Last updated: June 08, 2020
Since the outbreak of the virus known as COVID-19 in the Netherlands, the Dutch government has announced several measures to mitigate the risk to the Dutch economy. Some measures are focussed on relief for employers, such as the temporary allowance of labour costs. These measures have been discussed in our earlier blog. We also published a separate blog on the possibility of deferring rent payments and the legal consequences of doing so.
In this blog, we discuss recently announced measures to support companies in the Netherlands relating to: (i) damage compensation, (ii) expanding government guarantee schemes and offering bridge loans, (iii) taxation, (iv) corporate governance measures and (v) initiatives from parties other than the Dutch government.
One-time compensation (€4,000) for affected companies
Certain Dutch companies affected by the COVID-19 crisis can receive one-time compensation from the Dutch government in the amount of €4,000 per company, to mitigate the direct impact of the measures taken by the Dutch government to prevent the further spread of COVID-19.
The compensation will be available to companies that were forced to close at least the majority of their business due to COVID-19 measures, and to companies that have experienced financial stress due to the requirement for people to remain 1.5 meters apart. The government refers to restaurants, bars and beauty salons as examples of the type of businesses that may be eligible for compensation.
Who is eligible?
Private companies that expect a loss of turnover of at least €4,000 and fixed costs of at least €4,000 in the period between March 16 and June 15 are eligible for the one-time compensation if they meet all conditions. The company must also (i) be established and registered with the Dutch Chamber of Commerce (Kamer van Koophandel), (ii) have a maximum of 250 employees, (iii) have its main activity registered under a certain ‘SBI-code’ on March 15, 2020, (iv) have its physical establishment in the Netherlands, (v) not have received more than €200,000 in government support during the current fiscal year and previous two fiscal years and (vi) if not operating in the hospitality sector, have at least one branch that is not the home address of the owner (save for a few exceptions).
Companies can apply for this compensation until Friday, June 26, 2020. This compensation will then be replaced by the Reimbursement Fixed Costs for Small and Medium Enterprises for which applications open mid-June (see below). Companies that applied for the one-time compensation can also make use of the new reimbursement scheme.
Reimbursement Fixed Costs for Small and Medium Enterprises
The Reimbursement Fixed Costs SMEs (Tegemoetkoming Vaste Lasten MKB, TVL) introduces a reimbursement for small and medium enterprises that suffered a loss of turnover due to COVID-19. The reimbursement is available for the period June 1, 2020 to September 30, 2020.
Who is eligible?
Private companies that have a branch in the Netherlands and have suffered a loss of turnover of at least 30 per cent due to the COVID-19 pandemic are eligible for a reimbursement, which may be tax-free in certain circumstances, a maximum €50,000 within a period of four months if they meet all conditions. A private company with a branch in the Netherlands must also (i) employ at least 250 employees, (ii) be registered with the trade register of the Dutch Chamber of Commerce under a certain ‘SBI Code’ on March 15, 2020, (iii) not have petitioned for bankruptcy or filed for suspension of payments and, (iv) if not operating in the hospitality sector or itinerant trade (i.e. market trade and taxi transport), have at least one branch that is not the home address of the owner.
The exact calculations for the compensation of the turnover loss will be published for different sectors. Companies can apply for this reimbursement from mid-June (the exact date has not yet been announced).
Which costs are covered by the reimbursement?
The reimbursement is meant to cover fixed costs, such as rent, insurances and lease costs. The TVL does not cover wage costs, because, if a company is eligible, these costs are partly covered by ‘the Emergency fund bridging employment’ (the NOW Scheme, see below). Companies may at the same time make use of the TVL as well as the NOW Scheme. If a company receives the TVL while also using the NOW Scheme, the amounts received under the TVL are considered revenue in the calculations for the NOW Scheme. As a result, the subsidy received by the company under the NOW Scheme will be lower.
