The Cabinet of Ministers is launching six new measures to support entrepreneurs, including self-employed persons. This time, support is not expressed in direct payments, but in a set of tax incentives totaling about 4 billion euros. The government expects that most of these funds will still go to the treasury when the economy recovers from the crisis caused by the COVID-19 pandemic.
So what does the government propose to save businesses?
1. Possibility of reducing wages in the event of a drop in turnover. This means that entrepreneurs (DGA) can temporarily pay themselves lower wages. Regular wages can be reduced in the same proportion as the decrease in the company's turnover. This, in turn, will lead to a reduction in payroll tax. The Cabinet of Ministers believes that about 135 entrepreneurs will take advantage of this proposal, since the use of this opportunity, according to the Ministry of Finance, gives them an average advantage of 000 euros.
2. Self-employed entrepreneurs can count on a tax deduction or tax rebate (zelfstandige aftrek), but a prerequisite for receiving these benefits is that entrepreneurs must work for themselves at least 1225 hours a year. Quarantine makes it difficult for many entrepreneurs to meet this criterion, therefore, from March 1 to May 31, the tax authorities will consider a 24-hour working week from all entrepreneurs sufficient to receive assistance.
3. Employers also have more opportunities to give their employees tax-free gifts, such as flowers or gift certificates. This will not only help keep your employees motivated and lower your tax base, but it will also support flower growers and gift makers.
4. Legal entities have the opportunity to create a reserve for the amount of expected losses in 2020 and reduce the profit for 2019 by the indicated amount. At the same time, the size of the reserve cannot exceed the amount of profit in 2019. That is, the expected loss for 2020 associated with the corona crisis can be recounted in the income statement for 2019 as a so-called fiscal reserve. Using this tax reserve, it is possible to request a refund of previously paid or payable income tax for 2019. The Cabinet of Ministers believes that this measure will be able to support at least 125 Dutch companies.
5. The Cabinet of Ministers also announces that the adoption of the Law on excessive borrowing from own company will be postponed for one year until January 1, 2023. This will give entrepreneurs more time to pay off debts. The ministry estimates that about 11 people use it.
6. The last measure concerns mortgage loans. People who have applied for a deferral of mortgage payments, or rather a reduction in them to the payment of only bank interest, will be given such an opportunity, and the grace period can be extended up to 6 months. The unpaid amount during the grace period will be evenly redistributed to subsequent mortgage payments. About 60 people are expected to benefit from this assistance measure.
Publication Date: 29.04.2020
