The government support and recovery package – latest developments

Following the extended lock-down and the curfew imposed until 10 February, the cabinet announced on 21 January that the support and recovery package for jobs and the economy would be expanded (again). In this article we provide an overview of the most relevant measures and current changes compared to the earlier package.


The government is increasing the reimbursement rates of the NOW-3 grant in the second and third tranches from 80% to 85%. From 15 February onwards, the NOW compensation for the months of January, February and March 2021 can be applied for. The previously announced scaling-down of the NOW scheme for the third tranche will be abandoned. For clarification see schedule below:

  NOW 3
  First period Second period Third period
Timeframe October – December 2020 January – March 2021 April – June 2021
Compensation rate 80% 85% 85%
Total wage bill exemption 10% 10% 10%
Minimum loss in turnover 20% 20% 20%
Fixed supplement 40% 40% 40%
Maximum wage compensation 2x daily wage 2x daily wage 2x daily wage


TVL (Fixed Charges Allowance)

The subsidy percentages of the Fixed Charges Allowance (“TVL”) will be increased. These adjustments will apply both to the first and the second quarter of 2021. Due to this increase, entrepreneurs whose turnover has fallen by more than 30% will receive an allowance of 85% of the fixed costs. The reference period for the turnover will be 2019. The government reasons that entrepreneurs have already seen their turnover decrease early in 2020 as a result of the corona crisis. Also, from the first quarter, the TVL will be open to companies with more than 250 employees. Previously, only companies with less than 250 employees could apply. The maximum compensation amount will be increased to € 330,000. The Cabinet is currently exploring the possibilities of lowering the minimum threshold of €3,000 for fixed costs, because some small entrepreneurs do not qualify for the TVL due to too low fixed costs. In its letter to the Lower House, the Cabinet uses calculation examples to illustrate the impact of the increase in the compensation percentages on the level of compensation.

See below for an overview:

Timeframe June – September 2020 October – December 2020 January – March 2021 April – June 2021
Limitation sectors Yes No No N0
Minimum loss of turnover 30% 30% 30% 30%
Compensation rates 50% 50-70% 85% 85%
Maximum amount € 50.000,- € 90.000,- € 330.000,- € 330.000,-
Minimum amount fixed charges (per 3 months) € 4.000,- € 3.000,- € 3.000,- € 3.000,-
Maximum number of employees 250 250 n/a n/a
Minimum compensation € 750,- € 750,- € 1.500,- € 1.500,-

Stock compensation for closed retail sector

Due to the compulsory closure of a large part of the retail sector in December 2020, which is still ongoing, the cabinet has decided to extend the stock compensation for closed retail trade. The compensation will amount to a 21% surcharge on the TVL fixed charge rate (previously this was 5.6%). Please note that this extension only applies during the first quarter of 2021. No separate application is required for this compensation. It is automatically included in the application for the TVL. This supplement has a separate maximum payment of € 200,000, which falls outside the above-mentioned maximum of the TVL.

Business start-ups

The government is also announcing measures for start-ups. Start-ups can apply for credit loans, as they usually do not or hardly qualify for the above government measures due to the lack of the reference turnover in 2019. The loans are interest-free and have generous repayment terms. These so-called Corona Bridge Loans are available from the second quarter of 2021. The conditions of these credits depend on when entrepreneurs started their business.

There will also be a separate compensation scheme for start-ups, based as much as possible on the TVL. This will apply to start-ups who started between 1 January and 30 June 2020. The reference turnover will be the third quarter of 2020. The exact parameters of this scheme will be determined in more detail. The Cabinet hopes to open this scheme as of approx. April/May of this year.

Deferred payment of tax debts

Originally, entrepreneurs had a tax deferral until 1 April 2021. The Cabinet has extended this postponement until 1 July 2021. This means that entrepreneurs can apply for deferred payment until July 1, 2021 at the latest.

  • For entrepreneurs who had already submitted an application for three months, this means that they can still request an extension of the postponement until 1 July 2021. It is important that entrepreneurs who are unable to meet their payment obligations after the three-month extension request an extension themselves. Otherwise, they run the risk of being excluded from the payment scheme in which they can repay their debt in 36 months;
  • Entrepreneurs who had already received an extension this year will now have an automatic extension until 1 July 2021;
  • For entrepreneurs who apply for the first time after 1 April 2021, it means that they do not have to meet their newly arising payment obligations until 1 July 2021;
  • Entrepreneurs must start repaying their accrued debt as of 1 October 2021.

