The maturity of "coronavirus" debts was extended to 7 years

From October 1, 2022, Dutch companies will begin to pay off tax debts accumulated during the COVID-19 pandemic. However, the need to repay the debt is combined with other unfavorable factors for business: rising energy costs, rent, raw materials and wages. As a result, as we wrote earlier, 135 thousand companies may face serious problems. Therefore, the government went to meet the business. Some entrepreneurs will be able to pay tax debts for seven years instead of fiveas originally planned.

tax arrears statistics

The tax deferral is part of a support package that the state has organized for entrepreneurs in connection with the coronavirus. Currently, 269.000 entrepreneurs still have outstanding tax debts, totaling more than 19 billion euros. In total, about 400 thousand entrepreneurs took advantage of the delay, some have already partially or completely repaid their debt. As a result, 28 billion of the original amount of 47 billion euros have already been repaid.

Relief for entrepreneurs

By the summer, through online surveys, they revealed what problems entrepreneurs face when paying off tax debts. The government has proposed two options for relief:

1) periodic breaks in payment; tax

2) quarterly payments instead of monthly (more details - in our article).

Such measures can help, for example, companies with fluctuating turnover due to seasonal factors. To take advantage of the relief, entrepreneurs must submit a written request stating the problem that prevents the repayment of debts.

Who can extend the maturity of debts to seven years?

This opportunity is available for healthy companies with debt over €10.000. The government recognizes that some SMEs (kleine en middelgrote bedrijven – MKB) with tax debts are in dire need of support and wants to provide it to give healthy companies a breath of fresh air by extending their repayment period. Entrepreneurs will also be able to take a one-time three-month break in payments and pay quarterly instead of monthly.

Who is not entitled to this?

It is not possible to take advantage of the opportunity to extend the maturity of the “coronavirus” debt to seven years if the company:

• took advantage of the tax deferral, and is now in good financial condition;
• accumulated a high tax debt, while making little or no profit in the years before the COVID-19 pandemic;
• has a debt of less than 10.000 euros.

What needs to be done to extend the debt repayment period?

To do this, the entrepreneur should submit a request to the tax authoritieswhere to show that the debt cannot be repaid within five years, but can be repaid within seven years. The IRS will review the request based on the information provided. Debts over €50.000 will require more justification than debts between €10.000 and €50.000. The request can be submitted at any time during the entire debt repayment period.