UPDATE: ‘EXPANDED’ Dutch Temporary Wage Allowance (Noodmaatregel Overbrugging Werkgelegenheid - NOW)

donderdag 07 mei 2020

As from 5 May 2020, companies can apply for the ‘EXPANDED’ Dutch Temporary Wage Allowance (in Dutch: ‘Noodmaatregel Overbrugging Werkgelegenheid’ - NOW).

Since 6 April 2020, companies can apply for the Dutch NOW regulation provides, if the company’s turnover decreases with at least 20% due to the impact of the Corona virus. However, the NOW regulation could only be used if the 20% decrease refers to the turnover of the entire group during the reference period. Therefore, the individual financial situation of a legal entity within the group was irrelevant. For this reason, the NOW regulation could not be applied if an individual legal entity experiences a decrease in turnover of at least 20%, but the decrease of the entire group stays below this percentage.

Since this situation could lead to redundancies within the individual legal entity, the NOW regulation is amended (expanded) in the following way:

  • If the decrease in turnover at group level is less than 20%, the decrease in turnover of an individual legal entity may be used to apply for the NOW regulation. This individual legal entity can apply for the NOW regulation, if there its decrease of turnover is at least 20%.
  • The applying group company must be a legal entity (therefore business units, branches, permanent establishments etc. cannot apply the NOW regulation).
  • If the decrease in turnover at group level is at least 20%, then the new expansion of the NOW regulation will not apply. In such a situation, only the group will be able to apply.

Additional conditions

With the expansion of the NOW regulation, the following additional conditions must be met:

  • The group of which the applicant legal entity is a part, must state that it will not distribute any dividends and/or award any bonuses 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.
  • The applicant legal entity must reach an agreement with an employees’ representative body (e.g. Labour Union) about job retention. For companies with less than 20 employees, accordance of an employees’ representation will be sufficient.
  • The applicant legal entity cannot apply the NOW regulation if it carries out commercial activities that comprise of making available more than half of its workforce within the group (e.g. if it can be considered an employees’ legal entity within the group company – “personeelsvennootschap”).

Foreign bank account number

With the expansion of the NOW regulation, employers with a non-Dutch SEPA bank account number, no longer need to provide a Dutch bank account number.

UPDATE: Deferral of payment for tax debts

As a result of the corona crisis, the Dutch tax authorities will grant a special deferral of payment for tax debts of three months, to companies which are temporarily facing liquidity problems.

The taxes which fall under this approval are e.g.: payroll taxes and social security contributions, VAT, personal income tax/national insurance contributions, income-related contributions for health insurance under the Health Insurance Act and corporate income tax.

The request for a deferral of payment may be submitted either in writing or electronically, after a tax assessment is imposed.

Deferral of payment for tax debts longer than three months

Requests for a deferral of payment of longer than three months can only be submitted in writing, when the following conditions apply:

  • The current financial problems necessitate a longer period of deferral.
  • The financial problems mainly originate from the corona crisis.
  • A tax return was already filed, regarding the tax debt for which a deferral is requested.
  • The requested deferral relates to one or more taxes which fall under the approval (see above).
  • If the total tax debt, at the time of the request for deferral, amounts to or exceeds € 20.000,- an accountant’s statement will be required.

Possible Director’s liability

To prevent directors’ liability, it is important that directors of a legal entity notify the tax authorities, if the company cannot pay its tax obligation in time.
However, when a request for deferral of payment for tax debts is made based on the policy above, this request will also be regarded as a notification of inability to pay, both valid and filed in time.

The above with the exception that in a later phase it appears that the inability to pay was not mainly related to the corona crisis.

Pallas Attorneys-at-Law

If you have any questions, or if you need assistance with the application for the (expanded) Temporary Wage Allowance, please contact your lawyer with Pallas Attorneys-at-Law, or contact Alain Camonier on +31 20 470 93 64, or by e-mail: alain.camonier@pallas.nl