Temporary emergency bridging measure for sustained employment
As discussed more extensively in our blog dated March 18, 2020, individuals or companies that employ staff and expect a turnover loss of at least 20 per cent due to the COVID-19 crisis can claim compensation from the Dutch government for up to 90 per cent of staff wages, for a period of up to three months.
Extension of government guarantees and availability of bridge loans
The Dutch government announced the extension of several existing credit guarantee schemes. When a company eligible for a credit guarantee wants to obtain a loan, it can apply for a loan with one of the participating credit providers (listed, here in Dutch), which then in turn submits an application for the relevant guarantee with the Netherlands Enterprise Agency (RVO).
SME credit guarantee scheme extended
Pursuant to the SME credit guarantee scheme, credit providers can receive a guarantee from the Dutch Ministry of Economic Affairs and Climate Policy for part of a loan. The loan can be used as a bridge loan or to increase the overdraft limit on current accounts. As part of the COVID-19 measures, the guarantee that can be provided by the government is increased from 50 per cent to 75 per cent of the loan. This increase is available from March 16, 2020 until April 1, 2021.
Who is eligible?
Companies in the Netherlands that (i) employ less than 250 FTE employees, (ii) have annual revenue of up to €50 million and (iii) have been established for more than three years are eligible for a guarantee for part of a loan through this scheme.
Business loan guarantee scheme
The number of loans eligible for the business loan guarantee scheme (Garantie Ondernemingsfinanciering, GO) has also been increased as part of the Dutch government’s COVID-19 measures. The GO offers an opportunity for large companies to obtain a 50 per cent government guarantee on financings in the range of €1.5 million up to and including €150 million. In addition, the government has raised the maximum amount of money available under this scheme from €400 million to €1.5 billion. On top of this, the government has launched the so called “GO-C”, being the COVID-19-specific component of the GO. The GO-C provides that loans with a maximum of €150 million for the purpose of financing liquidity that exist as a result of the COVID-19 pandemic can be guaranteed with a government guarantee. For SME companies with an annual turnover of a maximum of €50 million, the guarantee can be 90 per cent of the loan amount, and for companies with an annual turn-around of more than €50 million, the guarantee can be 80 per cent of the loan amount. The GO-C is also open to the agricultural sector, such as flower companies.
Who is eligible?
In short, companies are eligible to receive a loan under this scheme if (i) they have a registered office in the Netherlands and substantial activities in the Netherlands, (ii) they are considered a ‘healthy’ company, (iii) they have reasonable profitability and continuity prospects, (iv) the financing qualifies as ‘fresh money’, (iv) in the last 12 months no excessive capital withdrawals have taken place, and (v) the request is only made for the company’s own activities.
The government will release more information about this scheme shortly.
Credit guarantee scheme for agriculture
Companies in the agricultural sector that have been affected by COVID-19 can apply for a bridge loan in a maximum amount of €1.2 million under the credit guarantee scheme for agriculture (BL-C).
Who is eligible?
To be eligible for a government guarantee under the BL-C, a company must (i) have an agricultural enterprise, (ii) have a turnover that is mainly from plant product or livestock (primary production), (iii) be located in the Netherlands and, (iv) have its business activities primarily in the Netherlands.
Bridge loans for start-ups, scale-ups and innovative SMEs
Start-ups, scale-ups and innovative SMEs can apply for a special bridge loan at a regional development office in their area, in amounts from €50,000 up to €2 million, by means of the Corona Bridge Loan (Corona-Overbruggingslening, COL). When an amount of €250,000 or more is made available to a company, the government expects the company’s shareholders or other investors to also provide finance to the company.
Who is eligible?
To be eligible for a bridge loan under the COL, a company must (i) fall within the definition of “start-up”, “scale-up” or “innovative SME” as laid down by the Dutch government, (ii) be generally financed by means of external own funds (rather than bank loans), and (iii) deploy a substantial amount of its business in the Netherlands.
