Same law, different lawyers
16 June 2020

Update on employment and tax relief measures during the Covid-19 crisis

In our recent blogs [1], we informed you about the Temporary Emergency Relief Measure for the Preservation of Work (Tijdelijke noodmaatregel overbrugging voor werkbehoud, hereinafter ''NOW 1.0'').  The main purpose of NOW is to provide rapid and generous financial support to employers facing a decrease in turnover, to enable them to continue the payment of wages.  The NOW will be extended for a period of four months from 1 June to 1 October 2020 (hereafter: ''NOW 2.0'') [2]. The intention is to open applications for the NOW 2.0 on 6 July 2020.

Employment Relief Measures – Extension of NOW: Dutch regulation for compensation of the wage costs during the Covid-19 crisis

General requirements

NOW 2.0 enables employers to apply for compensation up to 90% of the wage sum in the case of a decrease in turnover of at least 20%.  The subsidy to be granted will now be based on the wage bill of March 2020.  The employer must demonstrate the expected decrease in turnover during a measurement period of four consecutive months, starting either on 1 June, 1 July or 1 August 2020, but if the employer has been granted a subsidy under NOW 1.0, the measurement period should follow directly after the measurement period chosen for NOW 1.0.  The UWV will provide the employer with an advance payment of 80% of the expected subsidy.
The actual loss of turnover and a possible reduction in the wage bill during the months of June, July and August will be determined afterwards [3]. When determining the subsidy, the UWV will take the extra periodic salaries – such as a thirteenth month and the payment of holiday allowance – out of the wage bill.
Under the NOW 2.0, employers will also be compensated for other employers costs, by adding a fixed surcharge, which has been increased from 30% (in the NOW 1.0) to 40% (in the NOW 2.0).

Dismissal on the basis of business economic reasons in NOW 2.0

In NOW 2.0, dismissals will no longer be fined.  Only in case of a collective dismissal (of more than 20 employees within one UWV region within three months) an extra reduction of 5% of the total wage subsidy will become due if no agreement [4] with the interested trade unions (or other employee representatives) can be reached and, absent such agreement, the employer and trade unions have not jointly requested for mediation with a committee to be set up by the Labour Foundation (Stichting van de Arbeid).
Please note, however, that if employers have submitted a dismissal request with the UWV for employee(s) during the subsidy period, the salary of the relevant employee(s) will not be included in the wage sum when the final amount of the subsidy will be determined.

No bonuses, dividends and repurchasing of shares

To be eligible for subsidy under the NOW 2.0, an employer will have to commit not to pay bonuses to the board and the management (bestuurders en directeuren), nor to make a profit distribution to shareholders for 2020 and/or not to repurchase own shares during 2020 [5]. The prohibitions will apply up to, and including, the date of the shareholders' meeting in 2021, during which the annual accounts will be adopted.  Furthermore, this prohibition will only apply to companies receiving an amount of subsidy for which an auditor's report is required [6]. The employer can pay bonuses to other employees in the normal conduct of the business.


Under the NOW 2.0, employers have to commit to encourage their employees to undertake further (re)training to enhance their employability. Please do not hesitate to contact us if you have any further queries about NOW 2.0 or any other employment-related issues.

Tax relief measures – update on Extension for payment of taxes 

As part of the updated COVID-19 package, the possibility of entrepreneurs obtaining an extension for payment of taxes has been further clarified.  Such an extension may be requested for any amount of personal income tax, corporate income tax, wage tax, certain social security contributions, VAT, excise duties, insurance premiums tax, health care contributions, environmental taxes, gambling tax, and certain other taxes due.  Dividend withholding tax does not qualify for the extension and should be paid when due. The background is that distribution of dividends weakens the liquidity position of an enterprise.  VAT and excise duties also do not automatically qualify in so far as these are levied for the importation of goods with the application of customs legislation.
This extension will also cause collection measures to be suspended immediately.  Such an extension of payment must be requested in writing with the Dutch tax authorities via an electronic form or ordinary mail, and is processed manually (which may cause a delay).  The request can be filed when a return has been filed and an (additional) assessment has been imposed.

Initially, the extension will be granted automatically for a period of three months from the moment of the request and shall apply for all assessments imposed for the relevant tax if the taxpayer indicates that it has financial issues caused by the COVID-19 virus.  The request, and whether the conditions are met, will be reviewed in substance at a later stage.
Under these circumstances, the Dutch tax authorities will not impose a penalty for late payment (verzuimboete) or, if still imposed, shall nullify such penalty.
For an extension longer than three months, additional conditions apply:

  • the request must be submitted in writing via ordinary mail;
  • the circumstances must be described under which the enterprise suffers from COVID-19 and why an extension longer than three months is necessary;
  • tax returns must have been filed;
  • and the entrepreneur must commit to not pay bonuses, distribute profits and/or repurchase own shares during 2020. 

For an extension longer than three months concerning an amount higher than EUR 20,000, a third party expert opinion will be required.  This third party expert can be an external consultant, provider of financing, sector organisation, tax adviser or accountant, and whose expert opinion must contain at least the following elements:

  • a statement that genuine payment issues are present or will be present at short notice;
  • a statement that these issues occur primarily as a result of the COVID-19;
  • a plausible liquidity outlook; and
  • a description of documents and data provided by the entrepreneur. 

During the extension, the Dutch tax authorities may request for (partial) payment if the liquidity position of the entrepreneur allows this.  However, during this extension, the tax authorities should not set off the entrepreneur's tax receivables with its tax payables for which extension has been obtained, unless such set off would be requested by the entrepreneur.  Set-off will occur in case no set-off would damage the interests of the Dutch Government.

Any extension request made by the director of a commercial enterprise in the form of a legal entity subject to corporate income tax, is in principle considered by the Dutch tax authorities to be a notification of the entity's inability to pay wage tax and VAT timeously, potentially giving certain protection to the directors of such entity against liability for tax collection purposes.  Such a notification will be assessed separately by the Dutch tax authorities.
The above described measures are extended until 1 October 2020. 

For more information, please contact Anita de JongMaria Benbrahim, or Alexander Fortuin.


[1]   We refer to our blogs dated 8 April 2020 and 29 April 2020.

[2]   Please note that the legislative text of NOW 2.0 has not been published yet.

[3]   Please note that the final determination of NOW 1.0 can be requested from 7 September 2020.  However, if an employer has applied for (both NOW 1.0 and) NOW 2.0, the employer cannot request for the final determination of the subsidy before the end of the NOW 2.0 measurement period.

[4]   This means that the trade unions will have to declare that the number of redundancies proposed by the employer is necessary for efficient business operations.

[5]   Commitments for dividends, bonuses and shares for 2019 can be honored.

[6]   An auditor's report is required in case of an advance payment (80% of the subsidy) of at least EUR 100,000 or if the subsidy will be determined at EUR 125,000 or more.  Companies that are part of a group and that have requested a subsidy on the basis of a decrease in turnover at operating company level always need to provide an auditor's report.