Recently, the Ministry of Social Affairs and Employment (hereinafter: SZW) has published on its website its position on which companies, within a group, the so-called bonus and dividend prohibition applies, as well as the prohibition of share buy back schemes. Such prohibitions generally apply to applicants for NOW and/or (nonapplicant) group companies. This in response to questions from the The Royal Netherlands Institute of Chartered Accountants (hereinafter: NBA).

The NBA has published the possible consequences of the SZW’s point of view in an overview. This overview is included as an attachment to this newsletter. The attachment also includes two examples.

Point of view SZW

Briefly stated, the recent position of the SZW implies that if a company files a request for NOW, and within this request the company makes use of the option to calculate the decrease of turnover on an  operating company level, no bonus and/or dividend may be paid over 2020. This is also applicable for the repurchase of own shares and/or other actions which can be equated with repurchasing own shares.  Therefore, if somewhere within the group dividend and/or bonus has been paid, this immediately leads to rejection of the NOW allowance and the obligation to repay the already received amounts. It is remarkable that the position of SZW also pertains to the aforementioned prohibited acts by group companies who have not applied for NOW themselves. Its position even pertains to group companies based outside the Netherlands and are not a NOW applicant.

We quote a part of SZW’s position:

“The entire group of companies must then comply with this prohibition. Even by business units that do not apply themselves and the business units that do not have a social security wage in the Netherlands. The background of this is that when there is one operating company that needs NOW while the rest of the group is still economically doing well, the group itself should bear losses of that operating company (s) first and therefore from a social responsibility perspective does not distribute bonuses and/or dividends”      

The question is whether SZW’s position (as responsible executer of the NOW regulation) holds under the statutory NOW regulations. These regulations seem to offer some room for another, less stringent, interpretation. However as this is currently the SZW’s point of view, it must be taken into account with every NOW application.

And now?

If you have filed a request for NOW and you are thinking (within the group) about paying bonusses and/or dividend over 2020, please contact immediately your RSM advisor before you formalize the decision.

This applies in a general terms if you have used the operating company approach, but also in case  you have used or will use the NOW 2.0 and /or NOW 3.0 under the main rule (group arrangement).

More information?

Do you have questions or would you like to know the possible consequences of the above in view of your situation? Please contact your RSM advisor or send an e-mail to one of our NOW experts within the coronavirus crisisteam: [email protected]

Download 'New publication of the Ministry about bonus and dividend prohibition' in pdf.

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