Update: Coronavirus Tax (ENG) 24-03-2020
UPDATE - The potential tax consequences and possibilities of the Corona virus for your company
Request payment extension taxes:
• Companies with cash flow issues as a result from the Corona Crisis can apply for special extension for the payment of income tax, corporation tax, VAT and payroll tax.
• This extension is granted if it can be substantiated that the company has financial issues a result of the Corona Crisis.
• All recovery measures will be ceased by the tax authorities immediately after receipt of the request.
• If an extension for a period longer than 3 months is requested, a third party expert declaration has to be provided to the tax authorities in which the temporary payment issues of the company are confirmed. The exact details to be included in this declaration are yet to be published.
Other relevant topics:
• Temporarily no penalties for late payment of taxes due will be imposed;
• The recovery interest will be lowered from 4% to 0.01% as of March 23, 2020;
• The taxation interest will be lowered to 0.01% as of June 1, 2020 (July 1, 2020 for personal income tax)
Reduce preliminary tax assessment 2020
If you expect a lower taxable profit for 2020 then you can file a request to reduce the preliminary tax assessment.
Report inability to pay taxes
When you expect not to be able to pay the wage tax and VAT due to the Dutch tax authorities, this inability should likely be reported to the tax authorities using the appropriate form to prevent personal liability of the directors. If the inability to pay has not been reported, the directors may be held liable.
Wage tax / social security
• Review the consequences for wage tax, for example with regard to reimbursements for working from home, cancelled (skiing) holidays (even if this were to take place with the company), travel expenses, etc.
• Are there employees who work across borders and does the Corona Crisis change the work pattern? This may have consequences for the tax liability and even for the social security position of those employees in the countries concerned.
• It is possible that the minimum salary (“gebruikelijk loon”) of the director/major shareholder (“directeur-grootaandeelhouder”) may be reduced.
• Monitor your WBSO / R&D wage tax credit hours. If, e.g. due to working at home, not all budgeted hours are spent on
R&D, the wage tax credit will be reduced and additional wage tax may be due. Reporting obligations are not extended.
• When your supply chain changes due to the Corona Crisis (e.g. because your regular suppliers are no longer able supply), this may have an impact on VAT and customs duties.
• VAT on unpaid invoices can be reclaimed at the moment it becomes clear that the invoice will not be paid or after a year of non-payment.
• If your business receives more cancellations or no-shows due to the Corona Crisis (e.g. in the travel or hotel industry), the VAT paid on these non-supplied services may be reclaimed.
• If you receive compensation, VAT may have to be paid on this compensation.
• If you have not yet made use of the option to submit a quarterly VAT return, this can still be requested. If you are in a refund position, you can still request for monthly returns.
• You may sell fewer products abroad. In that case, pay attention to thresholds for the distance selling regime.
Corporate income tax
• Possibly the 2019 preliminary assessment can (sill) be reduced. This could be motivated by a 2020 loss that is expected (carry back). The authorities may (re)introduce this possibility – in the prior crisis such was possible as well.
• It is possible that the tax rate will be reduced in the coming years. Due to the consequences of the Corona Crisis, it may be possible to recognize additional provisions to reduce the tax burden in 2020. This could, for example, be the case for the provision for bad debts or a reorganization.
• It may also be possible to reduce the taxable profit by writing down receivables or other assets.
• A lower profit in 2020 may mean that losses from previous years will expire. Generally this can be prevented by, for example, restructuring assets or activities.
• Review the deductibility of (additional) interest expenses. For example, the consequence of a lower (fiscal) EBITDA may be that part of the net interest expenses in excess of € 1 million are no longer deductible.
• Note that a waiver of debt is in principle taxed at the level of the debtor.
• In the event of a tax loss, foreign withholding taxes on interest / royalty receipts cannot be credited in 2020. In that case, it may be more beneficial to deduct foreign withholding taxes instead.
• When your supply chain changes or when group companies incur significant losses due to a substantial decrease in productivity, companies should analyze the impact on the transfer pricing of the group.
• For companies performing R&D: use the innovationbox to reduce any corporate tax payable. This may still be possible for 2018 and 2019. Certain conditions need to be met.