In some cases this dividend payment was made at the very beginning of the coronavirus crisis, when the full economic impact of the pandemic could not be assessed and before any specific fiscal support measures were announced, without their actual content being known at the time. The following is an overview in this respect.
Advantages of prepayments
On 3 April 2020, the Federal Public Service Finance announced that, due to the liquidity problems encountered by companies as a result of the coronavirus crisis, it had been decided to increase the percentages of the benefits of the advance payments of thethird and fourth due dates, on 12 October and 21 December respectively.
The percentages of benefits from advance payments in the third and fourth quarters were increased (from 6% to 6.75% and from 4.5% to 5.25%). This support measure makes the deferral of advance payments less detrimental.
The measure is intended solely for businesses (and the self-employed) with liquidity problems. It consequently does not apply to companies that have purchased own shares or implemented a reduction in capital or are paying/have paid or are allocating/ have allocated dividends between 12 March 2020 and 31 December 2020. The prepayment rates remain at 6% and 4.5% respectively for companies that have paid dividends within this period.
This measure also applies to advance payments relating to a financial year ending between 30 September 2020 and 31 January 2021 inclusive. These advance payments must be completed at the latest by the 10th day of the 10th month of that financial year and the 20th day of the last month of that financial year.
When the impact and duration of the pandemic could be assessed with more accuracy, a number of additional measures were taken to improve the liquidity and solvency position of companies .
A general carry back system allows companies to include losses incurred in 2020 in the profits for 2019 (so-called 'carry back') for corporate (and personal) income tax. This results in a lower taxable base in relation to the 2019 income tax year, which defers the general tax burden in terms of timing.
Companies that have distributed dividends, purchased own shares, implemented a reduction in capital or any other reduction in equity between 12 March 2020 and the date of filing their corporate income tax return for the 2021 tax year are excluded from the early loss deduction scheme.
For the taxable periods associated with the 2022, 2023 and 2024 assessment years, companies have the option to exempt (part of) their taxable reserved profits by booking these profits to a (temporarily) exempt 'reconstruction reserve'.
The reconstruction reserve that can (temporarily) be exempted is limited to 20 million euro and is at most equal to the accounting operating loss that is determined on the closing date of the 2020 financial year. This means that companies that do not realise a negative operating result in 2020 cannot benefit from this measure.
Companies that have distributed dividends, purchased own shares, implemented a reduction in capital or any other reduction in equity between 12 March 2020 and the date of filing their corporate income tax return for the 2021 tax year are excluded from the reconstruction reserve scheme.
Exemption from withholding tax payment due to coronavirus
Measures were also implemented in support of employment. Exemption from payment of withholding tax on professional income gives employers support with wage costs.
Employers who availed themselves of the Temporary Unemployment scheme forat least one continuous month between 12 March 2020 and 31 May 2020 benefited from a partial exemption from payment of withholding tax on income earned in the months of June, July and August 2020 .
The exemption amounts to 50% of the positive difference between the withholding tax for the May reference period and the withholding tax for the months of June, July and August.
Again, this exemption from payment of withholding tax does not apply to companies that are purchasing/have purchased own shares or are implementing/have implemented a reduction in capital or are paying/have paid or allocating/have allocated dividends or liquidation reserves between 12 March 2020 and 31 December 2020, or to companies associated with a company based in a tax haven.
The government has taken a number of measures in response to the coronavirus crisis in order to improve the liquidity and solvency position of companies. As a result, companies that have paid dividends after the National Security Council of 12 March 2020 are missing out on a number of fiscal support measures. Although this is understandable from an economic point of view, for companies that paid dividends at the beginning of the crisis, not knowing what was in store for them and not being able to assess how badly the crisis would affect them, this kind of payment is undoubtedly a ‘poisoned chalice’.
 On Thursday 12 March, the National Security Council announced the federal phase of crisis management. Various measures were implemented in order to limit the spread of the virus.
 Law pertaining to fiscal provisions to promote the liquidity and solvency of companies to curb the economic consequences of the COVID-19 pandemic dated 23 June 2020 (Official Gazette 1 July 2020) and Law pertaining to various urgent fiscal provisions as a result of the COVID-19 pandemic (CORONA III) dated 15 July 2020 (Official Gazette 23 July 2020).
 Law stipulating various urgent fiscal provisions as a result of the COVID-19 pandemic (CORONA III) dated 15 July 2020 (Official Gazette 23 July 2020).