The Deputy Minister of Finance on 6 May 2020 issued a policy statement that replaces, updates, and supplements prior policy statements concerning tax relief measures provided in response to the coronavirus (COVID-19) pandemic.
The measures in the most recent policy statement—implemented on 9 May 2020 and, unless otherwise indicated, effective retroactively to 12 March 2020—provide relief, as briefly described below.
“Corona reserve” for corporate income taxpayers
The COVID-19 crisis means that companies may incur a tax loss in 2020. Because this can only result in a (provisional) loss set-off after the tax return for 2020 has been filed, permission approval is allowed for corporate income taxpayers to create a tax reserve (corona reserve) when determining the tax profit for the 2019 financial year. The corona reserve may be created for all or part of the “corona-related loss” that is expected to be incurred for the 2020 financial year. The corona reserve means that the expected loss for 2020 may be used immediately (subject to certain conditions) to arrive at a lower (provisional) assessment for 2019, thus resulting in a liquidity benefit.
Director-major shareholders must receive at least a normative salary. As COVID-19 relief, approval has been given for the normative salary for 2020 to be determined at a lower amount if there is a decline in turnover as a result of the corona crisis.
Increase of “fixed exemption” in the work-related costs rules
Employers can use the fixed exemption in the work-related costs rules to give employees untaxed reimbursements and provisions. The amount of the fixed exemption will be increased from 1.7% to 3% for the first €400,000 of the payroll for each employer, as a one-off and temporary increase. Consequently, the fixed exemption for 2020 will be increased from €6,800 to €12,000.
Easing of “hours criterion”
An entrepreneur subject to individual (personal) income tax is only entitled to certain entrepreneur tax relief, such as the self-employed persons deduction, the working partner’s abatement, and the retirement reserve, if that person spends at least 1,225 hours per calendar year on the business. Under the relief, when assessing whether the hours criterion has been met, entrepreneurs are deemed to have spent at least 24 hours per week on their business during the period 1 March 2020 through 31 May 2020. With regard to entrepreneurs who usually work peak hours during the period 1 March through 31 May because they perform seasonal work, they will be regarded as having spent the same number of hours during the same period in 2020 as the number of hours spent during the same period in 2019.
For taxpayers that temporarily are not able to make mortgage interest payments and mortgage repayments, a payment break (agreed to with the lender) generally will not result in the loss of the mortgage interest deduction simply because the repayment requirement has not been met.
Deadline for submitting refund requests for energy tax, sustainable energy surtax
The energy tax and surtax on supplies of natural gas and electricity during the period April - June 2020 (as well as the value added tax (VAT)) will become payable on the date when the additional invoice is issued (in October 2020 at the latest). Related refund requests must be submitted within 13 weeks of the end of the energy-use period and will be deemed timely if submitted within 13 weeks of October 31, 2020.
Read a May 2020 report prepared by the KPMG member firm in the Netherlands
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