Entrepreneurs struggle to repay coronavirus support, deferred income taxes

Entrepreneurs are struggling to keep their businesses afloat after the financial strain of multiple coronavirus lockdowns and the new challenges of rising inflation and energy prices. But now they face paying back excess coronavirus support and deferred income taxes – which De Volkskrant says could lead to bankruptcies, according to trade associations.

The business associations and entrepreneur organizations are calling on the government to help small and medium-sized enterprises. “The debt is piling up,” Maurice Crusio, chairman of the professional association of hairdressers, told De Volkskrant. “Entrepreneurs can no longer see the forest for the trees.”

For Ron Okhuijsen, who owns a restaurant in Utrecht, one challenge began when another ended.

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“This summer I was able to recover between 20,000 and 30,000 euros from the loss of more than two tons. That was good for morale,” he told De Volkskrant. “But my energy costs have increased from 1,800 to 3,400 euros a month.”

Meanwhile, Okhuijsen’s tax arrears add up to around 50,000 euros, which should be paid off in five years. “I had hoped in vain that the term could be extended, but now 1,000 euros are paid back to the tax office every month,” he said. “And that puts pressure on my liquidity.”

Okhuijsen is not alone. De Volkskrant reports that many companies are struggling to pay back their coronavirus support and two years of deferred income tax. According to the Dutch Business Agency (RVO), 14 percent of restaurant owners and 5 percent of hairdressers did not respond to reminders to repay their coronavirus support. And in many cases, small business owners are unable to pass on their increased costs to consumers.

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“A men’s haircut now costs 28.50. We’re up 4 to 5 percent,” said Rob van Burken, who owns a hair salon in Maarssenbroek. “It’s scary at the checkout, but actually it should have been 30 euros. But I can’t pass on all my expenses. We are based in Maarssenbroek and our customers have small wallets.”

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The Treasury has determined that some bankruptcies appear inevitable. “That will probably be true, but it will be forgotten that people see their dream shattered,” said Jacco Vonhof, chairman of MKB Nederland, according to De Volkskrant.

The VVD recently passed an application to make it easier for catering companies to repay their corona support debts. It’s a good start, said Dirk Beljaarts, director of Koninklijke Horeca Nederland (KHN). “Small and medium-sized enterprises are the engine of the economy, but without additional support, the engine sputters.”