Entrepreneurs struggle to repay coronavirus support, deferred income taxes

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

The trade associations and entrepreneurial organizations are calling on the government to help small and medium-sized businesses. “The debts are piling up,” Maurice Crusio, chairman of the trade association for hairdressers, told De Volkskrant. “The entrepreneurs no longer see the wood for the trees.”

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

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

Meanwhile, Okhuijsen's tax arrears add up to around 50,000 euros, to be paid off in five years. "I had the vain hope that the term could be extended, but now 1,000 euros per month are returned to the tax authorities," he said. "And that puts pressure on my liquidity."

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

"A haircut for men now costs 28.50. We have gone up 4 to 5 percent," said Rob van Burken, who owns a barbershop in Maarssenbroek. "That is scary at the cash register, but actually it should have been 30 euros. But I can't pass on all my costs. We are located in Maarssenbroek and our customers have a small wallet."

The Ministry of Finance has observed that some bankruptcies seem inevitable. "That will probably be true, but it is forgotten that people see their dream shattered," said Jacco Vonhof, chairman of MKB Nederland, according to De Volkskrant.

The VVD recently adopted a motion to make it easier for companies in the catering sector to repay their coronavirus support debt. This is a good start, said Koninklijke Horeca Nederland (KHN) Director Dirk Beljaarts. "Small and medium-sized enterprises are the engine of the economy, but the engine sputters without extra support."