Companies likely received hundreds of millions of euros in coronavirus support unjustly at the start of the coronavirus pandemic. This is the conclusion reached by employees of the Netherlands Bureau for Economic Policy Analysis (CPB), according to an article published on Thursday in economics journal ESB.
The CPB employees have indications that many entrepreneurs aimed to have their revenue loss just above the threshold of 20 percent, which entitled them to so-called NOW support.
That scheme meant that companies could receive money from the government to continue paying wages. The measure was introduced at the beginning of the pandemic to prevent mass layoffs at companies that had a large loss of revenue due to the lockdown.
In their research, the CPB employees used a dataset with a select group of companies that received this wage subsidy in the first months of the pandemic. A comparison was made with revenue figures in the VAT returns of those companies in the same period.
It appears that almost 40 percent of the surveyed companies reported a higher revenue loss to the UWV – which granted the NOW subsidy – than the loss in the VAT returns. The higher the reported loss, the higher the support that companies received.
The support that these ‘over-reporting’ companies received was therefore on average 8,000 euros too high. If this is exemplary for all companies that have received NOW support, the total subsidy amount over those first months would have been 740 million euros too high.
‘Companies may have manipulated revenue’
According to the researchers, there are several possible explanations for the differences between the reported revenue losses and the losses from the VAT returns. “Companies may have manipulated their revenue, legally or illegally,” they state. Deviations could also have arisen due to, for example, differences in accounting rules, human errors, or fraud.
The authors add that the possibly excessive support paid out does not mean that the measure did not work. After all, the support was intended to help companies quickly. “Stricter restrictions to prevent abuse could have complicated this and may have led to greater implementation problems.”