In a letter In a statement to the House of Representatives, State Secretary for Finance Vijlbrief outlined how the temporary scheme for special deferral of payment in connection with the coronavirus crisis will be phased out.
PLEASE NOTE: the rules described in this article have been partially relaxed. See our article Longer payment deferrals and more time to make repayments
Current arrangements
Under the current scheme, business owners can, until 1 October 2020, obtain a three-month deferral of payment for most tax debts without any further conditions. This request can still be made until 1 October 2020 are carried out.
Business owners who need a longer deferral of payment may apply to extend the deferral beyond this three-month period. However, further conditions must be met for this. This application can still be made until 1 October 2020 are carried out.
Finishing touches
The phasing out of the scheme consists of two parts:
- resuming payment of newly arising payment obligations;
- the repayment of the tax liability that has accrued.
All business owners must once again fulfil their new payment obligations with effect from 1 January 2021. Tax for the periods comprising the fourth quarter of 2020, December 2020 and the 13th four-week period of 2020 must therefore be paid as normal. After all, the obligation to pay for those periods arises in 2021.
If the deferral granted has expired earlier (the business owner did not request an extension after the first three months), the new payment obligations must be met once the three-month period has expired.
Accrued tax liability
Tax liabilities accrued during the deferral period may, from 1 January 2021, be 24 equal monthly instalments be repaid (faster repayment is, of course, permitted). Additional conditions will only be imposed in exceptional circumstances. During this period, tax refunds will not be set off against the outstanding tax liability.
For businesses that are unable to repay their accumulated tax debt within 24 months, bespoke solutions will be sought. These solutions will be based on existing policy. That policy entails:
- that a third-party expert must confirm that there are indeed payment difficulties of a temporary nature, that the company is viable and that the tax can be paid by a specified date;
- As much assurance as possible is provided to the Tax and Customs Administration regarding the settlement of the debt.
Remediation
The State Secretary will investigate whether it is necessary and desirable to broaden the existing options for restructuring.
The Tax and Customs Administration is in discussions with the Chamber of Commerce regarding support for business owners who, as a result of the current situation, are considering closing down their businesses.
Interest
The rate for both tax interest and collection interest has been set at 0.01% during the coronavirus crisis. The recovery interest will remain at 0.01% until 31 December 2021.
The tax interest will be set back to 4% with effect from 1 October 2020. For corporation tax purposes, this represents a reduction compared with the rate of 8% that applied prior to the coronavirus crisis.
Communication
Business owners to whom the Tax and Customs Administration has granted a special deferral of payment will receive:
- a letter will be sent out shortly containing general information on the main points of the phasing out of the deferral scheme;
- in December 2020, a more detailed letter, including a provisional breakdown of the debt accrued (the first instalment must be paid by the end of January 2021!);
- in March 2021, an updated overview of the tax debt accrued, showing the remaining payment instalments;
- during the term of the payment plan, periodic updates on the progress of the payment plan;
- a final statement after the final payment deadline.