Entrepreneurs struggle with corona debt: 4.7 billion euros still outstanding

Brands owns the restaurant De Meerplaats in IJmuiden. He started with a debt of €250,000. This included the deferred tax, the NOW subsidy, and the Fixed Costs Allowance (TVL). "And that's not even mentioning the personal assets we lost. I also had to borrow from family, which I'm still paying off."

For three years, he repaid €7,500 per month. Moreover, the interest rate increased by one percentage point each year – it will reach five percent in 2025. Under his new payment plan, Brands will repay €2,500 per month to the tax authorities for the next two years.

In March 2020, businesses were able to temporarily defer their tax payments due to the coronavirus pandemic. Approximately 400,000 businesses took advantage of this option, receiving €47.7 billion in coronavirus tax deferrals. They were required to resume payments in April 2022.

More than 266,000 of these entrepreneurs entered into a payment plan for this purpose. They were given five years to clear their tax arrears, until 2027. The current status, after three years, is that only 73,000 entrepreneurs have been able to fully repay their debt. That's not even a third of all entrepreneurs.

Most of the debt is owed by medium-sized businesses (50 to 249 employees). Nearly 60,000 entrepreneurs still owe €2.2 billion. On average, these entrepreneurs owe around €37,500. Of the small businesses (fewer than 50 employees), nearly 45,000 still owe tax. However, their average debt is much lower: around €7,800.

On the other hand, the Dutch business organization MKB-Nederland (MKB-Nederland) sees that a lot of money has already been repaid. "But for the businesses that are still struggling, there are major concerns," says a spokesperson. "This mainly concerns sectors like hospitality, services, and retail. They were forced to close and have suffered major blows."

As long as entrepreneur Brands maintains the same turnover with his restaurant, he'll be able to pay off everything. "That means maintaining quality, remaining hospitable, and asking guests for improvements. But a good turnover also means high income tax, and any surplus goes straight to the repayment. That does get you a bit tangled up."

Brands says he can't "make any crazy leaps." "We also had an energy crisis on top of it, which we shouldn't overlook. It was a massive battle. I've been an entrepreneur for forty years, but the pandemic is the darkest chapter in my diary. On March 15, 2020, at 6 p.m., we had to evict a hundred people. That caused a huge panic; my staff sat at my table crying. I've certainly gotten a lot more gray hairs because of that."

According to Brands, there's far more suffering behind the doors of hospitality businesses than people realize. "It's been five years now, everyone seems to be back to their usual routine. But the COVID-19 refunds are sometimes forgotten."

The Tax and Customs Administration expects that of the remaining €4.7 billion in tax debt, €3.5 billion will ultimately be uncollectible, for example, due to company bankruptcy. "From the beginning, the expectation was that there was a chance that companies wouldn't survive," says a Tax and Customs Administration spokesperson.

Both the Dutch Tax and Customs Administration and the Dutch Small and Medium-Sized Enterprises (MKB-Nederland) indicate that, in addition to the pandemic, other factors are also contributing to businesses' difficulties. These include inflation, higher energy and personnel costs, and staff shortages.

This video looks back at the coronavirus pandemic in the Netherlands from an economic perspective: