End of corona support... Or not ?

For entrepreneurs who found themselves in financial trouble due to coronagraphs, there were several options to get financial support in recent years.

One such option was the deferral of tax liabilities. Between 12 March 2020 and 31 March 2022, massive use was made of this special deferral of tax payments. As a result, businesses accumulated a debt to the Tax Administration of over €19 billion.

The starting deadline for the repayment schemes has been extended several times. But the moment of repayment has now really arrived and the obligation to repay is a fact from this month.

The starting point is to repay the debt in five years. The deadline for the first instalment is October 31, 2022. In principle, monthly repayments are assumed, but it is also possible to pay the repayment quarterly.

Furthermore, the condition remains that new tax assessments are paid on time. If this is not the case, the repayment scheme can be cancelled and the debt is due in one go.

But what if repayment fails for a while?
During the repayment period, it is possible to request a one-off payment break of up to six months. However, this does not change the maximum repayment period, the debt must be repaid in the same time. Thus, after the break, the monthly amount increases.

In exceptional cases, the repayment period can be extended to seven years. According to the state secretary, this scheme is only intended for viable companies facing temporary repayment or liquidity problems and a tax debt of more than €10,000.

To qualify for the long repayment period, a reasoned request must be submitted to the tax authorities, including a justification as to why the extension is necessary. A liquidity forecast must also be submitted showing that the debt can be repaid not in five but in seven years. If the debt exceeds €50,000, the annual financial statements must also be attached to the request, together with a statement by an independent expert who will assess whether there is a need for the request, whether repayment is feasible in seven years and whether there are indications that the company is not viable.

Accelerated repayment is, of course, also possible. The mandatory monthly amount will then remain the same, but the repayment term will be shorter. If you still want a change in the monthly amount after an additional repayment, a request can be submitted. The accrued debt is not interest-free. From March 2020 to 30 June 2022, the interest rate on tax debts (recovery interest) was reduced from 4% to 0.01%. Since 1 July 2022, the recovery interest rate was increased to 1% and on 1 January 2023 it will go up to 2%. The rate will then be further increased in two steps to return to the 'old' rate of 4% on 1 January 2024. If your company needs a payment break or if the 5-year term is really not feasible, please contact us. We will be happy to help you apply for the extension options.