Corona’s debt repayment to the Tax and Customs Administration causes problems for entrepreneurs: “In hindsight, I should have gone bankrupt”

Corona's debt repayment to the Tax and Customs Administration causes problems for entrepreneurs: ``In hindsight, I should have gone bankrupt''

Tens of thousands of entrepreneurs will receive a letter from the Tax and Customs Administration this month. They are late in paying their debts. Or they haven’t started paying yet. The service wants them to provide the money no later than next month.

It was one of Corona’s support measures: companies were deferred from paying taxes. Since October last year, 266,000 entrepreneurs have had to pay back nearly €20 billion in accounts receivable.

High repayment pressure

But after 9 months, the Tax and Customs Administration has not heard anything about the more than 50,000 entrepreneurs. Martin Rudolfi is one such entrepreneur. According to his own words, the restaurateur from Groningen has €300,000 in debt with the tax authorities since Corona. He does not know how to pay this debt.

“There’s just too much pressure to repay,” Rudolfi says. He had three restaurants, one is now sold. “As if Corona wasn’t bad enough, war ensued. Energy prices went up, inflation set in, we couldn’t find good employees: piling up problems ensued.” His restaurant is running but the payment is playing tricks on him.

Let’s go bankrupt

“Every time we were allowed to open again during the corona pandemic, we didn’t have an ideal turnover rate,” says Rudolfi. “Even when the pandemic ended last year, it was hard to get started.” As the problems piled up, the restaurant owner now started looking for help. “To see the feasibility of our work.”

He believes that without the debt to the tax authorities, Rudolphie would be in a much better position now. “I don’t know what the future will hold, but this payment is coming our way. If I had known all this, I would have let things go bankrupt. Then the damage would have been limited.”

Business is down

Michiel Hordijk of the Institute for Small and Medium Enterprises (IMK) helps entrepreneurs like Rudolphie. It is believed that many companies were shocked by the messages from the tax authorities. Dozens of businessmen are calling on him for help these weeks.

According to Hordecke, the group of 50,000 entrepreneurs who have not yet responded to the reminders have different reasons for this. “It’s often about very small debts, they’re companies that really stall out sometimes. It’s not easy to find that group. But they still back out at some point. Other entrepreneurs don’t know what’s going to happen and how to deal with it.”

Business call

A spokesperson for the Tax and Customs Administration says that contact with entrepreneurs has been sought in various ways in recent months: “In addition, extra attention is always given to the group of entrepreneurs who have not yet entered into a payment arrangement, or who are late in payment. We invite entrepreneurs who again have payment problems to contact us as soon as possible.”

In addition to the Tax and Customs Department, entrepreneurs can also seek help from the Chamber of Commerce, for example. Companies have 5 years to pay off their debts and can extend it to 7 years. There is a possibility of payment breakage. And under certain conditions—the company must be sound—entrepreneurs can qualify for reorganization.

‘Debt is not my fault’

The latest letter from the Tax and Customs Administration states that entrepreneurs should actually start making payments at the end of August. Failure to do so will result in a reminder or an enforcement order. If the entrepreneur continues to take no action, a bailiff will be called at any time, who can also confiscate the goods belonging to the entrepreneur, for example.

The restaurateur, Rudolph, believes his tax debt should be forgiven. When the coronavirus struck, he was required to keep his 60 employees on staff, but compensation for this was not cost-effective. “I did what was asked of me, but I was not fully reimbursed. It is not my fault that I am now in debt.”

make an agreement

The Tax and Customs Administration says there will be no debt cancellation: “We can and want to help, and we want to ensure bankruptcies are prevented wherever possible. So find us fast, because paying off your tax debt never ends.”

It would be a shame for healthy companies to collapse due to corona debts, Michel Hordecke of IMK says, but he believes this is not always necessary. “Some entrepreneurs see no possibility in their profit model of paying off debts. Then we consult, also with other debtors, and try to make a deal.”

No bankruptcy wave

The number of bankruptcies has increased in recent months. Especially in commerce, which includes the restaurant industry. In June, more than 300 companies went bankrupt. The highest number in 3 years. In addition to high interest rates, high wages, and expensive purchases, tax debt is a bedrock for some entrepreneurs.

However, according to Hordecke, there is no need to worry that this trend will continue and that the wave of bankruptcies will indeed come. “We are back to pre-corona levels. This is just part of a healthy economy.”

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For some entrepreneurs, tax debt hangs around their neck like a millstone. View the report here.

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