The Bottom Line
- Strict Start Date Rules: Companies legally established before January 1, 2019, cannot claim “starter” status for Dutch NOW-3 wage subsidies, even if they were dormant or had minimal “try-out” activity before a full operational launch in 2020.
- Significant Repayment Risk: Applying for government aid based on an assumed eligibility for special rules is risky. This company must now repay the full €148,257 advance it received after its subsidy was retroactively set to zero.
- Proportionality Arguments Face High Hurdles: Claims of financial hardship or fulfilling the spirit of the law (e.g., retaining jobs) are unlikely to prevent a clawback if the technical requirements of the regulation were not met. The court expects businesses to have understood the rules upon application.
The Details
This case centered on a company that received a significant advance of €148,257 under the Netherlands’ NOW-3 COVID-19 wage subsidy program. The funds were later clawed back in full after the government determined the company did not experience the required 20% revenue drop. The core of the dispute was the “reference period” used to calculate this drop. The company argued it should be treated as a “starter” business—one that began operations after January 1, 2019—which would have allowed for a more favorable reference period. The government, however, applied the standard rule, using the 2019 calendar year as the benchmark, a period in which the company had no revenue, making it impossible to demonstrate a qualifying loss.
The Central Appeals Tribunal, the highest court in this matter, decisively sided with the government. The court’s reasoning hinged on a strict interpretation of the facts. Although the company argued its “real” business operations only began with the opening of a new location in June 2020, it had been legally incorporated in 2016 and generated some revenue during a “try-out” phase that year. The court ruled that this early activity, however limited, established the company’s start date as being before the January 1, 2019 cut-off. A subsequent period of dormancy did not reset the clock. This judgment clarifies that for the purpose of the NOW-3 regulation, the legal and factual start of any business activity is what matters, not a later “official” launch or restart.
The company’s final argument—that the full repayment was disproportionate to the aims of the subsidy scheme—also failed. The court emphasized that the NOW-3 rules were published before the company submitted its applications. By applying, the company was deemed to have accepted the risk that its specific situation might not qualify under the starter provision. The court concluded that the company’s claim of future financial hardship was not sufficiently substantiated to outweigh the public interest in the correct allocation and recovery of state funds. This serves as a stark reminder for business leaders that when engaging with government support schemes, the technical letter of the law is paramount.
Source
Centrale Raad van Beroep
