Coronavirus: Dutch government adopts package of new measures designed to save jobs and the economy
Due to the coronavirus outbreak, the Dutch government has decided to implement a series of unprecedented economic measures. The measures are designed not only to protect our health, but also to protect people's jobs and livelihoods and to minimise the impact on self-employed people, small and medium-sized enterprises and major companies. Under the newly announced measures, billions of euros will be invested into the economy every month, for as long as necessary. The measures will ensure that companies are able to pay their employees' wages, grant a bridging arrangement for self-employed people and allow companies to hang on to their money through relaxed tax provisions, allowances and supplemental lines of credit.
The Ministers and State Secretaries of Finance and of Economic Affairs and Climate Policy and the Minister of Social Affairs and Employment announced the package of measures to the Dutch House of Representatives on Tuesday. The measures form a supplement to the economic measures already implemented by the government on Thursday, 12 March.
The members of government issued a joint statement to the effect that, "First and foremost, it is vital that all Dutch citizens comply with the health-related decrees and recommendations issued at all times. However, it is clear that these measures will have a significant impact on businesses, ranging from self-employed people to major companies, in all industries. They will not have to face this alone, as this new plan will provide them with a higher level of support. Moreover, the government will provide easier access to allowances and relax the conditions to be met, thus allowing employees and self-employed people alike to keep their jobs where possible.
The government is closely monitoring the situation and is discussing this on an ongoing basis with employers' organisations, social partners and banks. Thanks to sound government finances and budget agreements, the government will not immediately have to start cutting costs in response to this package. The government is choosing to allow the national debt to increase. We can afford to do so because our debt level was reduced in better days.
The following measures will be implemented:
1. The implementation of a temporary scheme allowing companies to apply for help in paying their labour costs (Ministry of Social Affairs and Employment)
Any company that expects to lose at least 20 per cent of its revenue may apply with the Employee Insurance Agency for an allowance that will enable it to pay its employees' wages for three months (up to a maximum of 90 per cent of the company's wage bill, depending on the loss of turnover). The Employee Insurance Agency will provide the company with an advance amounting to 80 per cent of the requested allowance. This will allow companies to keep paying their employees' salaries. In order to be eligible, companies must not dismiss any employees from their jobs for economic reasons during the period covered by the allowance. This Temporary Emergency Measure for the Preservation of Jobs (NOW) will enter into effect as soon as possible and will supersede the current Regulation for Reduction in Working Hours (regeling werktijdverkorting). As of today, the Ministry of Social Affairs and Employment will no longer accept applications for the latter. Applications previously submitted but not yet processed will be processed in accordance with the new scheme. Companies are welcome to apply for an allowance for any drop in turnover they may have experienced since 1 March.
2. Additional support for independent contractors (Ministry of Social Affairs and Employment and municipalities)
The government will implement a temporary scheme with relaxed rules to support independent contractors (including self-employed persons) and allow them to continue their operations. The scheme will be executed by municipal governments. Self-employed persons will have recourse to an expedited procedure allowing them to apply for additional income support, which will help them pay their costs of living for a three-month period. Under this scheme, their income will be topped up to the amount of the social minimum wage. No repayment will be necessary. Applicants will not be subjected to a means test or a partner income test. Alternatively, under this temporary scheme, independent contractors may apply for support in the form of a working capital loan at a favourable interest rate.
3. Relaxed rules with respect to the payment of taxes and reduced fines (Dutch Tax and Customs Administration)
It will be made easier for companies that have been impacted by the coronavirus to request a deferment of tax payment. The Dutch Tax and Customs Administration will halt the collection of taxes at once upon receiving the request for deferment. The deferment of payment applies to income tax, corporation tax, payroll tax and value-added tax (VAT). Any fines that may be imposed for the late payment of taxes do not need to be paid. Moreover, companies are excused from having to submit evidence at once. They will be granted more time to do so. The interest on overdue tax normally levied after the term of payment has expired will be temporarily lowered from 4% to nearly 0%. This rule will apply to all tax debts. The rate for interest on tax will be temporarily lowered to practically 0% as well. This reduction will apply to all types of tax that are subject to interest on tax. The government will lower the interest rate as soon as possible.
4. Broadening of the scope of the Guarantee Corporate Financing scheme (Ministry of Economic Affairs and Climate Policy)
Companies that are having difficulty obtaining bank loans and bank guarantees will have recourse to the Guarantee Corporate Financing scheme (GO scheme). The government has proposed that the guarantee ceiling for the GO scheme be increased from €400 million to €1.5 billion. The scheme will allow the Ministry of Economic Affairs and Climate Policy to help small and medium-sized enterprises by guaranteeing 50% of the amount of their bank loans and bank guarantees (between €1.5 million and €50 million per company). The maximum guarantee to be awarded to a company will temporarily be raised to €150 million. The government commits to providing whatever amount is needed to grant these guarantees.
5. Interest-rate deduction on Qredits microcredit for small companies (Ministry of Economic Affairs and Climate Policy)
Qredits, a provider of microcredit, finances and coaches a large number of small start-ups, which generally have difficulty obtaining loans from a bank. For instance, it provides microcredit to restaurant and cafe owners, retailers, personal care companies, construction companies and business service providers. Qredits is implementing a temporary emergency measure, under which small companies impacted by the coronavirus pandemic will be granted a six-month deferment of repayment, and the interest rate on their loans will automatically be lowered to 2% during this period. The government will allocate up to €6 million to Qredits to allow it to implement this measure.
6. Temporary guarantees for companies active in agriculture and horticulture (Ministry of Agriculture, Nature and Food Quality)
The Ministry will temporarily underwrite working capital granted to farms and horticultural companies as part of the Guarantee SME Loans scheme for small and medium-sized farms (BL). In this way, the government will act as a guarantor for loans granted to farms. The government seeks to ensure that the scope of this scheme will be broadened in the short term
7. Meetings with respect to tourist tax (central government/municipalities) and the arts and culture sector
In consultation with the Association of Netherlands Municipalities (VNG), the government will discuss the possibility of waiving provisional local tax assessments to be paid by companies and to retract previously imposed tax assessments. This proposal particularly applies to tourist tax. Furthermore, the central government has entered into talks with the arts and culture sector in order to make sure that it benefits from the generic measures, as well as from potential sector-specific measures where necessary
8. Compensation scheme for impacted sectors (Ministry of Economic Affairs and Climate Policy)
A number of sectors will be hit particularly hard by the health-related measures imposed by the government. For instance, cafes and restaurants will suffer from the mandatory closure, and the travel industry will be hit hard by cancellations. To make matters worse, it will be hard for companies to recoup their losses once the coronavirus outbreak has blown over. Therefore, the government is implementing a compensation scheme with appropriate measures for companies active in the aforementioned sectors. This scheme is currently being finalised and will be submitted to the European Commission very soon for an assessment of whether it constitutes permissible state aid.
Where to look for more information if you run a company
Banks can apply for broadened credit arrangements (Guarantee SME Loans and GO) with the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland), the Ministry of Economic Affairs and Climate Policy's executive agency. Companies should contact their credit provider The measures proposed by the Ministry of Social Affairs and Employment will enter into effect as soon as possible.
If you have any other questions about the coronavirus, please consult Government.nl or the website of the National Institute for Public Health and the Environment (RIVM). Alternatively, consult the Chamber of Commerce's website.