Support for foreign entrepreneurs with a business in the Netherlands
As of May 18, 2020, cross-border entrepreneurs with a business in the Netherlands that are in financial trouble due to the COVID-19 pandemic can request a working capital loan with the municipality of Maastricht. The loan can be of a maximum amount of €10,157 to ensure that liquidity problems are minimised. The interest will be 2 per cent and repayments need to be made within three years, starting from January 1, 2021.
Who is eligible?
Entrepreneurs with a business in the Netherlands who themselves live outside the Netherlands but in the EU, EEA or Switzerland.
Certain tax-related measures
Deferral of payment of tax debts
Companies with cash flow difficulties can request a special deferral of payment for certain taxes, including income tax, corporate tax, payroll tax and turnover tax (VAT). The request must indicate that the outbreak of the COVID-19 pandemic has caused payment problems. The companies that request deferral will automatically have such payments deferred for three months. In addition, no fines will be levied for late payment.
Companies can request a deferral of payment for longer than three months in writing. If the tax debt is lower than €20,000, the tax authority requests evidence that (i) the current payment difficulties make further deferral of payment necessary, (ii) the payment difficulties are caused mainly by COVID-19 and (iii) the obligation to file a tax return was complied with in respect of the tax debt for which a deferral is requested. For tax debts of €20,000 or higher, the tax authority will also require a statement of an expert third party (for example an external consultant or an external financer).
Where required, the statement of the expert third party must contain the following elements:
- A statement that it is likely that there are actual payment difficulties at the time of the request for deferral of payment, or it is likely that these difficulties can be expected shortly thereafter. In this regard, ‘shortly’ refers to the period during which the COVID-19 measures apply to the particular company.
- A statement that it is likely that these payment problems were mainly caused by COVID-19.
- A liquidity forecast that is plausible according to the expert.
Directors can be held liable if they fail to notify the tax authority of the company’s inability to pay certain taxes on time. If a request for a special deferral of payment is made and the request relates to tax return periods ending after February 1, 2020, the request will also be regarded as a notification of the inability to pay, filed on time.
Lowering of preliminary tax assessment
If, due to COVID-19, companies expect a lower taxable profit, it is possible to file a preliminary tax return with a lower taxable amount.
This filing can be made through the online tax portal and the government has indicated that these requests will be granted by the tax authorities.
COVID-19 provision for Corporate Income Tax
In their Corporate Income Tax return, companies can normally set off the loss over a year against the profit of the previous year (carry back). A loss over 2020 can be set off against the profit over 2019, but only after the tax return for 2020 is filed and a final tax assessment for 2019 has been imposed.
To shorten the time in which the loss can be settled, the Dutch cabinet announced that companies can deduct their expected loss over 2020 in 2019. This can be done by forming a provision. This provision cannot exceed the fiscal profit of 2019 and cannot exceed the expected loss for 2020. More details about the conditions under which the provision can be formed will be provided at a later stage.
Reduction of taxation interest
The taxation interest rate and the interest on overdue taxes are temporarily decreased as per March 23, 2020 from 4 per cent to 0.1 per cent, for all tax debts.
The tax authorities will not impose or remit any penalties for failure to pay tax debts or late payment of tax.
Corporate governance measures
On April 24, 2020, the Temporary Act on COVID-19 Justice and Safety (Tijdelijke wet COVID-19 Justitie en Veiligheid) entered into force in the Netherlands (the Temporary Act). The Temporary Act implements several measures in respect of COVID-19, which will be in effect until September 1, 2020 (unless extended). The main measures that will be implemented pursuant to the Temporary Act relevant to businesses (it being noted that these only apply to companies incorporated in the Netherlands) are as follows:
- The management board (the Management Board) of a private limited liability company (BV), a public limited liability company (NV) or of an association can decide that the general meeting of shareholders of the BV or NV (the General Meeting) or the meeting of members of the association is held solely via electronic means, such as a livestream and that no-one can attend in person. In such case, it must however be possible for the shareholders (or the members, in the case of an association) to submit questions regarding the announced topics to be covered in the meeting up until 72 hours prior to the meeting. This period is shorter (36 hours) if, within 48 hours of the meeting, the Management Board announces that a physical meeting that was already convened will instead be held via electronic means or that the location of the meeting has been changed. If the Temporary Act comes into force the Management Board will have this option, irrespective of any restrictions that are included in the relevant company’s articles of association (Articles).
