Under the Tax Plan numerous coronavirus support measures that have already been announced will be put into law.
Exemption from profit of compensation received under TOGS and TVL schemes
Until 15 June 2020 entrepreneurs in certain sectors who suffered losses as a result of coronavirus measures were able to make a claim under the Contribution for Entrepreneurs in Sectors Affected by COVID-19 scheme (TOGS or € 4,000 scheme). This scheme was succeeded by the Reimbursement of Fixed Costs for SMEs Affected by COVID-19 scheme (TVL).
In principle, the compensation received on the basis of these schemes is part of the company’s profit. This is not a desirable situation. For this reason an earlier decision stipulated that such compensation will not be regarded as profit and this is now being laid down in a legislative proposal.
Tax treatment of bonuses paid under COVID-19 Bonus for Healthcare Professionals Subsidy Scheme
Healthcare institutions can award employees and non-employees (e.g. self-employed persons and external cleaning staff who are hired in) a tax-free bonus of € 1,000.
The healthcare institutions must include this bonus in the fixed budget under the work-related expenses scheme and it is regarded as a final-levy component. As a result, no tax is levied on the employee and the payment is made net. This also means that the bonus does not reduce the employee’s entitlement to allowances.
In the case of non-employees, however, this approach was not possible. Consequently, under the Tax Plan this option has now been made available to non-employees too. The final-levy rate has been set at 75%. This is the same rate applicable to benefits in kind with a value of more than € 136 granted to non-employees.
The healthcare institution can submit an application for the bonus to the Minister of Health, Welfare and Sport. The bonus, including the final levy payable, will then be refunded to the healthcare institution.
Temporary bridging scheme for flexiworkers
The temporary bridging scheme for flexiworkers is now being put into law. Under this scheme, subject to certain conditions, flexiworkers were able to apply for a contribution of € 550 per month for March, April and May 2020. The bridging scheme was intended for flexiworkers whose income fell in April, compared with their income in February, as a result of the coronavirus crisis.
Temporary increase in fixed budget under work-related expenses scheme in 2020
As a result of the coronavirus crisis, the fixed budget under the work-related expenses scheme has been increased to 3% on the first € 400,000 of the taxable wage bill. This increase has now been included in a legislative proposal and will apply in 2020 only.
Coronavirus reserve
Do you expect your company to post a loss for 2020? And did you make a profit in 2019? If so, it is possible to include a tax reserve in your 2019 corporation tax return. You will then already be able to offset your expected loss for 2020 with your 2019 profit and will therefore pay less tax. However, this is subject to the condition that your loss for 2020 is linked to the consequences of the coronavirus crisis, for example because you had to close your business but still had fixed costs to pay.
The coronavirus tax reserve has been capped at the level of your profit for 2019 without taking this reserve into account. It is compulsory to release the coronavirus reserve in 2020. This measure, which was previously part of a policy decision, is now being included in a legislative proposal.
Please note: The coronavirus tax reserve is only available to companies that are subject to corporation tax.
16 September 2020