Temporary emergency bridging measure to retain jobs (NOW 1.0 for the period through to June 1, 2020)
- In the Jobs and Economy emergency package presented on March 17, 2020 the government announced the ‘Temporary emergency bridging measure to retain jobs’ (Tijdelijke noodmaatregel overbrugging voor behoud van werkgelegenheid; NOW).
- In short, the NOW scheme means that companies that during a self-elected period of three consecutive months during the period March 1, 2020 through July 31, 2020 (turnover reference period) suffer a loss of turnover of at least 20% in comparison with their turnover for 2019 divided by four, can obtain compensation for a maximum of 90% of the payroll in proportion to the decline in turnover. The compensation covers the payroll costs during the period March 1 through May 31, 2020 regardless of the turnover reference period. If the subsidy is granted, 80% will be paid in advance. Two variables thus play an important role in the NOW scheme: the loss of turnover and the payroll.
- If the decline in turnover at the group level is less than 20%, the decline in turnover of an individual operating company may be considered. If the decline in turnover of the individual operating company is at least 20%, then the operating company can, in principle, rely on the NOW, provided that certain conditions are met. Among others, these conditions determine that the head company of the group or the parent company of the applicant operating company must state that it will not distribute any dividends or award any bonuses to the board of directors or management for the year 2020, nor will it redeem any own shares through to the date of the shareholders’ meeting in which the financial statements for 2020 are approved.
- In the final determination of the subsidy the decline in turnover used for the advance payment is compared to the actual decline in turnover in the turnover reference period. If the actual decline in turnover reference period is lower, the subsidy will be reduced.
- With regard to companies that did not yet exist on January 1, 2019 and companies that have acquired (part of) another company, a different method for calculating decline in turnover applies. Start-up companies can base the reference period for the turnover on the full calendar months as of the first calendar month after the day on which the company commenced its operations in 2019 through to February 2020. This turnover will be translated to a three-month period. Likewise, for companies that acquire part of another company, the turnover comparison can take place as of the first calendar month after the day of the transfer, for all full calendar months in 2019 through February 2020, translated to a three-month period.
- In principle, the salary for the purposes of payroll tax/national insurance contributions (“SV salary”) for January 2020, without additional periodic salaries, acts as the NOW payroll tax base for the advance payment. This SV salary is multiplied by three and increased by 30%, being the fixed amount of employer contributions; the result is the payroll. Employee salaries exceeding € 9,538 per month are not included in the payroll calculation for the excess. In the final determination of the subsidy, the payroll used for the advance payment is compared to the actual payroll in the subsidy period. If the payroll in the subsidy period is lower, the subsidy will be reduced by 90% of the difference in the payroll, regardless of the decline in turnover. However, if redundancy on economic grounds is applied during the subsidy period a reduction of 150% of the payroll of the relevant employees applies.
- To accommodate businesses with a (too) low and unrepresentative payroll in January, an alternative calculation method applies in which the payroll for the month March 2020 will be decisive. This is subject to the condition that the payroll for the period March through May 2020 exceeds three times the payroll for January 2020. The payroll for the months April and May 2020 is thereby set at a maximum of the payroll for March 2020.
Temporary emergency bridging measure to retain jobs (NOW 2.0 for the period June 1, 2020 through to October 1, 2020)
- The government has decided to extend NOW by another four months. The second NOW tranche (NOW 2.0) applies to the period commencing on June 1, 2020 and ending on October 1, 2020. The application process for NOW 2.0 has started as of July 6, 2020
- In short, the purpose and structure of NOW 2.0 is the same as that of NOW 1.0. In order to retain jobs, employers with a decline in turnover of at least 20% in comparison with their turnover for 2019 divided by three, can receive compensation for their payroll costs. This compensation is related to the loss of turnover and is for the payroll costs for the months June, July, August and September 2020.
- The turnover period for calculating the decline in turnover is four months. This period starts on June 1, July 1, or August 1, 2020. If a subsidy application has also been filed for the period March-May 2020 (NOW 1.0), then the turnover period for the extended application (NOW 2.0) must directly follow after the period chosen in the earlier application.
- The reference month for the payroll has been moved from January 2020 to March 2020. This can offer a solution for organizations with peak seasonal activities.
- The fixed increment (as compensation for other employer expenses) has been increased from 30% to 40%.
- The NOW 2.0 also includes a provision that reduces the subsidy if redundancy on economic grounds is applied for during the subsidy period. Under NOW 1.0, a reduction of 150% of the payroll of the relevant employees applies, under NOW 2.0 the reduction will, in principle, be 100%. However, if 20 or more employees are made redundant on economic grounds and the Collective Redundancy Notification Act (Wet Melding Collectief Ontslag; WMCO) applies, the final NOW subsidy will, in principle, be reduced by another 5%. This reduction, which will thus apply in addition to the above reduction of 100%, will not apply if i) the employer and the relevant employee representative body reach agreement on the redundancy application or ii) these parties request mediation by a committee to be appointed by the Labor Foundation (Stichting van de Arbeid).
- NOW 2.0 applications are, among others and exceptions aside, subject to the condition that a company or group must not distribute dividends or award bonuses for 2020, or redeem own shares, through to the date of the shareholders’ meeting in which the financial statements for 2020 are approved
Additional measures to support self-employed
- Self-employed can, under conditions, get non reimbursable income support until 1 October, 2020 through a fast track procedure and/or a 2% interest loan for working capital to a maximum amount of € 10,157 (TOZO) for a maximum term of three years.