Tax authorities more flexible with amicable restructuring agreements for corona debt

1 October 2022: start of repayment of deferred tax debt

Many companies are still experiencing the financial consequences of corona. Due to the shutdowns, little or no revenue was generated in a number of sectors, sometimes for months. On the other hand, many financial obligations continued as usual. A scenario of misery because many entrepreneurs have built up problematic debts as a result, including with the tax authorities.

The tax and customs authorities have already accommodated the enterprising Netherlands with a “special payment deferral”: a generous arrangement for the payment of tax debts. From 1 October 2022, deferred repayments will start with a payment period of 60 months.

The beginning of paying off this debt does not improve the financial situation of many entrepreneurs. The number of companies that run into financial problems will then increase.

What if you can no longer meet all payment obligations and creditors threaten bankruptcy? Then you can submit a request for an amicable reconstruction agreement. Especially for those entrepreneurs – with a fundamentally healthy business – Tax is temporarily more flexible in an amicable process; also known as debt consolidation.

What are amicable debt restructuring and restructuring agreements?

With an amicable reconstruction agreement, you enter into out-of-court agreements with all creditors to pay as much debt as possible within 36 months. After this period, any remaining amount is waived (final discharge).

A condition for such debt restructuring is that all other creditors agree to the restructuring proposal. In addition to Tax (main creditor), all other creditors must therefore also accept the proposal.

What is the role of tax and customs administration in an amicable restructuring agreement?

Tax is usually the first to pay off a debt. In the case of an amicable restructuring agreement, the tax authorities actually require at least twice the payment percentage compared to the percentage paid to the other creditors.

In practice, this often means that there is not much left for other creditors. And this is precisely why an amicable settlement often fails: denying private creditors do not agree to the amicable settlement.

Accrued tax debt? Tax is temporarily satisfied with less

Due to the corona crisis, Tax settles for a smaller payment percentage, so that the refusing creditors agree on an amicable solution more quickly.

This is good news if you got into trouble due to debt built up during the corona crisis. It increases the chance that you can continue to do business if you are unable to pay off your debt.

When do the tax authorities’ more flexible rules apply?

Is the accrued corona debt growing over your head? And do you feel compelled to request an amicable settlement? In that case, Tax will temporarily adopt a more flexible position by means of amicable agreements.

This applies to all restructuring requests submitted in the period from 1 August 2022 to 1 October 2023. However, tax requires that you continue the business.

Problematic debt and request for an amicable solution – how to fix it?

You can submit a request for an amicable restructuring agreement via the municipality or a debt restructuring organisation. The condition is that you have problematic debt. For example, creditors threatening to seize your house or filing for bankruptcy.

Application for an amicable process is made through the Municipal Debt Relief Act (Wgs). Together with the municipality or the debt restructuring organisation, you prepare an action plan to tackle the debt situation.

In a statutory debt restructuring, outstanding debts, such as accrued tax debts, are clearly mapped. This also applies to debts to suppliers and banks etc. It is then investigated whether an amicable reconstruction agreement can be reached with all creditors. In some cases, you can use a remedial loan from the municipality. You can easily register with the municipality or the debt adviser via Whatsapp, telephone or e-mail.

A legal person, for example a BV, is not entitled to debt assistance through the municipality. Only the director or the main shareholder of a limited company can do this.

Debt Restructuring Act for Natural Persons (Wsnp)

Are you unable to reach an amicable agreement with your creditors? In that case, you can also, in certain cases, rely on the Act on debt restructuring of natural persons (Wsnp). This only applies to ‘natural persons’.

Unlike legal entities, there is no separation between private and work assets for natural persons. Legal forms of business to which this applies are sole proprietorship, partnership or partnership.

You can also turn to a business debt advisor. The expenses for debt relief are at your own expense. Wondering what you can do as an entrepreneur to get your business debt free. We take a closer look at that in this article.

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