In a bid to keep economic growth on the upswing, the Dutch government will allow a number of pandemic economic support measures, including tax deferral options, to expire October 1.
In an August 30 joint release, the ministries of Economic Affairs, Finance, and Employment said that general support measures — such as unemployment support, wage subsidies, career guidance and training, and opportunities to request tax deferrals — will end October 1, while several extraordinary tax measures will continue until 2022.
The government said that continuing coronavirus support measures would disrupt the economic recovery, something that has been indicated by the labor market shortage. Some support schemes will remain in place until the fourth quarter of 2021 for industries that are mandated to be closed, such as night catering, and companies that have been disproportionately affected by the pandemic’s economic changes. The government estimates that total expenditures on support measures since March 2020 will amount to over €80 billion.
Businesses and the self-employed will no longer have the option to defer their taxes starting October 1, and their first payment will be required by October 1, 2022, according to the release. Entrepreneurs have until October 1, 2027, to fully repay all tax debts accumulated during the pandemic, which the government announced in May when it extended relief measures to July 1. Recovery interest for tax debt will increase from 0.01 percent to 1 percent starting January 1, 2022, the government said. The interest rate will further increase to 2 percent on July 1, 2022; 3 percent on January 1, 2023; and the pre-pandemic rate of 4 percent on January 1, 2024.
The government says 369,000 entrepreneurs have exercised the tax deferral option, which totals €40.4 billion in deferred taxes. About €16.6 billion in deferred taxes have been repaid, and the government has collected €4.6 billion in reduced taxes, according to the release.
In September the Dutch Tax and Customs Administration will begin tax collection for individuals and businesses that opted not to defer payment, says the release. The tax authority will first send letters to taxpayers listing accrued debts and options for deferred payment.
Extension of Some Tax Measures
The Netherlands is working with the competent national authorities to extend the provisions of its mutual agreements with Germany and Belgium on the taxation of cross-border workers until at least January 1, 2022, according to the release. Dutch and German competent authorities signed an agreement June 25 extending the provisions of their agreement until September 30. Dutch and Belgian competent authorities signed an agreement June 21 extending the provisions of their agreement until September 30.
Additionally, the government will extend until January 1, 2022, the tax-free travel allowance, the tax exemption for some German net benefits, and the mortgage interest deduction for homeowners if they have secured repayment breaks from their lenders.