My payment deferment is about to expire. What can I do now?
Due to the outbreak of the coronavirus, many entrepreneurs have applied for a 3-month extension of payment of taxes to the tax authorities. In most cases, this delay will expire soon or has recently ended. What options are there for payment and follow-up delay? In this article we answer the most frequently asked questions about the deferral of tax payment.
For a schematic representation, see also the deferred payment flowchart
When can I apply for deferment of payment?
Basically, it is possible to request a special 3-month extension of tax payment. The postponement can be requested when a (supplementary) assessment is imposed. For all assessments of income tax, health insurance law, corporation tax, payroll tax and turnover tax, deferral of payment can be applied for at once. For example, a request for deferral of corporation tax payment also applies to payroll tax. If the taxpayers do not agree, a separate request for postponement is required. This occurs, for example, with a fiscal unit for turnover tax or entrepreneurship in a VOF. No evidence is required with the request. Nor does any security need to be provided. You will receive a 3-month extension of payment.
Deferral of payment can also be requested for other tax assessments. However, a request must be made for each tax separately. This concerns the insurance tax, gambling tax, landlord levy, storage of renewable energy, energy tax, coal tax, waste tax, tap water, excise duties and consumption tax for alcohol-free drinks.
How do I submit a special deferral of payment application?
To apply for the special deferral of payment, you can use the online form of the Tax Authorities using DigiD. If it is not possible to submit an application online, it is also possible to submit a written request for special deferral of payment by letter.
How long does the deferment of payment continue?
From the moment of submitting the request for deferment of payment, deferment of payment is granted for a period of 3 months. The Tax and Customs Administration sends a confirmation letter of the granted extension, stating the date until which the extension has been granted. The postponement of payment also automatically applies to all assessments that are imposed within these 3 months. For declaration taxes, you must continue to file a declaration on time. Any default penalties for late payment will be canceled. Absenteeism penalties for late filings are maintained. The postponement of 3 months does not apply per assessment (with progressively sliding expiry periods), but is one term of 3 months. For an assessment that is imposed after 2 months, there is therefore actually only 1 month delay.
What happens after 3 months?
When the special deferral of payment ends after 3 months, the outstanding tax debts must be paid. To prevent entrepreneurs from getting into payment problems, the outstanding assessments do not have to be paid in one go. The tax authorities will send a letter with information about the repayment to each taxpayer “after the summer”. A payment scheme is likely to be offered that may vary by industry sector. For example, a period of 12 months in which the outstanding taxes must be collected while new assessments are paid on time.
If the offered payment arrangement does not fit, it is probably also possible to agree a personal payment arrangement with the tax authorities. The question is whether the Tax and Customs Administration has sufficient capacity for this.
What should I do if I still cannot pay new tax assessments after 3 months?
If the 3-month deferment of payment is too short, an extension can be requested. The extended deferral of payment applies until the tax authorities withdraw it. In any case, extended postponement will not be withdrawn before 1 October 2020.
What conditions apply to the extended deferment of payment?
If you want to apply for an extended deferment of payment, the following conditions must be met:
- The existing payment problems necessitate longer deferral of payment.
- The payment problems are mainly due to the corona crisis; and
- For the tax debt that requires longer deferral of payment, the declaration obligation has been met.
If these conditions are not met, an extended deferment of payment cannot be requested. We advise you to contact the Tax and Customs Administration to make arrangements about a personal payment arrangement.
If the above conditions are met, an extended deferment of payment can be requested. A distinction is made here between extended deferment of payment where, at the time of receipt of the original deferment, the outstanding tax debts amount to less than € 20,000 and extended deferral of payment where the outstanding tax debts amount to more than € 20,000.
In the event of a postponement of more than three months, the entrepreneur must declare that no bonuses are paid to the board and management of the company, no dividend is paid and no treasury shares are repurchased in the period from the submission of the postponement request up to and including the date of the meeting at which the annual accounts are adopted in 2021.
Bonuses also include profit distributions and other payments that have bonus features. This condition does not apply to bonuses, dividends and shares for which payment and redemption take place after the deferral request, but the underlying decision was taken in 2019.
When do I need a third expert statement?
If the total tax liability at the time of receipt of the request for deferment is € 20,000 or less, special deferral of payment can be requested without a third expert statement. When submitting the request, you declare that you make every effort to improve the liquidity position. This means, among other things, that your company does not pay dividends or bonuses and does not buy back own shares.
If your tax debts amount to more than € 20,000 at the time of deferment of payment, a third expert statement is required for extended deferral of payment.
For example, a third-party expert is an accountant or tax advisor, but it can also be your industry association or other expert.
The expert must demonstrate that there are payment problems at the time of requesting deferral, or shortly thereafter. The statement should show that the financial problems have mainly arisen from the corona crisis. In addition, the statement contains a so-called liquidity forecast. According to the third-party expert, this must be plausible. The forecast must be made on the basis of facts and circumstances known at the time of requesting deferral of payment. The expert explains which information the entrepreneur has provided for the statement.
Would you like us to help you prepare a liquidity forecast or a third expert statement? Please leave your details below.We will then contact you.
What will happen after October 1, 2020?
The special deferral arrangement will in any case run until 1 October 2020. After this, the Cabinet will determine when the situation lends itself to withdraw the deferral of payment. A sector-dependent approach may be chosen. If that happens, the entrepreneur will be offered an appropriate payment arrangement. Entrepreneurs are free to repay the deferred tax earlier.
How does a payment scheme work?
Even after the extended postponement (until October 1, 2020), the tax debts must still be paid. It is always about postponement and not about adjustment. After the grace period has expired, the Tax and Customs Administration offers a payment arrangement. It is not yet known what this payment scheme will look like. The policy is expected to be applied more generously than usual. For example, it has been indicated that in some situations the payment arrangement can last longer than 12 months. Some security may need to be provided. This could include a bank guarantee, mortgage right or pledging.
Will my deferment of payment lapse if I pay an outstanding assessment in the meantime?
No, if you pay in part on the outstanding assessments, the deferment of payment will be maintained for the other outstanding assessments and new assessments that are imposed in the period that the deferral is in progress.
I have received an additional assessment with a default penalty for late payment. Do I have to pay this fine?
No, this fine does not have to be paid. In the near future, the Tax and Customs Administration will automatically omit the default penalty for failure to pay (on time). This concerns payment defaults made in the period from March 12, 2020 until the date when the special deferral of payment ends.
If entrepreneurs nevertheless receive a tax assessment with a fine, this does not have to be paid. It is not necessary to submit a notice of objection. The fine will be set aside by the tax authorities themselves.
Are there any other options regarding the deferral of payment?
When your procrastination ends, you can do (broadly) four things:
- Payment If the consequences of the corona crisis for your company are not so bad, you can pay the outstanding taxes. You do not need to do anything else.
- Take no action The Tax and Customs Administration sends a letter “after the summer” with how you can pay the outstanding assessments. For payment, you adhere to this payment scheme. New assessments must be paid on time.
- Request for further postponement Depending on the size of the outstanding amount, a third expert statement is required. Outstanding assessments do not have to be paid and new assessments are in any case postponed until 1 October 2020.
- Paying open assessments and requesting a new postponement A fourth option is to pay all outstanding taxes after the 3-month postponement period and then apply for another 3-month postponement. This does not require a third expert statement or liquidity forecast. The new request will be treated as a first request for postponement.
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