This article is an update based on the information available as at 10 April 2020. The latest addition concerns information regarding the date on which the payment deferral period begins (see section 6).
In our article Special payment deferral – an update We set out the conditions that apply to obtaining a special deferral of payment in the event of payment difficulties resulting from the coronavirus crisis.
For income tax and corporation tax, you’ll need to wait for the tax assessments issued by the tax authorities. However, you’re actually required to pay payroll tax and value added tax (VAT) earlier. Even so, you’ll still need to wait for the (additional) tax assessments.
How exactly does this work in practice?
1. You simply need to submit your payroll tax and VAT returns to the Tax and Customs Administration on time (or have your adviser submit them on your behalf).
During the coronavirus crisis, there are no relaxed rules regarding the submission of payroll tax and VAT returns. All returns must be submitted in full and accurately within the existing filing deadlines.
When it comes to payroll taxes, it is particularly important to submit the tax return on time. This is because the UWV needs the information from the tax return in order to pay the benefit from the Emergency Measure for Job Retention (NOW) to determine. Submitting payroll tax returns on time is, in fact, a prerequisite for receiving the NOW subsidy.
2. You do NOT pay the tax due.
You are used to paying payroll tax and VAT in the same month as the tax return is filed. You no longer do this. After all, once the tax has been paid, you can no longer obtain a deferral of payment for it. The Tax and Customs Administration will not refund tax once it has been paid.
If your VAT return results in a refund, a refund decision will, of course, be issued as normal. Whether that refund will, as is customary, be automatically offset by the Tax and Customs Administration against outstanding tax assessments (for which special deferral of payment may have been granted) is not clear at present.
3. The Tax and Customs Administration will issue you with a supplementary tax assessment for the amount declared (plus a late payment penalty).
You cannot validly lodge an objection against this additional tax assessment. After all, the assessment was correctly issued.
You can, however, lodge an objection to the late payment penalty imposed. After all, the Government has undertaken to waive these fines (but, of course, only if you submitted your tax return on time and were unable to pay as a result of the coronavirus crisis). You can include this objection in your written request for special deferral of payment (see below).
4. You should send the Tax and Customs Administration a request for special deferral of payment for the amount due under the additional tax assessment.
Since 2 April 2020, there have been two ways to do this:
- with a simple note stating which (additional) tax assessments you wish to apply for a special deferral of payment for (in this note, you should indicate that your payment difficulties are caused by the coronavirus crisis; no further justification is required at this stage);
- digitally via the website from the Tax and Customs Administration (to do this, log in using your DigiD; legal entities must use an employee’s DigiD).
PLEASE NOTE (1): in both cases, a request for deferral of payment can only be made once a (first) (additional) tax assessment has been issued.
Even whilst the payment deferral is in force, the Tax and Customs Administration will continue to issue additional VAT and payroll tax assessments for the amounts you owe on the returns you submit. This is, after all, how the tax liability is formalised. You do not need to apply for a further deferral in respect of these new additional tax assessments.
PLEASE NOTE (2): You must apply for a deferral of payment separately for each entity.
The temporarily relaxed policy applies to income tax, corporation tax, value added tax (VAT) and payroll tax. With effect from the week of 6 April 2020, it also applies to gambling tax, insurance tax, landlord’s levy, environmental taxes, excise duty and excise duty on non-alcoholic beverages. For customs duties, a request for deferral of payment may be submitted to the Tax and Customs Administration.
5. The Tax and Customs Administration grants this extension automatically.
Since 2 April 2020, it has been sufficient to submit a single request for a deferral of payment. The Tax and Customs Administration will then automatically grant a deferral of payment for all types of outstanding tax liabilities and for any new tax liabilities arising during the period for which the deferral applies.
Naturally, VWG will be happy to submit your request(s) for a payment deferral to the Tax and Customs Administration on your behalf. Please call or email your usual contact person to arrange this.
Please bear in mind that we do not receive additional tax assessments directly from the tax authorities. You should therefore forward these assessments to us straight away.
We may also not receive correspondence regarding the request for a deferral of payment directly from the Tax and Customs Administration. To ensure we can deal with the matter appropriately, it is important that you forward all documents you receive from the Tax and Customs Administration to us immediately.
6. If you anticipate that you will still be unable to pay after the deferral period has ended, you should submit a written request to the Tax and Customs Administration for an extension of this period.
You can apply for a three-month deferral of payment. If, after those three months, you are still unable to pay the tax, you can apply for a further extension.
However, you can also apply (directly) for a deferral of payment for a period of more than three months. In that case, the Tax and Customs Administration will request further information towards the end of those three months.
The Tax and Customs Administration first provided a clear answer to the crucial question – ‘When does the three-month period start?’ – on 10 April 2020.
The three-month period begins on the date on which the request for a deferral of payment is signed.
Example: you have not paid your payroll taxes on the February 2020 tax return. On 21 April 2020, you receive a supplementary tax assessment for this, which must be paid by 5 May 2020 at the latest. You must submit your application for a deferral of payment, dated 1 May 2020. The deferral will then be granted until 1 August 2020.
This extension period applies to all subsequent tax assessments.
Example: you have also failed to pay the payroll taxes on the March 2020 tax return. You will receive a supplementary tax assessment for this on 21 May 2020. You do not need to submit a new request for special deferral of payment; this has already been granted following your request submitted on 1 May 2020. The deferral of payment for the additional assessment of payroll taxes for March 2020 will then run, as for February 2020, until 1 August 2020.
In the event of a deferral for the period following the initial three-month period, the Tax and Customs Administration will assess whether the following conditions have been met:
- the current payment difficulties mean that a longer deferral is necessary;
- these payment difficulties have arisen mainly as a result of the coronavirus crisis;
- the tax liability for which the deferral is being requested has been declared in accordance with the reporting requirements;
- the request relates to one or more of the taxes mentioned above;
- If the total tax liability for which the additional deferral is being requested exceeds €20,000, a statement from an independent expert is required (see our article Special payment deferral: an update ).
If you anticipate that you will need a longer deferral of payment, please ensure that you gather the necessary information within the first three months. VWG will, of course, be happy to help you with this.