From October 1, 2022, a five-year period for paying off tax debts arising from the coronavirus crisis begins for entrepreneurs. At the same time, some parliamentarians and representatives of business associations believe that the existing scheme for paying tax debts by companies needs to be made more favorable - in particular, to increase the repayment period from five to seven years.
On 1 July 2022, Secretary of State for Taxes Marnix van Rij, after online consultations and discussions with business organizations, sent a letter to Parliament, which considers several scenarios for settling the tax debt accumulated by Dutch entrepreneurs in connection with the pandemic coronavirus.
Accepted debt repayment scheme
Since mid-February this year, restrictive measures to contain the coronavirus have been gradually lifted, so nothing else hinders economic development in this regard. Accordingly, entrepreneurs must pay off tax debts. To do this, the government proposes the following scheme:
- tax debt must be repaid within 5 years (starting point - October 1, 2022);
- the entrepreneur must make 60 equal monthly payments;
- this repayment procedure applies to tax debts until April 1, 2022;
- in the period from March 23, 2020 to July 1, 2022, only 0,01% interest on tax debt is charged. From July 1, the interest rate will gradually increase to the old level of 4% by January 1, 2024.
The government believes that the adopted tax debt repayment scheme is a very generous measure on the part of the authorities. Further easing is undesirable. Nevertheless, the government is considering the scenario of introducing such easing, but without increasing the total maturity of debts.
What is the situation with the repayment of "coronavirus" debts now?
The total amount of "coronavirus" tax debt is €21 billion and is distributed among 280 companies. In total, about 000 thousand entrepreneurs took advantage of the temporary delay. Some of the companies that took advantage of the deferment have already partially or fully repaid the debt, as a result, almost half of the original amount of €400 billion has already been repaid.
65% of entrepreneurs have a debt of less than €25, that is, they will pay no more than €000 per month. The remaining 416% (approximately 35 companies) have significantly higher debt, averaging €97 and having a maximum monthly payment of €000. Wherein about 20% of companies are in the "high risk category", that is, they may not pay off their debts in full at all.
What concessions can the government agree to?
The letter to Parliament highlights that options for flexible repayment of tax debts will be available:
- only in relation to viable companies (as even viable companies may experience temporary liquidity difficulties);
- only on the basis of a written application, which will indicate the causes of problems with the repayment of debts;
- only if the company fulfills all newly arising tax liabilities.
The following exemptions are possible:
- periodic breaks in payment;
- quarterly payments instead of monthly.
