From October 2022, business owners will be required to repay their COVID-19-related debts to the Tax and Customs Administration. We have set out the relevant rules for you below. You can also find this factsheet in pdf-format.
Corona debts
Business owners with coronavirus-related debts will receive a statement from the Tax and Customs Administration setting out these debts. This statement contains instructions on how to make the repayments.
Payment scheme
The Tax and Customs Administration is granting a deferral of payment for these coronavirus-related debts until 1 October 2027, subject to the following conditions.
- The debts are repaid in 60 equal monthly instalments (5 years). The deadline for payment of the first instalment is 31 October 2022 and then every month thereafter.
- The entrepreneur strictly complies with all new tax obligations as they arise. This involves submitting accurate tax returns on time and meeting the resulting payment obligations in full and on time.
If a business owner no longer meets these conditions, the recipient may refuse or terminate the payment arrangement. Before doing so, the recipient must give the business owner the opportunity to comply with the conditions within 14 days.
At least once every six months, the recipient shall notify the trader in writing of the payments made by the trader that have been debited.
Additional approvals
In addition to the rules set out above, the following approvals have been granted:
- extend the payment plan;
- repayment in quarterly instalments;
- payment holiday.
Extending the payment deadline
At the business owner’s request, the payment plan may be extended until 1 October 2029 at the latest (7 years instead of 5).
The following conditions apply.
- The extension is necessary and feasible.
- The total tax liability covered by the payment plan amounts to €10,000 or more at the time of the request.
- There is no outstanding tax debt that should have been paid on or before 12 March 2020, for which enforcement proceedings had been initiated and for which no deferral of payment was in force on 12 March 2020.
- There are no outstanding tax liabilities that should have been paid on or after 1 April 2022, unless a deferral of payment is in place.
The following requirements apply to the request.
- In writing and stating the reasons.
- A liquidity forecast covering the 24 months following the submission of the application must be attached, demonstrating the entrepreneur’s ability to repay the loan.
- If the total tax liability at the time of the request for an extension is €50,000 or more, two additional conditions apply:
- the entrepreneur must submit the annual accounts for the last three financial years;
- The entrepreneur must submit a statement from an independent expert confirming that the necessity and feasibility of the extension are plausible and that there are no indications that the business is not viable.
Extending the payment term means that more interest on arrears is payable.
Repayment in quarterly instalments
The payee may, upon request, agree to the payment being settled in equal quarterly instalments.
The final payment date for the next payment instalment is then the last day of the calendar quarter in which the request is submitted, and subsequently one quarter later each time.
The following conditions apply.
- A written and reasoned request.
- The grounds must demonstrate the necessity.
- There are no outstanding tax liabilities that should have been paid on or after 1 April 2022, unless a deferral of payment is in place.
Payment holiday
Upon request, the recipient may grant a one-off payment holiday of up to 6 consecutive monthly instalments or 2 generic quarterly instalments.
The following conditions apply.
- The business owner must demonstrate that they expect to experience repayment difficulties for a short period.
- There are no outstanding tax liabilities that should have been paid on or after 1 April 2022, unless a deferral of payment is in place.
The payment holiday does not extend the term of the payment plan (60 or 84 months). This means that, following the payment holiday, the instalments will be increased. This also means that more collection interest will be due.
Combining
Provided all the conditions are met, an extension of the payment plan, quarterly repayments and a payment holiday can be combined.
Extra repayment
Of course, you are allowed to make an additional repayment during the term of the repayment plan.
An extra repayment does not reduce the amount of each instalment, but shortens the term of the repayment plan.
It is, however, possible to ask the recipient in writing to reduce the instalment amount following an additional repayment.
Requests
Written requests must be submitted to:
Tax Office
PO Box 100
6400 AC Heerlen
In principle, the recipient will make a decision within 8 weeks of receiving these requests.
The Tax and Customs Administration states on its website that, whilst awaiting a decision on a request, payments may be made in accordance with the request. If the request is rejected, however, any arrears that have accrued must be cleared immediately.
Interest on arrears
During the payment plan, collection interest is payable on the outstanding tax debts.
The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.