Financial Clarity for Creatives

Well 2020 is the craziest year ever for most people. And it is still not over. It seems that we all have to live with COVID 19 for some time. Or, at least until the scientists produce a working vaccine, which still seems to be on the horizon. Many of us have had to drastically change the way we live and work. If you are working for the government or a large corporate, there seems to be a safety net. Not all people are that lucky. Many of the independents, the ZZZpers, performers, artists, creatives have taken a big shock to their finances in recent months. But even in normal times, the aforementioned segments of the working population need help with keeping their finances in healthy order. Here we address that issue with the help of Melvin from NAHV in Amsterdam. For decades they have provided financial clarity for creatives.

There is quite a large community of expat small business owners, creatives, independents and ZZZpers in Amsterdam. I thought it would be a good idea to look at the financial issues we are facing at the moment. With that in mind, I got in touch with Melvin van Jaarsveld, a partner at NAHV, who are tax and financial advisers for small businesses. For over 25 years, NAHV has been helping Amsterdam area small business people with their financial clarity. They are particularly accustomed to helping creatives, independents, people in the cultural sector and the liberals arts. I thought it is a good time to get some insights from Melvin that would help people that need to better understand what is happening.

Melvin, thanks for taking the time from your schedule to answer my questions. I am sure this will be massively helpful for a large number of local expats that are small business owners. So here we go:

Q1 Please tell us more about the updated measures to help small businesses?

Right now, a number of 2.0 measures are in effect and are easy to apply for. Measures like the TOGS (a onetime compensation of 4.000 euros) or the TOZO (monthly social benefit for three months). These are the two most applied for packages at the moment. The TOGS is now titled the TVL in case people missed that. And the TOZO is in its 2.0 version too as a monthly extra benefit. When you have employees, the NOW measure can help to compensate loss of revenues verses having to pay your staff.

Q2 How will the current crisis effect taxation for small business owners ?

Nothing much changes to be honest, although one item is interesting; to be able to use the self employment deduction as a small business, you must prove that you have spent more than 1.225 working for your business. The government will go easy on self employed who may not have been able to work those full 1.225 hours. In the period of March 1^st to May 31^st, the tax office will assume a self employed has spent at least 24 hours per week working on his or her business, period. So within that period it does not matter whether or not you actually were able to spend those hours.

Q3 In which ways can NAHV help local expat business owners?

We can help getting the financial picture clear for short- and longer term. We can help with the application for the different measures, although we do suggest to do most of the application yourself. On a tax level, we can help lowering any preliminary assessments and take a good look at the Toeslagen (net compensations such as Daycare compensation or Healthcare compensation). We see that during this crisis people naturally tend to focus on the cash flow and look at their VAT and Income- or Company tax obligations, but forget about the Toeslagen.

Q4 How will healthcare costs be affected?

Since 1 May, healthcare providers can receive a continuity contribution in support. This is so they can continue to pay the fixed costs. Measures have been put in place to avoid blockages with medical costs. On their side, the Health insurers will also accelerate the payment of outstanding claims. But, to be honest, we have no idea on how this crisis will affect healthcare costs, but we can only assume that the monthly premium for your medical insurance will increase, but that is something for 2021. We’ll only know for sure around November or December of this year when the insurance companies present their new premiums.

Q5 What is your advice to companies to prepare for future crises of this nature, should there be a second wave?

What we have seen most is that the smaller business owners do not buffer. They tend to spend everything they have after the tax office is paid. This worries us and needs to change. With every invoice that one gets paid, you should at least set aside the VAT that you charged since this is not your money. You are just the VAT cashier for the government. From each net amount remaining you should set aside anything between 35% and 50% at least. Firstly, this is to cover taxes and secondly, to build up a buffer for when income drops. In my opinion, a self employed should be able to at least have a buffer of 6 months to a year. This protects against disasters like corona, if no income is incoming. Then they need to think about unemployment due to long term illness. That can happen. And then there is the big one lots of people never like to think about : Pensions. This is one of the most important ones. The corona crisis shows us how little self employed are actually prepared for long term and short term crisis. That is where NAHV can help.

Melvin, thank you for your time and these insights during this busy time for you. I hope this information about how NAHV provide financial clarity for creatives.