In a previous article dated 1 September 2021, we explained that, in connection with the coronavirus crisis, the tax authorities may grant business owners special deferral of payment. For an explanation of special deferral of payment, please refer to the relevant article. However, tomorrow is the last chance to apply for a special deferral for outstanding tax debts.
Expiry of the special deferral of payment
Per 1 October 2021 The special payment deferral is coming to an end. Other forms of COVID-19 support are also coming to an end; see our article dated 31 August 2021. What does the expiry of the special payment deferral actually mean in practice? There are two circumstances you need to be aware of.
1. From 1 October 2021 all must new payment obligations are met.
This means that if a tax return is submitted on or after 1 October 2021, it must be paid on time. Furthermore, tax assessments with a payment deadline on or after 1 October 2021 must be paid. The payment deadline is always stated on the tax assessment.
2. From 1 October 2022 repayment of the accumulated tax liability during the special deferral of payment.A tax debt has accumulated during the period in which a special deferral of payment was in place. The tax authorities are offering a payment plan for this. From 1 October 2022, the accumulated debt can be repaid over 60 months. Repayments must then be made in equal monthly instalments. This means that the debt will be repaid from 1 October 2022 to 1 October 2027. However, it is possible to repay the debt earlier.
The payment scheme applies to debts accrued during the period from 12 March 2020 to 30 September 2021 inclusive. Any debts incurred before 12 March 2020 – so-called pre-coronavirus debts – will only be included in the payment scheme if an extension of the special deferral has been requested.
Interest on arrears
Interest on arrears must be paid on the repayment of the debt. This means that each month, a portion of the repayment plus a portion of interest on arrears is paid. The current rate of interest on arrears is 0.01%. This rate applies until 31 December 2021. Thereafter, the interest rate will be gradually increased to the previous rate (4%). On 1 January 2022, the interest rate will rise to 1%; on 1 July 2022 to 2%; on 1 January 2023 to 3%; and finally, on 1 January 2024, to 4%.
Information from the tax authorities
The tax authorities will send a letter containing all the information regarding the payment arrangement. For further information, please visit the tax authorities’ website.