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NOW-application: How to determine loss of turnover & the starting reference date

In order to apply for NOW-support in the Netherlands you will need to determine:

  • The expected loss of turnover, expressed in whole percentages (rounded up)
  • In which consecutive period of 3 or 4 months, depending on whether it concerns NOW 1.0 or NOW 2.0, you expect the loss of turnover. You can determine the starting date of the period, which can be either March 1, April 1 or May 1 2020 for NOW 1.0 or June 1, July 1 or August 1 for NOW 2.0.
On the official website of the authorities you’ll find more information about this, as well as a calculation tool that allows you to determine the loss of turnover (in Dutch):
  • https://business.gov.nl/subsidy/corona-crisis-temporary-emergency-measure-now/
  • https://www.rijksoverheid.nl/onderwerpen/coronavirus-covid-19/algemene-coronaregels
  • https://www.rijksoverheid.nl/onderwerpen/coronavirus-financiele-regelingen/documenten/publicaties/2020/09/30/tijdelijke-noodmaatregel-overbrugging-voor-werkgelegenheid-now-2.0
  • https://www.rijksoverheid.nl/onderwerpen/coronavirus-financiele-regelingen/overzicht-financiele-regelingen/now/algemene-informatie-over-now3-vanaf-oktober-2020

Below you’ll find some remarks about these topics.

Expected loss of turnover

In terms of the definition of turnover, it is indicated that it should be net turnover excl. VAT. Dutch companies (large and medium-sized) will have this net turnover readily available, as this definition fits in well with Dutch annual accounts law and those net turnover figures are known in the annual accounts that the Dutch entrepreneur will have to present each year. Small Dutch companies that do not prepare annual accounts may use the fiscal net turnover that they use when filing their tax declarations with the tax authorities.

According to the NOW-scheme the turnover should be determined at a group level. This is logical because within a group you may have entities within the group in which no turnover is generated at all, such as a personnel/staff entity. It may also be the case, for example, that there is a legal entity within the group that handles production while another entity within the group sells the goods that are produced within the group. The production entity will in fact not have a turnover, but because the loss of turnover is being determined at a group level, somewhere else within the group (the sales legal entity), the actual turnover will in the end become clear.

Following the determination of the loss of turnover at a group level, each separate entity within that group should file a separate NOW-application, indicating the same percentage in loss of turnover.

On April 22, 2020, the definition of “group level” was further expanded, so that operating companies that belong to a group and that do not meet the conditions can still apply for NOW, subject to conditions. Click here for the news item from the government.

The government still has not provided us with a clear decision about how to calculate the loss of turnover in case the employer is not established in the Netherlands.

In spite of this uncertainty, you can use the initial basis and our position to determine a loss as a percentage of sales and submit your application on that basis. Within 22 weeks, a settlement bill will be received for the difference in the amount granted. Please take into account that the government may claim back part of the grant paid out to you as an advance if they do not accept the loss of sales percentage you provided, and if in their perspective, the sales loss was a lower percentage than you set out in the NOW application.

Our preliminary position is that if there is no establishment in the Netherlands and you still want to determine a % loss of turnover, you could take the foreign turnover as a starting point and seek alignment with the turnover tax returns in your own country. After all, it contains the total turnover such as declared. Besides VAT within the EU is harmonized.
This might also be applicable in the situation where there is a subsidiary or branch office in the Netherlands, with a turnover that solely consists of a commission, expressed as a percentage of the Dutch costs, while the actual turnover is booked outside the Netherlands.

Please note that turnover is basically calculated on a group level. However as far as a foreign employer is concerned the NOW-scheme explicitely states:

Non-Dutch legal entities or natural persons without employees with wages insured in the Netherlands are not taken into account for the calculation of the loss of turnover of wages insured in the Netherlands of the group.

Consecutive measure period of 4 months & reference date for NOW 2.0

The expected loss of turnover (over 4 months) will be compared to a third of the turnover that was generated in the year 2019 and must be measured over a consecutive period of 4 months. If there is for example a loss of turnover of 60% in June, 0% in July, 0% in August and 20% in September, the actual loss of turnover will be 20%, being the average, measured over 4 months.

As an entrepreneur you can start thinking strategically about the starting reference date for the period of 4 months that you will use for determining the loss of turnover. As a starting date you can choose June 1, July 1 or August 1. However, if you also applied for NOW 1.0, the NOW 2.0 starting reference date should be directly consecutive to the 1.0 period.

Please note that you’ll have to indicate the starting reference date when filing for the NOW support, which will by then be definitive, you cannot choose another reference date afterwards!

In case you have questions about the determination of the loss of turnover, please do not hesitate to let us know. We can make sure that one of our tax lawyers will contact you.

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