Both local and international companies located in Flanders experiencing financial difficulties due to the COVID-19 outbreak can apply for social security and tax support measures. Here’s a structured overview of the measures and what they entail.
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COVID-19: measures to limit business impact in Flanders
Postponement of the tax filing deadline. For VAT, corporate income tax, legal entities income tax and corporate income/non-resident tax, the filing deadline has been automatically postponed:
- VAT return and EC sales listing deadlines related to February were postponed to 6 April 2020. Meanwhile, deadlines related to March or the first quarter of 2020 were postponed to 7 May, while the ones related to April 2020 were postponed to 5 June.
- For all other taxes, deadlines have been postponed from 16 March to 30 April 2020.
Deferred payment of personal income tax, withholding tax, VAT and social security contributions. For certain tax debts, payment will automatically be deferred. Late payment interest will also be annulled.
- VAT – payment related to February is postponed to 20 May 2020, payment related to March or the first quarter of 2020 is postponed to 20 June, and payment related to April 2020 is postponed to 20 July.
- Withholding tax – payment related to February is postponed to 13 May 2020, payment related to March or the first quarter of 2020 is postponed to 15 June, and payment related to April 2020 is postponed to 15 July.
- Legal entities tax, corporate income tax, non-resident tax – for tax settlements established from 12 March 2020, the normal period will automatically be extended by 2 months.
Payment by installments for tax debts. Companies that can prove that they are facing difficulties resulting directly from the coronavirus outbreak are eligible for staggered tax payments for debts established before 12 March 2020. They will also be exempt from late payment interest and non-payment fines.
Accelerated refund of VAT credit. Any company that files monthly VAT returns can apply for the accelerated refund of their VAT credit related to February 2020. Note: you must apply for this support measure via the Intervat application of the Federal Public Service Finance before 30 April 2020.
A 4-month deferral of payment of annual road tax. Good to know: a payment period of 6 months (instead of 2) is indicated immediately on assessment notes sent after 26 March. If a recently sent assessment notice still mentions a term of 2 months, the taxpayer may add 4 months to pay.
Extended deadline for inheritance tax and registration rights payments. The deadline will be extended by 2 months after the end of the stricter COVID-19 measures (i.e. phase 0, which ended on 4 May 2020).
- VAT rate reduction for restaurant and catering services. From 8 June 2020 to 31 December 2020, a temporarily lowered VAT rate of 6% applies to restaurant and catering services, including serving non-alcoholic beverages, in all types of on-trade (pubs, taverns, etc..).
Nuisance incentives. The government of Flanders provides ‘nuisance incentives’ of EUR 4,000 for companies that are affected by and were forced to close because of COVID-19. For those only affected by closure during the weekend, Flanders offers a one-time premium of EUR 2,000. In addition, all affected companies will receive EUR 160 EUR per day, starting from the 21st day of closure.
Compensation premium. For enterprises that aren’t obliged to close down but are affected by a turnover loss of at least 60% between 14 March and 30 April 2020, the government of Flanders provides a compensation premium through Flanders Innovation & Entrepreneurship:
- a one-off contribution of EUR 3,000 for self-employed persons. This also includes those who are self-employed in a secondary occupation, provided that they pay social security contributions due to their levels of income.
- a one-off premium of EUR 1,500 for self-employed persons in a secondary occupation who have an income between EUR 6,996.89 and 13,993.78.
Employee incentive premium. This monthly (gross) premium for employees varies between EUR 68,64 and 171,6. It may be granted on 1 April 2020 at the earliest and last up to 30 June 2020 at the latest. The premium is intended for people working at enterprises that experienced a decline of at least 20% in turnover, production or orders due to the COVID-19 crisis.
SME growth subsidy. If your SME needs help to get back on its feet after the coronavirus crisis, you can apply for a grant via government agency Flanders Innovation & Entrepreneurship (VLAIO).
Flanders Innovation & Entrepreneurship (VLAIO) support measures and subsidies. A great number of companies in need of financial support due to the coronavirus can benefit from:
- Baekeland mandates;
- Ecology Premium Plus (EP-Plus);
- ICON subsidies for cooperative demand-driven research;
- thematic ICON project support;
- innovation mandates (IM);
- research project support;
- development project support;
- Strategic Ecological Support (STRES);
- Strategic Transformation Support (STS).
Coronavirus crisis guarantee. Flanders’ government has expanded investment firm PMV’s ‘generic’ guarantee capacity of EUR 1.9 billion by adding a coronavirus crisis guarantee of EUR 100 million. The associated one-time premium rate has been lowered to 0.25% instead of 0.5%. Under the generic guarantee scheme, which will be fully deployed, an existing credit, line of credit or previously guaranteed lease can be extended. The additional coronavirus guarantee is meant to:
- make it easier for companies to receive bank financing for their working capital if they have been unable to pay outstanding invoices due to the COVID-19 outbreak;
- enable companies and self-employed individuals to have a ‘bridging loan’ guaranteed for existing non-bank debts for up to 12 months (adding 9 months to the 3-month period under the ‘generic’ guarantee scheme);
- allow guarantees for bank debts – in addition to supplier debts – related to existing lines of credit or non-guaranteed investment loans (provided that that the bank is also prepared to grant at least 3 months of payment deferral or to maintain lines of credit).
- Payment suspension for SMEs. Entrepreneurs benefitting from the Start-up Loan, Co-financing and Co-financing+ schemes (granted by PMV/z) are temporarily not required to repay this financing. The direct debits foreseen for repayment of capital and/or interest are automatically suspended for all borrowers. The suspension is valid for 3 months and will be extended to 6 months if necessary.
Postponed mortgage payments. Financially sound companies that were hit by the coronavirus/COVID-19 crisis can ask their banks to suspend their mortgage payments until September 2020. This measure also applies to economically unemployed individuals.
Financial guarantee for loans of up to 12 months. The federal government made a deal with the financial sector to earmark EUR 50 billion to cover potential losses due to loans that cannot be repaid. This guarantee will cover all loans that run for up to 12 months and are currently taken out by businesses and the self-employed.
Crisis warranty. Companies and self-employed workers can have a bridging loan guaranteed for existing debts – for wage payment, purchase of raw materials or outstanding invoices etc. – that cannot be paid due to the coronavirus crisis. This warranty can be obtained on top of existing guarantees for investment loans and working capital. 1,000 loans of EUR 100,000 can be guaranteed (below the 75% regional warranty). This measure is applicable until the end of 2020.
Three-year subordinated loans through PMV. Flanders’ investment firm PMV creates a medium-term financial buffer with subordinated loans of up to EUR 800,000 over 3 years, for:
- start-ups and scale-ups, i.e. (young) enterprises that did not have a recurrent positive cash flow in the last 3 years and that are currently developing or already commercializing innovative products and/or services;
- SMEs and self-employed persons who had recurrent positive cash flows and thus were eligible for conventional bank financing prior to the COVID-19 crisis.
Temporary unemployment. The national employment office RVA will consider all temporary unemployment related to the COVID-19 crisis as “due to force majeure” until 31 August 2020. The application procedure for receiving subsequent temporary unemployment benefits has been simplified as much as possible:
- Employees must submit a benefit application by filling in the simplified form that can be found on the website of the payment institution of their choice.
- Employers must submit an electronic declaration of the hours of temporary unemployment in the course of the month concerned. This can be done online via the social security portal (ASR), under “Scenario 5 – Monthly declaration of the hours of temporary unemployment or hours of suspension of employees”. Another option is to send a structured batch file to the social security portal via your payroll services provider.
-The unemployment allowance amounts to 70% of the employee’s average salary (capped at EUR 2,754.76 per month). In addition, the employee receives a supplement of EUR 5.63 per day from the unemployment office. Note that a payroll tax of 26.75% is due on the payments.
Supplementary allowance granted by employers on top of the National Employment Office (NEO) contributions that employees receive for temporary unemployment. This allowance comes with a 26.75% payroll tax, but is free of social security contributions and should be applied for through a payroll provider.
Teleworking. Both the federal government and the government of Flanders encourage teleworking as much as possible. In case the employer intervenes in the costs of teleworking (internet connection, additional laptops…), this can be a tax-free allowance as well as a beneficial lump sum valuation for social security purposes.
- Corona parental leave/allowance. By applying for an interruption allowance from the National Employment Office (NEO), employees can reduce their work performance by 20 or 50% to take of children under the age of 12. This is applicable from 1 May to 31 August 2020. For single-parent families or households with a disabled child, the measure can be extended to 30 September 2020 and the interruption allowance is increased to 150%. (Note: a similar corona parental allowance is available for self-employed workers.)
- Flexibility in executing a federal public contract. No fines or sanctions will be imposed by the federal government in case a federal public contract incurs delays or cannot be executed due to the coronavirus crisis.
Support for the tourism industry. The government of Flanders has earmarked EUR 5 million for youth and social tourism measures. Additionally, government agency Visit Flanders will no longer collect rent from youth hostels, which adds up to an additional EUR 1 million in support.
Tax incentive for medical equipment donations. Gifts of medical devices can be free of VAT and tax-deductible for corporate tax and personal income tax purposes. There’s also tax relief for private donations in personal income tax.
- Aid to Public Centers for Social Welfare (OCMWs). EUR 100 million is made available to extend the benefits of certain social measures to vulnerable people in order to combat energy poverty. An additional aid of EUR 10 million is extended to cover operating costs related to additional workload.
Investment promotion measures. On 12 June 2020, the federal government approved additional measures including:
- a new tax shelter system for SMEs affected by the COVID-19 crisis (measure available until the end of 2020);
- an increased tax deduction (25%) for investments made between 12 March 2020 and 31 December 2020;
- the suspension of the VAT advance of December 2020;
- various types of tax reductions for donations in personal income tax.
Want to find out more about the available tax incentives, government grants and business support in Flanders? Request a free copy of Flanders Investment & Trade’s brochure ‘Home is where the support is’.
For more information on the latest coronavirus-related measures, reach out to us.
With Dutch as its official language, Flanders (Dutch: Vlaanderen) is the autonomous northern region of Belgium. The capital of both Belgium and Flanders is Brussels.