KLM accrued €1.4 billion in tax debt during pandemic

KLM accrued even more debt from the government during the coronavirus pandemic than known to date. In addition to 3.4 billion euros in loans and guarantees, the Dutch airline also received a tax deferral of 1.371 billion euros, NRC reports based on its own research.

The KLM Group, including subsidiary Transavia, also received 1.7 billion euros in wage subsidy through the NOW scheme. With that, the total State aid to the KLM Group amounts to almost 6.5 billion euros, according to the newspaper. 

The 3.4 billion euros in state aid consists of a direct loan of 1 billion euros and bank loans of 2.4 billion euros with a 90 percent government guarantee. So far, KLM has used almost 1 billion euros of that amount, 227 million euros from the direct loan, and 665 million from the bank guarantees. 

KLM will have to pay back these loans and the 1.371 billion euros in tax debt. The NOW subsidy likely won't be repaid, as KLM suffered a significant turnover loss in the pandemic - a requirement for this subsidy. 

A spokesperson for the airline stressed that it would repay the debt to the Tax Authority as soon as it could, as interest on that debt will rise rapidly in the coming years. 

KLM is currently in talks with the government about improving its finances. According to NRC, any further support will almost certainly come with a demand from the European Commission that KLM gives up some of its landing spots at Schiphol.