[UPDATE] The end of support measures and fix NOW 1

The end of the state support measures

From the moment the coronavirus started to spread in the Netherlands, it was clear that this would have an impact on the economy. Slowly but surely, it became clear that the measures imposed by the government to combat the spread of the corona virus would cause major problems for many companies. The government therefore introduced a support package to assist companies that expected a drop in turnover as a result of the coronavirus. This resulted in the ‘Temporary Emergency Bridging Measure for Sustained Employment’, or NOW.

The introduction of the NOW was soon followed by further government support measures such as the ‘Compensation Fixed Costs’ (‘Tegemoetkoming Vaste Lasten’, ‘TVL’), ‘Temporary Bridging scheme for self-employed entrepreneurs’ (‘Tijdelijke Overbruggingsregeling zelfstandige ondernemers’,  ‘TOZO’), ‘Temporary Support for Necessary Costs’ (‘Tijdelijke Ondersteuning Noodzakelijke Kosten’ , ‘TONK’) and various tax measures.

Now that the vaccination rate in the Netherlands is rising, government measures are relaxed further. Slowly but surely, the Netherlands is opening up again and the economy is increasingly able to stand on its own two feet. The government has therefore announced that the support measures will end on 1 October 2021. However, a small part of the measures will continue until the end of the year. Below you will find an overview of the measures that will stop on 1 October 2021 and the measures that will continue after that date.

Stops on 1 October 2021	Stops on 1 January 2022
Temporary Emergency Bridging Measure for Sustained Employment (NOW)	Financing schemes during corona, such as KKC, Qredits bridging credit, BMKB-C and GO-C
Contribution towards fixed costs (TVL)	Subsidy scheme for events
Temporary Tide-over Scheme for Self-employed Persons (TOZO)	Fixed travel allowance may still be reimbursed untaxed
Temporary Support for Necessary Costs (TONK)
Tax deferral

Determination NOW 1

Many employers made use of the NOW in particular. The NOW is now in its sixth three-months period. The first period of the NOW, which covered the months of March, April, and May 2020, seems a long time ago. Yet, for many employers, NOW 1 may pose a current issue.

As of 7 October 2020 onwards, employers can submit a request for final determination of the subsidy. This concerns the definitive calculation of what the employer was entitled to under NOW 1. Within the context of this determination, the UWV assesses, among other things, what the actual decline in turnover was and whether the employer’s wage bill remained the same. With regard to the latter, it appears that many employers could get into trouble when determining the subsidy.

The wage bill over the months March through May 2020 is compared to the wage bill of the employer in the month January 2020. The idea behind this is that it shows whether the employer has kept the wage bill the same, or in other words: has the employer dismissed employees? After all, the objective of the NOW is to enable as many people as possible to keep their jobs.

In practice it now appears that many employers had a lower wage bill in the months of March through May 2020 than in the month of January 2020, without having laid off any employees. The UWV then concludes that the subsidy is determined at a lower amount than initially assumed when the advance payment was made. In some cases, this results in a lower subsidy, in other cases employers even have to pay back part of the advance payment.

The reason for this is that some employers pay an extra wage component in the month of January, such as a bonus or a settlement for overtime worked in (part of) the previous year. This leads to a higher wage bill than usual. However, in the comparison the UWV only considers the payment of a year-end bonus, thirteenth month and/or reserves for holiday pay. Other variable wage components, such as a bonus, payment for overtime, commission, etc., are not excluded from the wage bill by the UWV.

This problem has already been acknowledged by Minister Koolmees in a parliamentary letter dated 22 March 2021. In this letter, Minister Koolmees informed the Lower House that he had asked the UWV to “expressly consider whether incidental payments in the reference month may have resulted in an unrepresentative wage bill” when an employer objects to a subsidy determination. If that is the case, those incidental remunerations must be excluded from the wage and salary bill in the objection.

After Member of Parliament Stoffer asked additional questions about this, Minister Koolmees clarified on 4 June that the UWV cannot consider in the initial determination of the subsidy whether the wage and salary bill of January 2020 was possibly higher due to incidental remuneration. The UWV’s system is simply not designed for this. The UWV now does take this into account in case of an objection by an employer.

This means that in some cases it is necessary for employers to lodge an objection in order to obtain a determination of the subsidy that does justice to the situation. Was your wage bill in January 2020 higher than the wage bill in March, April and/or May 2020 due to the payment of incidental remuneration? If so, please do not hesitate to contact us to explore the possibilities of an objection against the subsidy determination.

NEW: additional adjustments announced at final determination of NOW-1 grant

In certain cases, employers are required to submit a third-party or auditor’s statement when applying for a final determination of the NOW-1 grant.

See below for an overview per situation of the type of statement required:

Minister Koolmees recently announced in a parliamentary letter that a number of problems had arisen in the final determination of the compensation. As a result, a number of changes have been announced, which are explained below.

1) A fourteen-week period will be added to the third party/auditor statement
Employers can apply with the UWV for determination of NOW 1 up to and including 31 October of this year. As stated above, some employers must submit a third-party or accountant’s statement. Minister Koolmees recognises that timely submission of these statements might prove difficult due to the pressure on accountants. Therefore, employers may submit their final application, for the time being without such a statement. Employers then have up to 14 weeks after the application to submit the statement (accountant/third party). This option can be ticked when applying for the final determination. Provided the employer himself submits the application in time, the additional accountant/third-party statement may be submitted later.

Please note: if the application is made after 31 October, it will be considered as too late, and the compensation will be set at nil.

2) Solving problems of accountants in complex group structures.

Some accountants have to deal with a complex group structure. Therefore, an ‘inherent limitation’ is added to the determination of the group structure. This means that if it is not certain that the group is complete and that the costs will be very high if it has to be fully investigated, auditors may limit their work. In this case, a mandatory set of work must have been performed by the auditor. This mandatory set will be communicated through the trade association of accountants, in consultation with the government. If an auditor is unable to carry out the audit in full, a so-called disclaimer of opinion with inherent limitation may be issued after completion of this new mandatory set. An ‘ordinary’ disclaimer of opinion from the accountant means that the final compensation is set at nil. With this adjusted disclaimer with inherent limitation, the group in question receives a 10% reduction on the total NOW compensation.

3) The audit risk in case of social security wages abroad is adjusted

Accountants must check whether social security wages are paid abroad. This is a time-consuming task and often leads to the conclusion that there is no social security wage abroad. The Minister therefore estimates that there is a low risk, which is why accountants need to investigate this less thoroughly from now on. The requirements for this less in-depth investigation will be communicated directly to accountants by the sector association for accountants in consultation with the Minister.

The above-mentioned new rules for the final determination of the NOW compensation will apply to all NOW schemes.

See below an overview of the deadlines for the final determination of the various NOW tranches.

Determination desk per tranche	NOW – period	Window open	Window closed
NOW-1 (first tranche) – unaltered	March – May 2020	7 October 2020	31 October 2021
NOW-2 (second tranche) – unaltered	June – September 2020	14 March 2021	5 January 2022
NOW-3.1 (third tranche)	October – December 2020	3 October 2021	22 February 2023
NOW-3.2 (fourth tranche)	January – March 2021	30 January 2022	22 February 2023
NOW-3.3 (fifth tranche)	April – June 2021	30 January 2022	22 February 2023
NOW-4 (sixth tranche) – unaltered	July – September 2021	Ultimately 1 June 2022*	22 February 2023