Wednesday, April 22, 2020

Emergency measures for business owners: compensation for payroll expenses and one-time bridge loan

The Government of Curaçao announced emergency measures for business owners comprised of, among others, (i) compensation for payroll expenses, the so-called employment stimulus (in Dutch: noodmaatregel overbrugging werkgelegenheid (“NOW”)) and (ii) a one-time bridge loan with modified terms. Both measures are summarized in this memo.

 

Compensation for payroll expenses (NOW)

The purpose of the NOW stimulus is safeguarding jobs, even if there is temporarily no work for employees, and avoiding bankruptcies. The NOW stimulus aims to help a business owner by providing him with a compensation for payroll expenses for his employees.

1.1        Conditions to receive compensation for the month of April[1]

To receive the compensation, the following conditions must be met:

• the business owner must keep all permanent employees on payroll in accordance with and for the duration of their valid employment contract and must keep paying them their full salary;
• the business owner must have suffered a decline in turnover in April 2020 of at least 25% compared with the turnover in April 2019[2];
• the business must be active in one of the following sectors:
  • hotels, apartment rental to tourists, travel agencies, restaurants and cafés;
  • rental companies (except real estate);
  • transportation and warehousing (except freight forwarders, brokers, charterers and transshipment);
  • amusement (except radio and television and lotteries), attractions and culture;
  • gyms, sports facilities and dive schools;
  • cleaning companies, carwashes and laundromats;
  • security and alarm companies;
  • temp agencies and personnel consultants;
  • gardening companies and pet care companies;
  • hairdressers and other personal care services;
  • retail stores non-food (except pharmacies, medical articles, gas stations and pet stores);
  • retail stores food (only alcohol, tobacco and ice cream parlors);
  • trade (except supermarkets, fuel traders and pharmaceutical trade);
  • construction;
  • installation company;
  • industry (except foodstuff, paper, petroleum and products for cleaning and disinfecting and medical products);
  • repair shops for consumer goods;
  • mining;
  • care (only medical laboratories, ergo/physiotherapists and nurseries for infants and children); and
  • real estate agents and appraisers.
• the decline in turnover may not be caused by anything other than the Covid-19 crisis;
• the business owner must pay all tax and social insurance premiums[3]. Payment is a precondition for the possible compensation in a subsequent period.

 

1.2        The compensation

The compensation consists of an amount equal to 80% of the percentage of expected decline in turnover times the salary amount (per employee on that date, up to the maximum SVB-salary) of April 2020. It concerns the salary amounts[4] of all employees who were on payroll on 28 February 2020 and the statutory directors who on 15 July 2019 were registered in the SVB-data base and are still employed. The salary amount does not exceed the maximum SVB-salary of ANG 5.781 per person per month[5].

The measure is not applicable to, among others, employees with a so-called zero hour contract, interns, shareholders who are not paid employees, owners of sole proprietorships, statutory directors of companies with no other employees and Government N.V.s.

The government provided a few calculation examples which follow:

Expected decrease in turnover in April 2020 is 90% vs. April 2019

Compensation = 80% X 90% = 72% of the salary amount of April 2020.

Expected decrease in turnover in April 2020 is 40%vs. April 2019

Compensation = 80% X 40% = 32% of the salary amount of April 2020.

It is expected that the compensation will be deposited between 23 and 27 April 2020 on the bank account provided by the business owner.

An applicant who receives compensation, commits himself to submitting a short ‘recovery plan’ and the OB and social security premium returns for April 2020 before 15 May.

Please note: if the decrease in turnover ends up being less than that reported as expected, the difference will be recovered, without penalty, from the business owner.

Please note: every business owner who receives the NOW stimulus, is also entitled to receive a refund of the employers’ contribution (of 9.5%) of the AOV/AWW for his employees. The exemption to pay the employers’ contribution of the AOV/AWW, part of the first tranche of fiscal measures (“Alivio 1”), is thereby rescinded for April.

 

1.3        Required documents

The application for compensation must contain at least the following documents:

• a copy of the turnover tax (OB) return of April 2019;
• a copy of the ZV/OV return of February 2020;
• a list of names and sedula numbers of the employees on 28 February 2020;
• a list of names and sedula numbers of the statutory directors on 15 July 2019;
• a list of names and sedula numbers of the statutory directors who left the employment after 15 July 2019.

Please note: NOW applications for compensation over April can only be submitted during 5 days (from 18 through 22 April 2020) via the website https://www.fondodisosten.org. After midnight on Wednesday (22 April) the applications will no longer be accepted!

 

One-time bridge loan

In addition to the compensation for payroll expenses, business owners hard hit by the Corona-crisis can obtain a one-time bridge loan with modified terms to cover fixed costs such as rent.

2.1        Conditions for bridge loan

The following businesses may apply:

• Micro businesses: 1-4 employees with annual turnover of less than ANG 0.5 million
• Small businesses: 5-10 employees with annual turnover of less than ANG 0.5 million
• Medium-sized businesses: 11-50 employees with annual turnover of between ANG 0.5 million and ANG 5 million

The businesses must:

• have had to cease their activity partially or completely (restaurants, hairdressers and barber shops, etc.) as a result of the Covid-measures introduced (such as the 2-meter rule);
• be established in Curaçao;
• the owner/director must be in possession of a valid ID or valid residence permit;
• be registered at the Chamber of Commerce or going to register;
• be operational since at least 1 October 2019 (minimum 6 months of operations);
• provide financial information substantiating that the business requires support;
• have adapted their business model where possible as a result of the Corona-crisis or be willing to do so.

2.2        The bridge loan

The bridge loan is a loan with a maximum 12-month payment grace period and low interest rate of 2%. The loan is extended by financial institutions such as Qredits, Korpodeko and possibly other banks. The loan includes mandatory coaching and advice by the financial institution.

2.3        Required documents

The application for the bridge loan must contain at least the following documents, if applicable:

• a copy of the Chamber of Commerce extract;
• a copy of the CRIB-number certificate;
• a copy of the Articles of Incorporation/by-laws of the company;
• a copy off the shareholders’ register;
• a copy of the partnership agreement;
• a copy of the lease agreement;
• copies of the business licenses;
• copies of the March and April 2020 bank statements;
• proof of existing loans (dated and with amount owed);
• a copy of the summary of debts from SVB and/or the Tax Department;
• copies of the wage tax and turnover tax (OB) returns for January through April 2020;
• recent annual accounts;
• an investment proposal to mitigate the effects of COVID-19; and
• an overview of fixed monthly costs for March and April 2019 and March and April 2020.

The bridge loan can be applied for via the website https://www.fondodisosten.org.

For more information, please contact:

Anjli Finessi, tax adviser, finessi@bakertillycuracao.com

Frank Groenewegen, accountant, groenewegen@bakertillycuracao.com

Arthur van Aalst, tax attorney, vanaalst@bakertillycuracao.com

 

[1] Depending on developments, this may also be valid in subsequent months.

[2] Businesses that were established after 1 April 2019 or that are not subject to turnover tax (OB) and can therefore not substantiate the turnover for April 2019 may still qualify for the NOW stimulus measures but must first contact the Helpdesk at trahado@fondodisosten.org.

[3] Every business that receives the NOW stimulus, is also entitled to receive a refund of the employers’ contribution of the AOV/AWW. See paragraph 1.2.

[4] Not included in the salary amount are the vacation supplement nor additional benefits such as pension premiums.

[5] If the salary is more than the maximum, the business owner and employee may mutually agree to postpone payment of the excess.