The number of bankruptcies in the Netherlands during the corona crisis so far is lower than during the financial crisis that started in 2008 , but also lower than in recent years. Indeed, the number of companies that filed for bankruptcy has not been as low as in 2020 in years. A total of 2,703 companies filed for bankruptcy, 16 per cent less than in 2019; the lowest number since 1991.
When the corona pandemic and thus the crisis began last spring, 0.17 per cent of Dutch companies went bankrupt. In 2008, the first year of the financial crisis, that number was 0.57 per cent; considerably higher , in other words.
Large differences compared to 2008
The reason why companies are less affected by the current crisis than that of 2008 lies mainly in the fact that companies have taken full advantage of the flexibilisation of the labour market. This allowed them to scale down staff in 2020 more easily and manage their costs better. The loss of income for businesses is also lower than during the 2008 financial crisis. Moreover, many entrepreneurs shifted their strategy and started selling more online. Accordingly, online sales increased by 55 per cent during the corona crisis. What is also striking is that not every industry was hit hard during the corona crisis. The hardest hit were within hospitality, retail, events and department stores. Generous support and quick intervention by the government ensured that a smaller group of businesses got into trouble than in 2008.
Tsunami of bankruptcies… or not?
That the number of bankruptcies remainedso low during the corona crisis entrepreneurial Holland and the government could not have predicted. But can you predict the number of bankruptcies when there is a crisis? Some studies suggest that the number of bankruptcies in the Netherlands in the next 12 months will increase by 44 per cent compared to last year.
There are also economists who think the number of bankruptcies will rise, but they have become more positive about the ferocity of that wave. The economy seems to be picking up and debt repayment schemes have been widened. Entrepreneurs will not have to start repaying tax debts until 1 October 2022 . They will now have five years to do so instead of three years.
Stay of execution
Many companies applied for and received tax deferrals. At the end of last year , the total tax debt already stood at EUR 13.2 billion. But delay is not a reprieve: eventually they will have to catch up. Not every company will be able to repay the tax debt pay back and as a result would have to close their doors. Entrepreneurs who manage to keep their heads above water , will suffer the effects of the corona crisis for a long time to come. It will be years before the ‘old normal’ returns to them too. Linkedin Envelope
