Support package developments in the Netherlands for the Travel and Hospitality Industry

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Support package developments in the Netherlands for the Travel and Hospitality Industry

Opportunities and other tax development

Although optimism is slowly but surely coming back as lockdowns and other travel restrictions are decreasing in multiple jurisdictions, the Travel and Hospitality Industry is still suffering heavily from the COVID-19 crisis. For a large part of the industry it will still take some time for their business to bounce back to sustainable levels. For these companies it will remain key to make use of all the incentives from support packages provided by governments. In this regard, the Dutch Minister of Finance has recently announced that the current support packages will be extended to at least 1 October 2021. As the developments around these support measures are following one another in rapid succession, we have highlighted the developments in the Netherlands that we consider most relevant for the Travel and Hospitality Industry.

Fixed Costs Grant Scheme (TVL)

Generally referred to as the ‘TVL’, this measure provides a reimbursement for fixed costs to companies that experience a severe drop in revenue. In 2020 this grant was only available to SME-companies with specific activities, however as of Q1 2021 this grant is also available for larger companies with a much broader range of activities. In Q1 2021 (application deadline 10 June 2021, 17.00h), the maximum grant amounts to EUR 600.000 for non-SME-companies. For Q2 2021, the maximum reimbursement will amount to EUR 1.2 million for non-SME-companies. We expect the application portal for Q2 to open in the second half of June.

The TVL provides great opportunity for hospitality companies that are hit by the Covid-19 crisis. In practice we do so see that the conditions and application process is not always fully clear to our clients. In this regard we want to highlight two main points of attention:

  • A proper analysis should be made if the applying company qualifies as a SME or large company. In practice we see that some companies that are part of multinational groups incorrectly file an application as a SME company which could lead to the denial of the subsidy.
  • All ‘related’ enterprises in the Netherlands should be included in the TVL request. We see in practice that often a too narrow definition of related enterprises and therefore related group entities are erroneously not included in the TVL application.

NOW

The NOW is also extended, to the months of July, August and September 2021. In terms of conditions, this NOW 4 is similar to the NOW 3. Hence, an expected loss of turnover of at least 20% is sufficient and employers may reduce the wage bill by up to 10% without this affecting the final determination of the grant. The grant rate is 85%. The reference month for NOW 4 is February 2021.

Until now, the TVL was included in the revenue for NOW purposes. This could lead to repayment of the NOW grant. However, the government has introduced a significant relaxation in this respect. It has been decided that when determining the NOW 3 (autumn 2021 to mid-2022) and the NOW 4, the TVL will no longer be included in the revenue for NOW purposes.

Job-related Investment Discount (“BIK”)

The earlier adopted job-related investment discount or ‘BIK’ has been cancelled with retroactive effect to 1 January 2021, as the European Commission may consider the scheme to be unlawful state aid. Under this temporary crisis measure, it was intended to introduce a deduction from the from the wage tax and national insurance contributions payable for certain qualifying investments. The available budget will now be used to reduce the employers’ contribution into the General Unemployment Fund, presumably effective from 1 August 2021.

Please find more details and other measures from the support packages in our full tax alert here.

Royal Decree on loss offset in corporate income tax published 4 June 2021

The last point is not so much part of the support package but probably a welcoming change in the corporate income tax law. As part of the Tax Plan 2021, the government announced a measure to limit the tax loss carry forward and carry back in excess of EUR 1 million to a maximum of 50% of the remaining profit per year. The measure also contains an unlimited loss relief period, where losses currently expire after six years. For companies severely hit by the corona crisis, this law change can be a blessing in disguise as it takes away the risk that significant losses incurred in the Corona crisis would expire before they can be fully utilized. The downfall is obviously that companies with significant loss positions will directly be in a tax paying position as of the first profitable year (>EUR 1 million) after the crisis.

Although the change of law was already adopted by parliament, the final introduction was still subject to an implementation test. Following the successful finalization of the test it has been confirmed by Royal Decree that the change in the utilization of tax losses will enter into force for financial years starting as of 1 January 2022 and will also apply to existing losses.

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