obligation, using the contact details at the bottom of this page. We will gladly help you out.
2. Reduction of the usual wage in case of a turnover decrease
As a qualified entrepreneur, you may temporarily start from a lower wage for the wage tax. The reduction of the wage must be in proportion to the company's turnover decrease. The details of this will be similar to those of the arrangement made during the credit crisis in 2009. On average, this might mean a maximum liquidity advantage of € 6,200 per director/majority shareholder. Additionally, it will still be possible to make a case for a lower usual wage based on existing legal possibilities.
3. Relaxation of the hour criterion
To prevent that you lose your entitlement to different types of small business tax reduction, from 1 March 2020 until and including 31 May 2020, the Tax Authority will assume that you have spent at least 24 hours per week on your business, even if you have not actually done that. This may lead to an average advantage of € 1,800.
Starters' tax reduction in case of incapacity for work
The reduced hour criterion of 800 hours per calendar year, in the starters' tax reduction in case of incapacity for work, is relaxed accordingly. In this case, you, as an entrepreneur, will be assumed to have spent at least 16 hours per week on your business(es).
If you have a seasonal company, this is not the case if the peak of your activities falls in the mentioned period. For that reason, an additional arrangement applies to you as a seasonal entrepreneur. You will be assumed to have worked the same number of hours in this period as you did in the period from 1 March 2019 until and including 31 May 2019. This will allow you to assess if you meet the hour criterion for 2020 based on your administration of last year.
4. Increase of the free space of the working expenses arrangement
The free space you have in the working expenses arrangement is increased, once only, from 1.7% to 3%, for the first € 400,000 of the labour costs per employer. If you have the space, you can use this as an extra contribution for your employees, for example by sending them flowers or a gift card or granting them a bonus.
5. Postponement of the effective date of the proposed Law on excessive loaning for own company
The proposed Law on excessive loaning for own company (the so-called 'DGA' tax) will be postponed by one year until 1 January 2023. According to this bill, you, as a director/majority shareholder, have to pay tax over your own company's debts exceeding € 500,000, not including owner-occupier debts. You have until the end of 2023 to prepare yourself and to repay your own company's debts in excess of € 500,000 (not including owner-occupier debts).
6. Pause of mortgage payment obligation
Loan providers such as banks offer house owners the possibility to pause the payments of interest and redemption related to their mortgage, provided that they are temporarily unable to comply with their payment obligations due to the corona crisis. In principle, this pause will be up to six months.
If you have a mortgage that you contracted on or after 1 January 2013 and is subject to the fiscal redemption requirement, the tax reduction will only be granted if the mortgage is to be repaid in up to 360 months, according to at least an annuity scheme. If you fail to make up the arrears of repayment in accordance with the law, you, as a house owner, risk the expiration of the tax reduction. Under certain conditions, the state secretary will meet you in a policy decision, in which case you can choose between two approvals:
Approval 1: new repayment scheme for the loan A new annuity scheme will be established as soon as possible after the end of the payment pause. You will make up the arrears of the repayment in the course of the remaining duration of the maximum period of 360 months of the loan.
Approval 2: splitting the loan The debt may be divided into an old part and a new part.
- Old part: the existing annuity scheme will remain applicable to the remaining debt, without taking into account the arrears of repayment.
- New part: A separate repayment scheme will be agreed for the part of the arrears that is the result of the pause. The duration is up to the remaining duration of the original debt. Depending on your financial strength, you could also agree a shorter duration for this part.
If you choose approval 2, you will not have the obligation to spread the arrears of repayment out over the remaining duration. The arrears can also be repaid within five years, for example. This gives you more made-to-measure options.