Customary wage for directors and major shareholders

Substantial interest holders (hereinafter referred to as AB holders) do business through a company for which they often also perform work themselves. Normally, they must pay tax at least on the statutory assessed appropriate remuneration: the customary wage. The Cabinet has allowed for the year 2020 that AB holders, who are confronted with a decrease in turnover, may reduce their tax on the customary wage proportionally to the decrease in turnover. In doing so, the first four months of 2020 were compared to the first four months of 2019. Also in the year 2021, AB holders may assume a lower customary wage. Compared to the measure in 2020, the measure in 2021 will be adjusted on two points:

  • In the measure for 2021, the turnover for the whole year 2021 will be compared with the turnover for the whole year 2019;
  • An entry threshold will be introduced for a minimum turnover loss. The 2021 scheme will be open to companies that have lost at least 30% turnover in 2021 compared to 2019.

Hour criterion

Entrepreneurs who are taxable pursuant to the laws on income tax can, under certain conditions, claim various entrepreneur facilities. One of these facilities is the self-employed tax deduction, which can only be claimed if the hour criterion is met (at least 1,225 hours per calendar year). The Cabinet finds it unjust and undesirable if entrepreneurs are no longer able to claim these entrepreneur facilities because they do not meet the hour criterion. Therefore, the Cabinet introduces a relaxation:

  • In the period 1 January 2021 to 30 June 2021, entrepreneurs are expected to have devoted at least 24 hours per week to their business (and at least 16 hours per week for the starter’s deduction in the event of incapacity)
  • Seasonal entrepreneurs must have spent the same number of hours on their business in this period as they usually do in other years. In short: the entrepreneur must consider how many hours he spent on the business between 1 January and 30 June 2019 and thus assess whether he meets the criterion in 2021.

Travel allowances

As announced, the cabinet would decide by 1 February how long the fixed travel allowance can still be reimbursed untaxed by the employer. Employers can reimburse their employees untaxed until 1 April 2021. Condition is that the fixed allowances had already been granted by the employer to his employees before 13 March 2020.

 Work-related costs scheme

The free margin in the work-related costs scheme will be expanded. This extension already applied in 2020 but is now extended for 2021. This means that the free margin will now temporarily be increased to 3% for the first € 400,000 of the wage bill, instead of 1.7%. In addition, the Cabinet is currently investigating, in consultation with social partners, the possibilities of a supplementary scheme whereby other home office expenses – which are currently not covered by the work-related costs scheme – can be compensated untaxed.

Other tax measures

The following tax measures are extended up until 30 June 2021:

  • Postponement of administrative obligations re payroll tax;
  • Agreement with Germany and Belgium on taxation of cross-border workers;
  • Exemption for some German net benefits;
  • The VAT zero rate on face masks;
  • The VAT zero rate for hiring out health care workers;
  • The VAT zero rate on COVID-19-vaccinnes and test kits;
  • Retention of right to mortgage interest deduction for homeowners if they receive a mortgage payment break from their mortgage provider;
  • Temporary reduced VAT rate on sports classes offered online by gyms continues until compulsory closure of gyms is lifted.


During Tozo 1 and Tozo 2, entrepreneurs could apply for Tozo benefits with retroactive effect for the entire duration of the scheme. In Tozo 3, the retroactive effect of the scheme has been limited. The Tozo 3 benefits can be applied for as from 1 February 2021 with retroactive effect from the previous month. On 1 February 2021, an entrepreneur can therefore apply for Tozo benefits from 1 January 2021. This possibility of retroactive effect will also be included in the Tozo 4 benefits which will take effect on 1 April 2021.

Tonk (Temporary Support Necessary Costs)

As previously announced, the Cabinet is reaching out to all people who fall between the cracks (e.g., self-employed or flex workers) and who are not helped by the existing government support package. The government will therefore offer extra help via municipalities by temporarily providing support for payment of necessary expenses if these can no longer be paid due to a drop in income. Tonk will apply retroactively from 1 January 2021 to 30 June 2021. The municipalities may deviate at their own discretion within their decentralised policy freedom. The focus of this scheme is on housing costs and the funds will be made available in two tranches via the municipal fund. More information on the exact content of the Tonk will be announced shortly. Read more on p. 18 of the parliamentary letter.

 Additional aid per sector

In addition to the above-mentioned support measures, the Cabinet is making further funds available to each sector. According to the Cabinet, the following sectors can count on more support:

  • Agriculture and horticulture
  • Events sector
  • Recapitalisation of medium-sized and large companies
  • Sports sector
  • Local authorities
  • Culture and media
  • Education and training
  • Automotive, aviation and maritime industry

For a sector-specific explanation by the Cabinet, please refer to the Parliamentary Letter.

Do you have questions about the government support package? We are happy to help!