Minister Koolmees of Social Affairs announced on April 22, 2020 to amend the so-called "group provision" from the NOW scheme. Operating companies can also rely on the NOW scheme, provided they comply with the conditions set.
The basic premise of the NOW scheme was that the decrease in turnover of the entire group (concern) was the basis for eligibility and the amount of the subsidy. Pressure has been exerted by industry, trade unions and sector organizations to relax this part of the scheme. The reason is that if turnover is determined at the group level, the goal of the NOW scheme (maintaining employment) cannot always be achieved.
The change means that operating companies that have more than 20 percent loss of sales due to the Corona crisis, but belong to a group that does not meet that condition, may still use the NOW scheme. However, this is subject to the following additional conditions:
- The operating company must have its own legal personality. Components of legal entities, such as corporate offices or business units are not eligible for the NOW scheme.
- Concerns must declare no dividend or bonus payments or share repurchases for 2020 until and including the date of the shareholder meeting at which the 2020 financial statements are adopted.
- Operating companies must have an agreement with the relevant unions on job retention at the operating company. For operating companies with fewer than 20 employees, agreement from an employee representation is sufficient. This ensures that use of this exception is actually necessary for job retention within the groups.
- The applicant legal entity or company may not engage in business activities that consist for more than half of the activities of providing labor within the group. By virtue of this condition, personnel limited liability companies are excluded from being able to apply for the scheme.
- Additional audit safeguards, which can be reviewed by the auditor, also apply:
- The other operating companies may not perform assignments or projects at the expense of the grant requesting entity, which would normally perform them and which are different for that other entity. No assignments may be rebooked late or late in the measurement period from the grant requesting entity to another entity within the operating company.
- If employees of the operating company undertake activities at another entity during the grant period, then when determining the grant, the operating company's loss of turnover must be reduced by the resulting (theoretical) turnover. This prevents shifting personnel from qualifying for funding the labor costs covered at other operating companies through that turnover.
- The Transferpricing system as used in the 2019 or latest adopted financial statements is leading for the 2020 measurement period and may not be adjusted. This prevents, in part, revenue shifting through additional increases or decreases in internal chargebacks.
- Changes in inventories of finished goods are allocated to sales. This limits the risk of inventory movement.
In short
The amendment to the NOW scheme gives operating companies that do not qualify for the NOW subsidy the opportunity to still apply for the NOW scheme, if they themselves do lose 20% or more in turnover. However, this is not without controversy: various additional conditions apply. So here too, the rule is 'think before you leap'!
The NOW's amended regulations went into effect on May 5. From that date, operating companies can apply to the UWV.
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