The Dutch government may miss out on some €6 billion in tax income in the coming years, as companies which asked for deferred payments because of coronavirus go bust.

In total, 400,000 firms asked for a delay in paying corporate taxes and while some have already repaid what they owe, nearly €21 billion is still outstanding, tax minister Marnix van Rij has told MPs.

Some 282,000 firms still have outstanding tax debts and Van Rij says he expects between 25% and 33% will not be able to pay because of their weak financial position.

‘The total includes companies which were not doing well before the coronavirus crisis,’ he said. Companies must start repayments by October and have five years to clear their debt.

However, finance ministry officials will only have a good idea how big the problem is once that deadline has been reached, Van Rij said.

Warning

The Dutch central bank said in March that while government support measures were effective in supporting hard-hit industries in the first year of the coronavirus crisis, they also reduced the incentive for businesses to adapt to change.

In addition, the bank says, there is also the possibility that the support measures have allowed many underperforming businesses to stay afloat, whereas in an economy with ‘normal’ business dynamics, they would have gone bankrupt.

The financial aid package also led the government’s macro-economic advisory unit CPB to warn last year that government support was keeping companies afloat which would have gone bust anyway.