Paying your corona tax debt

Entrepreneurs who had payment problems due to the corona crisis could request a special extension of tax payment from the Tax Administration between 12 March 2020 and 31 March 2022. Since 1 April 2022, you have to pay taxes on time again. Were you granted a special tax extension? Then you have most likely started paying your taxes in October 2022, after receiving a letter from the Tax Administration with an overview of your debts and information about the payment arrangement. 

Payment arrangement relaxation

Are you unable to repay the tax debt monthly or within 5 years? Then you can request a more flexible payment arrangement from the Tax Administration (in Dutch). An adjustment of the payment arrangement has consequences for the instalment amount, the amount of collection interest, and the term of the payment arrangement. The Dutch Tax and Customs Administration offers 3 options:

• You can ask for a 1-time pause for a maximum duration of 6 months or 2 consecutive quarterly instalments;
• You can ask if you can make quarterly payments instead of monthly;
• You can ask if you can make payments for a maximum of 7 years (84 months) instead of 5 years (60 months). For this option, you must meet certain conditions. For example, your debt must be more than 10,000 euro. 

Liquidity budget

One of the conditions to apply for a longer payment period of 7 years is that you include a liquidity prognosis with your application. To do so, you need a liquidity budget. A liquidity budget shows the expected income and expenditure of your business per month or quarter. It is a good idea to draw up a liquidity budget in any case. It will help you determine if you have enough money to pay off the debt and the best time to apply for a payment arragement. You can get help with this from your accountant.

Problems repaying

Are you unable to repay the special tax extension on time? Then take action as soon as possible to solve your problems. You do not have to solve debts on your own. Municipalities are obliged to offer help if you are in debt. There are also organisations, such as debt counsellors, who can help and advise you. Sometimes for free. For example, how to apply for cancellation of your tax debt from the Tax Administration under certain conditions. Until 1 April 2024, the Tax Administration also had relaxed the terms for reaching a debt restructuring agreement (in Dutch).

Deal with your debts using this step-by-step plan.

Ending your business

Is there no future for your business, and is it impossible to find a suitable payment arrangement? Then you may have to end your business. Your tax debt will continue to exist. In some cases, you can ask the Tax Administration for a debt payment arrangement even after you have ended your business.  

Problems with tax repayment after 1 April 2022

This article is concerned only with corona-related debts. Different rules apply to other tax debts. From 1 April 2022, entrepreneurs have had to pay taxes as usual. Requesting a special extension is no longer an option. You may be able to get a regular tax extension or a payment arrangement (in Dutch) if you fail to pay your new tax bills on time. This does not affect the payment arrangement or the amount of the tax debt that you accrued during the special extension of repayment.