In total, there are now 20.5 billion euros outstanding in tax debt from entrepreneurs. Part of it is not repaid because entrepreneurs make use of settlement schemes during the year. One third of the debt is built up by companies that experienced an increase in revenue during the corona crisis.
According to the Ministry of Economic Affairs, the fact that you do not have to pay off tax debts may be one reason why bankruptcies are low. Secretary of State Van Rij points out in a letter to parliament that it is difficult to make statements about bankruptcy because, in addition to tax debt, a lot of individual factors play a role in mapping the solvency of companies. Later this month, the government will send a letter to the House of Representatives discussing the approach to medium-term corona support in more detail.
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A third tax relief for healthy businesses
It is clear from the figures that the largest tax debt was incurred by SME entrepreneurs who had to make use of support measures such as NOW and TVL. This means that companies with larger revenue losses have logically also built up a larger tax liability. But it is striking that a third of the blame lies with companies that saw their turnover increase. This illustrates that tax deferral was a very untargeted measure compared to aid measures that were more regulated.
Of the 394,000 entrepreneurs who have applied for an extension, some have already repaid the debt or are no longer in debt because tax assessments have been completely reduced, Van Rij said. This debt was largely built up in 2020. The following year, there was a more limited build-up. Since February 2022, the number of applications for tax deferral has increased again, since the resumption of enforcement cases, where the letter mentions the possibility of deferral.
|Number of entrepreneurs who have requested an extension||393,949|
|Current number of entrepreneurs with deferral||278,053|
|Total initial amount of deferred assessments (LH, BTW, IH, VPB)||€ 44,973 million|
|Already paid||– € 18,833 million|
|Reduction of attacks||– € 6,194 million|
|Outstanding tax debt (LH, VAT, IH, VPB) *||€ 19,947 million|
|Deferral of payment of other taxes (procedure)||ca. € 575 million|
|Outstanding tax debt due to corona deferral||ca € 20,522 million|
Differences by sector
Large companies have the smallest share of debt, while SMEs in total have accumulated high debt. The largest proportion of entrepreneurs who still have outstanding tax debt are found in the construction, catering and transport sectors. Overall, business services are the sector with the largest debt, but Van Rij points out that it is a broad sector. Service, retail and hospitality also make up a large part of the debt, ie. sectors where the restrictive measures had a direct impact. Sectors also stand out where the coherence with corona measures at the sector level may be less clear, but where underlying individual firms may still run into problems, such as industry.
From 1 October, companies will start paying off the debt built up during the corona crisis. This is done in sixty monthly installments. Not all companies will be able to meet the payment obligation. If the conditions of the payment scheme are not met, the entrepreneur will be contacted to see if there are options to comply with the payment scheme. But the ministry also expects more use of settlement schemes during the year, which means some of that outstanding debt will not be paid.