About 64,000 entrepreneurs have not yet paid off a penny of the tax debt they accrued in corona time. The fear is that this will lead to a wave of bankruptcies and business closures.
As of today, tens of thousands of entrepreneurs in the SME sector will once again receive the blue envelope from the Tax and Customs Administration. It states that entrepreneurs must now really start paying off the tax debt they have built up during and after the corona pandemic.
And that will cause problems, says Michiel Hordijk, director of the consultancy firm Institute for Small and Medium-sized Enterprises (IMK). “We see a lot of denial behavior among entrepreneurs. They no longer open the mail from the tax authorities. We even see symptoms in entrepreneurs that resemble PTSD. Entrepreneurs already freeze when they see the postman arrive, for example.”
Years of stress
The years of stress about whether or not the company will survive takes its toll on the entrepreneurs, Hordijk sees. “They don’t think logically anymore. They no longer have an overview of their situation at all.” The entrepreneurs do realize that they have a major problem. They know the end is near. If they do not respond, they will receive another letter in May and in June it will be over and out”, Hordijk warns.
Entrepreneurs know that the end is near
But that prospect is paralyzing. All the stress only makes procrastination worse, sees the business advisor, who has now been asked by half of the municipalities to help look for solutions to the problems of tens of thousands of entrepreneurs. “There is no psychosocial help for these entrepreneurs. They are often on their own.”
Tax deferral
Many companies in need are in the retail and hospitality sectors. Those companies were hit hard by the closures during the corona pandemic. Other companies also had a hard time, such as travel agencies. To accommodate entrepreneurs, the Tax and Customs Administration granted tax deferral. This left money to pay the rent, suppliers and staff.
“Initially, about 400,000 entrepreneurs made use of this scheme. When it was extended last year, 266,000 companies joined. Of that group, 64,000 companies have still not paid off. They have also not yet discussed a possible payment arrangement.
Share won’t make it
Some of the companies that do not pay will not be salvageable, Hordijk suspects. These are the companies that were not or barely profitable even before corona. They simply do not earn enough to pay all the bills, so there is no money to pay back the tax authorities.
But the situation is not equally bleak everywhere. “The average tax debt is about 70,000 euros,” says Hordijk. “But half of the companies have a debt of about 10,000 euros. They are already stuck on that. That group should help. But then they need to take action.”
Entrepreneurs have to make sure they make money
The most important thing is that entrepreneurs no longer bury their heads in the sand, but rather gain insight into their situation. ,, And then put our shoulders underneath it together. Entrepreneurs have to work on solutions and make sure they earn money”, Hordijk outlines.
Read also: Paying off corona debt puts entrepreneurs in a bind: ‘In hindsight I should have fired my staff’
And gaining insight can also mean that you see that it is better to stop the company. “We see that more and more entrepreneurs are closing down. If you take action in time, you can arrange a soft landing. Otherwise, you run the risk of having everything you have seized. And then there’s only help.”
Defeat
The big problem is that the entrepreneurs are difficult to reach. They are also afraid to ask for help, because they think that others will find out that the company is not doing well. Moreover, entrepreneurs are used to being in control themselves. Asking for help is a defeat in the eyes of many.
“I think that the partners of entrepreneurs or the staff will also see that the entrepreneur is under a lot of stress. They must also think: are we now out of trouble or what about it? These people can also give the entrepreneur a push to seek help.”
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