Dutch Tax Authority's new temporary measures make restructuring plans more likely to succeed

During the COVID-19 pandemic, the Dutch government allowed 376,000 Dutch businesses to defer tax payments amounting to around €42 billion. As at 29 September 2021, 274,000 businesses still owe approximately €20 billion in tax debts.

Most of the Dutch government's pandemic-related financial support measures ended on 1 October 2021, so businesses must now meet their tax liabilities as they fall due. However, the Dutch Tax Authority has implemented several new temporary measures to support businesses with repaying their tax debt.

Temporary measures

The new measures include:

• The Dutch Tax Authority will consider granting companies additional payment deferrals, but only in exceptional cases and under strict conditions.
• Companies must start repaying their tax debt on or before 1 October 2022.
• Companies must repay their tax debt within five years (ie by 1 October 2027 at the latest).
• Recovery interest (currently 0.01%) will gradually increase to the original level (4%).

The government has explicitly chosen not to cancel tax debts because a full or partial cancellation of debts would be unjust and unfair to businesses that have already paid their tax debts. 

As an additional temporary measure to support viable businesses proposing restructuring plans, the Dutch Tax Authority will also temporarily settle its claim at the payout ratio offered to unsecured creditors (instead of its requirement for double the ratio paid to unsecured creditors). This temporary policy will run from 1 August 2022 to 20 September 2023 and will make restructuring plans more likely to succeed.

Find out more

The Dutch Tax Authority's temporary measures give businesses breathing space and offer viable companies more possibilities when restructuring their debts. To discuss these measures in more detail, please reach out to a member of our Restructuring & Insolvency team.