Introduction

The 2019 novel coronavirus has been declared by the World Health Organization (WHO) as a “global pandemic” and its impacts on daily life continue to spread and disrupt personal and business routines across the world.

Various significant economic measures have been adopted by the Dutch administration to help companies in financial difficulties as a result of the coronavirus which will be briefly discussed in this client alert.

Government-guaranteed scheme for small and medium-sized enterprises (Borgstelling MKB-kredieten) and Corporate Finance Guarantee scheme (Garantie Ondernemingsfinanciering)

As of 16 March 2020 the existing government-guaranteed scheme for small and medium-sized enterprises (SME Guarantee Scheme) has been extended. The existing SME Guarantee Scheme provided that 50% of the credit lend to qualifying companies (for purposes of a bridge loan or an overdraft facility increase in each case with a tenor of not more than one year) would be financed (through the relevant financier) by the Dutch administration itself. Additionally, 90% of the total credit outstanding would benefit from a government guarantee (borg). The extended SME Guarantee Scheme now provides that 75% of the credit lend to qualifying SME's would be financed by the Dutch administration (while still benefitting from the 90% government guarantee). Additionally, the temporal scope of the extended SME Guarantee Scheme will be broadened so that it applies to bridge loans and/or overdraft facilities with a tenor of 2 years (instead of 1 year). The Dutch administration indicated that it has sufficient financial resources available to ensure all qualifying companies can benefit from this extended SME Guarantee Scheme.

Also, please note that the Corporate Finance Guarantee scheme (Garantie Ondernemingsfinanciering) available for medium and large companies will be extended. Originally, this relief measure has been introduced by the Dutch administration in the wake of the credit crisis by providing a 50% government guarantee on loans within the EUR 1.5 million to EUR 50 million range. This scheme's overall budget was limited to EUR 400 million. The new measures by the Dutch administration seek to extend the overall budget to EUR 1.5 billion. Also, the maximum amount to which this scheme will be applicable shall be broadened to cover loans up to EUR 150 million.

Although the above are most welcome steps taken by the Dutch government, it should be noted that these measures would predominantly apply to new (bridge) loans and/or new overdraft facilities. However, in current market conditions, companies may seek relief with respect to repayment obligations under existing loan agreements. A further question is whether non-bank lenders could participate in this scheme and we will closely monitor any developments.

Tax payment relief measures

As part of the Coronavirus package, entrepreneurs will be provided the possibility to obtain an extension of payment for any amount of personal income tax, corporate income tax, wage tax and VAT due. This extension shall also cause collection measures to be immediately suspended. Such extension of payment must be requested in writing with the Dutch tax authorities via ordinary mail and is processed manually (which may cause a delay). Initially, the extension will be automatically granted if the tax payer indicates that it has financial issues caused by the Coronavirus. The request and whether the conditions are met will be reviewed in substance at a later stage. Under these circumstances the Dutch tax authorities shall not impose a penalty for late payment (verzuimboete) or if still imposed, shall nullify such penalty.

In addition, as a more general measure, for any amount of tax due by entrepreneurs, both the statutory interest (belastingrente) as well as the tax collection interest (invorderingsrente) shall be temporarily charged at a rate of 0.01%. This reduced statutory interest rate will apply as from 1 June 2020 for all relevant taxes save for personal income tax for which the reduced rate shall apply as from 1 July 2020. The reduced tax collection interest rate will be applicable as from 23 March 2020.

Moreover, and not particularly linked to the Coronavirus, entrepreneurs are allowed to request a reduction of preliminary assessments for personal income tax and corporate income tax purposes. Such reduction can reflect the newly expected income and profit levels and thus reduce current payment obligations for taxpayers. If previous amounts of tax due have already been paid and exceed the newly preliminary assessed amount, the difference shall be refunded.

It may very well be that more measures will follow and/or tweaks will be made, as the administration indicates that the current set of measures is part of a dynamic package.

Compensation for wage costs due to Covid-19 virus in the Netherlands

Before 17 March 2020, companies who were facing difficulties because of a work reduction as a direct result of the Covid-19 virus, were able to apply for permission from the Dutch Ministry of Social Affairs and Employment (Ministerie van Sociale Zaken en Werkgelegenheid) fto reduce the working time of their employees.

In the letter to the parliament dated 17 March 2020, the Minister has withdrawn this short-time working scheme with immediate effect because of an unprecedented use of the scheme by employers. As a replacement the Ministry has introduced the Temporary Emergency Relief Measure for the Preservation of Work (Tijdelijke noodmaatregel overbrugging voor werkbehoud). Employers can apply to the Employee Insurance Agency (UWV) for a generous allowance to cover up to 90% of wage costs , and receive an advance payment of (a minimum of) 80% of the allowance expected to be granted by the UWV.

Please note that the allowance scheme is not connected with the unemployment benefits-regime.

In order to be eligible for an allowance to cover wage costs, the employer has to comply with the following conditions:

• the employer will have to demonstrate an (expected) decrease of revenue as per 1 March 2020 of at least 20%;
• the employer has to commit not to apply for permission of the UWV to dismiss employees on the basis of business economics grounds during the period that employers receives the allowance; and
• the employer will in principle have to continue full payment of wages.

The actual allowance (up to 90% of the wage costs) will depend on the (expected) loss of revenue. Please note that the definitive determination of the compensation is made retrospectively, which may result in subsequent payments or recoveries.

The allowance can be granted for a period of 3 months, which may be extended once for another 3 months (further conditions may be attached to this extension). This new scheme applies to all companies, regardless of size.

In contrast to the short-time working scheme, the new allowance scheme also applies to wage costs for on-call workers with a zero-hours contract and temporary workers, even though these employees are (in principle) not entitled to continued payment of wages under Dutch law.

Please note that employers cannot apply for this allowance yet. We will keep you updated on the exact date when applications for this scheme can be filed.

Self-employed workers

Self-employed workers may be eligible for social assistance for a period of three months through an accelerated procedure under the Social Assistance (Self-Employed Persons) Decree (besluit bijstandsverlening zelfstandigen). This scheme is implemented by municipalities, and supplements income up to the social minimum. There is no capital or partner test in this temporary assistance scheme for self-employed persons. This amount does not need to be repaid. Support under this temporary scheme is also possible in the form of a loan for working capital, at a reduced interest rate.

Conclusion

Various measures have already been taken by the Dutch administration to relief companies from financial difficulties caused by the coronavirus. Given the major impact on the Dutch economy, we expect that further measures will be taken and we will closely monitor any developments in relation to this topic.

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