Source Taxlive (in Dutch)
Unofficial translation
The cabinet is coming up with more and more aid measures to support entrepreneurs who are in financial difficulties due to the outbreak of the corona virus. Except for the special deferral payment scheme, the sales tax is not yet infected with the corona virus. But without turnover, there is also little VAT to pay. Nevertheless, VAT specialist Anne Marieke Smits, partner at BDO, argues for extra attention for VAT measures in the short and long term.
Aid measures
The impact of the coronavirus on entrepreneurial Netherlands is already tangible. After an initial set of aid measures, the Cabinet has now come up with an extensive emergency package to help businesses through the corona crisis. The measures in this package range from a relaxation of the scheme for special deferral of payment of income, corporate, wage and turnover tax to a new temporary scheme for wage cost compensation that will immediately replace the current working time reduction scheme.
Additional VAT measures
“The primary task of the government is to ensure that entrepreneurs retain sufficient liquidity to sing out this difficult period. The cabinet has made a fantastic gesture in this regard with the emergency package. A special deferment of payment is a very nice first step in the field of taxation, but more can be done, ”says Smits. It lists some short and long-term measures that the government can take to limit the financial consequences of the corona virus for entrepreneurs.
An extra quarter for VAT payment
An extra quarter for paying the VAT debt is such a short-term measure that Smits refers to. “The majority of Dutch SMEs and independent entrepreneurs report VAT every quarter. The first declaration for 2020 must be submitted and paid in April. Entrepreneurs with payment problems due to the corona virus can request special deferment of payment for the VAT additional assessments. But that is the first step. The corona crisis is causing rising debtor stocks. Outstanding invoices will be paid increasingly delayed, resulting in increasing pressure on the available liquidity for business expenses. An extra quarter to pay VAT is then an important financial support for SMEs. ”
From year to quarter for VAT refund on bad debts
In addition to increasing debtor stocks, an increase in the number of bad debts is also a conceivable scenario. If total or partial bad debts are certain, entrepreneurs can reclaim the VAT already paid, but it will take a year. “Be careful with this and do not use an annual period but a quarter,” says Smits. “This gives financial entrepreneurs with bad debts in particular financial air during this time of crisis.”
Courtesy in stock
Some extra VAT leniency is also appropriate for catering entrepreneurs. The compulsory closure of at least three weeks affects the catering sector considerably. The industry is now giving away masses of sustainable and fresh products, in particular to food banks and other deprived persons, hospitals and homes for the elderly. “For VAT, you could consider this as a withdrawal of goods from company assets or deduction restrictions may apply,” explains Smits. “I hope, however, that the Tax and Customs Administration sees this great initiative as a business motive. “In case of withdrawal, the entrepreneur is not entitled to deduct input tax or VAT must be paid on the purchase price of the goods, while with a business motive the entrepreneur can simply recover the VAT.
Spread of VAT payment
Other industries, such as the travel and events industry, are also severely hit by the corona virus. The travel industry has meanwhile created a corona voucher, so that travel companies do not have to immediately repay paid travel sums and travelers are not lost the money for their holiday trip. They can still go on holiday at a later time by exchanging the voucher. Smits: “What could help the travel industry as well as the events industry is an opportunity to spread the VAT payment on down payments over a longer period of time. The short-time working scheme and soon the new wage costs compensation scheme will also give the government more and more insight into other sectors that are being hit by the corona virus.
Smits indicates that the VAT effects for enterprising Netherlands with planned activities that must be canceled or postponed in the coming period are in any case of a very casuistic nature. “More handles on how to handle VAT, for example with a corona voucher, a cancellation where no amount or only a percentage of the amount is returned, or the forced cancellation of an event due to unforeseen circumstances such as the corona virus, is desirable because the very casuistic case law on this is not very clear. ”
Long-term freedom
Finally, according to Smits, the government can take very targeted VAT incentives to get or keep the economy going. “I expect liquidity to be really problematic for many entrepreneurs. Therefore, give entrepreneurs who now submit a VAT return per month the freedom to convert this to a quarterly return. And suspends the sanction of the mandatory monthly declaration for failure to declare or pay VAT on time. With a conversion to quarterly, the monthly declarants now have at least a few extra months to pay their VAT. And that may give just the little air that is needed to endure the corona crisis financially. ”