- The Management Board of an NV can extend the period during which the annual General Meeting must be held, which is normally within six months after the end of the financial year (unless the Articles provide otherwise) by a maximum period of four months.
- The Management Board can postpone the preparation of the annual accounts by a maximum period of five months (for BVs and NVs) or four months (for associations and cooperatives) (the Preparation Period). Under current legislation, an extension of the Preparation Period is only permitted by resolution of the General Meeting. If the Management Board decides on the postponement, the General Meeting can no longer extend the Preparation Period. Note that timelines are different for listed companies and not amended by the Temporary Act.
- The so-called ‘presumption of mismanagement’ against the Management Board (which, under current legislation, arises in the case of the bankruptcy of a BV or an NV if the Management Board has filed the company’s annual accounts late) will not apply if the late filing occurred due to COVID-19. The Management Board must be able to prove this. However, the presumption of mismanagement continues to apply if the Management Board has not kept its books properly.
- The provisions proposed by the Temporary Act also temporarily set aside any restrictions included in the Articles which would prevent the Management Board from making use of the proposed changes under the Temporary Act, such as specific decision-making requirements or required prior approvals from other corporate bodies or third parties. This does not apply to other general approval requirements in the Articles, which remain in place.
Measures taken by banks and other credit providers
Several Dutch banks and credit providers have been implementing measures to enable their clients to maintain some financial headroom during the COVID-19 crisis. Examples include lenders temporarily not requiring repayments to be made and reductions of interest rates.
- ABN AMRO Bank N.V. confirmed that companies that have taken out a loan up to and including €50 million will temporarily not be required to repay their loans and do not need to pay interest. Companies with higher loans can discuss their situation with ABN AMRO Bank N.V.
- The Dutch microcredit provider Qredit provides business loans of up to €50,000 to starting or existing business owners who conduct business activities in the Netherlands. As part of its COVID-19 measures, Qredit allows its borrowers to cease loan repayments for a period of six months and is temporarily reducing the interest on loans to 2 per cent.
- The investment fund Invest-NL, which is partly government-owned, made €100 million available for the provision of financing to promising start-ups and scale-ups. Invest-NL aims to provide loans starting from €2 million, with 50 per cent of each loan provided by other professional investors. The idea is to make the loans available for a period of three years without any repayment obligations, after which the loan can be converted into shares.
Supplier and export credit insurance
The Dutch government wants to avoid issues with supplier credit due to the COVID-19 pandemic and has made additional funds available to reinsure all portfolios of private supplier credit insurers (such as Atradius N.V., the Dutch ECA) by means of guarantees with a total value of €12 billion.
Also, Atradius N.V. wants to support Dutch exporters of capital goods and services, as well as contractors and engineers operating internationally. For this purpose, it introduced special measures for export credit insurance in cooperation with the Dutch government and Dutch entrepreneurs. The package is temporary, applying until the end of 2020, and aims to (i) broaden certain measures (such as creating the possibility of coverage of short term export credit; insuring indirect export transactions; increasing the list of countries and the maximum coverage thereof and providing export credit guarantees for existing loans) and (ii) speed up the approval process. Besides this, there is an additional possibility of obtaining working capital from the Dutch Trade & Investment Fund.
Chamber of Commerce
The Dutch Chamber of Commerce has launched an online application that companies can use to check which COVID-19 measures they may be eligible for. This application can be found here (in Dutch).
In the Netherlands, municipal tourist tax must be paid by companies who operate tourist accommodation for guests from outside the municipality, such as hotels and camp sites. The percentage of tourist tax to be paid differs for each municipality in the Netherlands. Each municipality can decide to suspend or reduce the payment of the provisional assessment of tourist tax.