Additional Covid-19 measures for entrepreneurs - Wage subsidy
07 May 2020
On May 1st 2020, the Government of Aruba received approval for the wage subsidy from the Council of Ministers in the Netherlands. Below a summary of how the wage subsidy works based on the information made available by the SVb.
Eligible will be all entrepreneurs except for:
- Land Aruba;
- SVb and AZV;
- Educational institutions subsidized by Land Aruba;
- Institutions receiving financial aid from Land Aruba (e.g. via subsidies like Serlimar, Arubus N.V. and Post Aruba N.V.);
- Government participations (e.g. WEB, Elmar, Setar, APA and AAA) and Sui Generis institutions not aided financially by Land Aruba (except for ATA and ANSA);
- Institutions related to health care that mainly receive their income from AZV (e.g. hospital, doctors, specialists, botica’s, and so forth);
- Banks, life insurance companies and pension funds;
- Institutions tasked with care for the elderly;
- Private companies that have or are deemed to have a monopoly (monopoly is defined as having high entrance barriers for competitors);
- Agriculture businesses;
- Supermarkets and minimarkets;
- Funeral homes.
Some important conditions entrepreneurs should meet to be eligible for the wage subsidy:
- The decrease in expected turnover should be at least 25% and is determined by the formula gross revenue [month] 2020 divided by gross revenue [month] 2019;
- No lay-offs are allowed for socio-economic reasons;
- The entrepreneur should keep paying the employees at least 60% of their salaries. The remaining 40% should be agreed upon with the employee(s);
- The wage subsidy is calculated up to a maximum gross SVb salary of AWG 5,850 per month, which equals the maximum SVb wages for ZV/OV insurances;
- The entrepreneur should be registered at SVb and Departamento di Impuesto (and have a tax identification number) on March 15, 2020;
- The entrepreneur must be in compliance with its tax & social security payments. We understand this relates to the month over which the wage subsidy is requested, i.e. if a wage subsidy for May 2020 is requested, the wage tax and social security premiums return over May 2020 should be filed by June 15, 2020 and the amounts due should also be paid by that date;
- Each month, a new request will need to be filed at SVb;The entrepreneur will have to file an application for the month of May 2020 by May 12, 2020. To apply for the wage subsidy, the entrepreneur has to fill in the application form that is available at https://misvb.svbaruba.org/.
Wage subsidy calculation
The wage subsidy is calculated by applying the following formula:
(60% + 11.6%) x gross wages registered at SVb x expected decrease in turnover (with a minimum of 25%)
Below we have included two simplified examples, one where the employee earns less than the maximum SVb wage and one where the employee earns more than the SVb wage:
The wage subsidy will be paid as an advance by SVb, but will be settled based on the actual information (tax returns and other financial data) afterwards. It should be noted that the wage subsidy can be subject to change in the future depending on e.g. actual use.
It is unfortunately still not clear how the decline in turnover (that should exceed 25% to qualify) should be calculated. Will the BBO/BAVP/BAZV returns be used, or the monthly profit & loss statements? Hopefully guidelines will be published soon to avoid misunderstandings or repayment obligations in the future.
Another uncertainty is what happens if the entrepreneur and the employee reach an agreement on a reduction of hours worked and corresponding pay. If that new wage is registered at SVb, could that affect the wage subsidy in the coming months?
How can BDO assist?
Our team of financial, accounting and tax professionals are ready to assist you. You can reach our team via telephone (transferred to the mobiles of the team who will be working from home) or via e-mail:
The above is not intended to constitute, nor should it be relied upon, to replace any professional advice. The above is based on our understanding of the two measures and the information available. No action should be taken without first consulting your tax advisor.