Corona and Dutch payroll measures
6x government support, director-major shareholder and payroll expenses
Due to Corona measures, in 2020 companies in The Netherlands received a total of 15 billion euro to compensate for payroll expenses. The Dutch research institute CBS calculated this in April 2021. In addition to this NOW (Emergency Measure for Employment Preservation) compensation, budget has been and will be made available to compensate employees for, for example, working from home. Also measures have been set in place to lower the usual wages of director-major shareholders (in Dutch: DGA) when the revenue is down.
Do you want to know what you, as an entrepreneur, are entitled to? In this article we list six Corona support measures.
The NOW is a compensation in the payroll expenses of employees, for employers that have seen a structural decrease in revenue as a consequence of the Corona pandemic. You can apply for the NOW from April 2020 through the UWV. Almost one year later, on April 1st 2021 the NOW will advance to phase 3.3. NOW 3.3 encompasses the period until July 1st 2021. The conditions: with at least a 20% decrease in revenue and a maximum allowed 10% of a decrease in payroll expenses, employers are entitled to a compensation of a maximum of 85% of the wages. An advance on the payroll expenses with NOW 3.3 can be applied to (again) from the third week of May for the third quarter of 2021. The advance will be settled with the definitive compensation retroactively. The UWV has calculation tools* with which you can estimate how high your definitive compensation will be*.
2. Decrease in usual wages director-major shareholder
For substantial interest holders the customary-wage regulation applies. With this regulation the minimum amount of the wages of the director-major shareholder is determined. Because the Corona crisis can lead to a decrease in revenue, the government is compensating the director-major shareholders with the option to lower their usual wages. With this, the expenses in payroll taxes decrease.
Are you a director-major shareholder and would you like to make use of this regulation? Then you do not need permission to lower your usual wages. However, you do need to meet a number of requirements. For example, the revenue loss in 2021 has to be at least 30% relative to 2019. You calculate whether or not you can make use of the decrease of your usual wages by determining whether the revenue (excluding VAT) was smaller in 2020/2021 or equal to 0,70 of the usual wage over 2019. Read before you make use of the regulation more about this on the Tax Authorities website* or contact your fiscal advisor.
3. Expansion free space
Although there is no separate fiscal regulation for the compensation of additional expenses for employees working from home, the working expenses scheme can be used to compensate employees. Employers are allowed to spend 1.7% of the total wage expenses for these kinds of expenses as of January 1st 2020. Because of the Corona crisis, this free space has been expanded to 3%. With this the government wants to support employees that want to compensate their employees for untaxed provisions. Utilities, internet and telephone, coffee and lunch and even toilet paper or some flowers can all be paid out of the working expenses scheme.
4. Continuing travel expenses when working from home
Many employees with a fixed travel expense compensation, travel less to and from work. Consequently, their travel expenses will also lower. However, the compensation can continue, provided this was already granted before March 13 2020. You can assume the travel pattern from before the Corona measure: ‘work from home if possible’. If this measure, and therefore the necessity to work from home, expires, the travel expenses will be compensated in accordance with the actual commute.
5. Postponement payment wage taxes
Do you have less financial space to pay the payroll taxes because of the Corona crisis? Then it is good to know that until at least June 30th 2021 you can apply for exceptional postponement of tax payment*, or you can extend a current postponement. For repaying the tax debt you get ample time; you may take up to 36 months. This exceptional postponement of payment does not only apply to wage taxes, but can be applied for all taxes.
6. Easement administration wage taxes
In addition to compensation in expenses, taxes and postponements in payments, the government gives employers more space to get their administration in order. Obligations in, for example, employee administration will be loosened until (at least) July 1st 2021. When you cannot meet your administrative obligations for wage taxes because of employees working from home, then no consequences will occur because of that. Naturally, you are obligated to get your administrative affairs in order when it is possible for you to do so.
Would you like to know more about Corona support regulations?
The regulations that the government has set in motion to support employers are in response to the decreases and increases of the Corona numbers, and therefore it is unavoidable that rapid changes will occur. Make sure, therefore, that if you want to claim these provisions, you are informed of the most recent developments.
You can read all about it in English at the governmental website business.gov.nl.
*) Need help navigating the Dutch websites? Do not hesitate to contact us.