Measures taken by The Netherlands to deal with the economic consequences of COVID-19
Wednesday 18 March 2020
In order to deal with the economic consequences of COVID-19, the Dutch government has introduced several measures, which as of March 17 include:
- A guarantee facility for SME loans (BMKB) is already in place and working – EUR 665 million of an available budget of EUR 765 million, 0.08% of GDP. The Ministry of Economic Affairs and Climate Policy has expanded guarantees to a higher guarantee percentage, up to 90% of the credit risk of banks for SMEs that want to take out a loan of EUR 1.5 mln maximum but that do not have the required collateral. This measure was recently expanded for SMEs coping with risks associated with the nitrogen ruling (adopted) and is further expanded to apply to SMEs affected by COVID-19.
- The social assistance decree, aimed at self-employed persons, (Bbz, Besluit bijstandverlening zelfstandigen 2004) will be expanded, meaning that the self-employed and entrepreneurs will be able to receive social assistance if they meet certain standards, which will be relaxed. This social assistance will include additional benefits to meet livelihood standards and/or a loan for working capital.
- A new temporary measure will be introduced to help entrepreneurs paying wages, in order to prevent unemployment. This measure replaces the current working time reduction scheme, which was not designed for handling a pandemic. In the new scheme, employers will be supported more quickly than before. Employers using the scheme must commit to not firing their employees on economic grounds. Employers who expect a decline of at least 20% in revenue can request an allowance for a period of 3 months of maximally 90% of the total wage sum. The Employee Insurance Agency (UWV) will pay a deposit beforehand, and it will be determined afterwards whether a firm has received too much or too little support. The Dutch government will work on the details of the proposal in the coming period and will send a request to the European Commission regarding state-aid rules. The costs will strongly depend on the number of applications. If 25% of all employers apply for an average of 45% of their wage bill, the costs will be around 10 billion euros in the first 3 months. These costs will increase when the number of applications rise.
- Businesses can request for a special deferral of payment in income tax, corporate tax, turnover tax, energy tax and wage tax. Temporarily, no penalties for failure to pay taxes (on time) will be imposed. Businesses that already forecast lower profits due to the epidemic can request a reduction of the provisional tax assessment and will be able to pay less initial tax in order to avoid liquidity problems. To avoid immediate liquidity problems, the requirement for a “third expert” will not have to be included in the request immediately (but after two weeks). Moreover, the tax authorities will temporarily decrease the recovery interest rate from 4% to 0.01%.
- The so-called GO-regulation, through which SMEs can secure a 50% guarantee from the government on their bank loans and bank guarantees, will be expanded. The maximum ceiling guaranteed will be increased from EUR 400 million tot EUR 1.5 billion and the maximum GO-facility per firm will be increased from EUR 50 million to EUR 150 million. This will enable both small and large firms to benefit from this policy.
- In order to support small firms and start-ups with little financial reserves, we will expand the Qredits-programme. Through this program, we expect to support approximately 3000 to 6000 firms by a deferment of payment for a period of a maximum of six months and by giving those firms a discount on their rent payments for the same period.
- Agricultural and horticultural SMEs will be supported by temporarily relaxing the guarantee for working capital, which is part of the existing decree Borgstelling MKB-Landbouwkredieten (BL). The decree will ease acute liquidity problems for agricultural and horticultural business who experience those problems due to the COVID-situation. The credit is for a maximum of 2 years.
- The central government will discuss with local governments on how they can support local entrepreneurs within the current regulatory frameworks. In order to support the liquidity of local firms, the central government will discuss whether it is possible to postpone the collection of local taxes, including tourist taxes.
- To support firms that are affected by our government’s health measures - for example by the closure of restaurants - an emergency desk will be introduced, through which those firms can receive a one-off lump sum allowance of EUR 4000. The conditions for this allowance are currently being drafted.