Germany: COVID-19 Update by PKS Stahl & Treucontrol Treuhand

Posted on the 20th March 2020

Our German member firms PKS Stahl & Treucontrol Treuhand have provided the following information with regards to the German Governments initial response to assist German businesses in the wake of the COVID-19 outbreak.

Tax deferral
Income tax, corporation tax and turnover tax can be deferred and advance payments of trade tax can be set to zero.

The following applies until a possible uniform federal regulation is in place: The tax offices may waive the usual deferral interest of 0.5 percent per month in part or in full in specific individual cases if it is credibly demonstrated that the lack of liquidity is due to the corona epidemic. Please speak to your local tax office about these possibilities.

Enforcement measures (e.g. account seizures) or late payment surcharges will be waived until 31.12.2020 as long as the debtor of a tax payment due is directly affected by the effects of the coronavirus.

Short-time work
If, as a result of the coronavirus, a temporary reduction in normal working hours becomes necessary, affected companies can apply for short-time working compensation from their employment agency.

In addition, extended short-time working regulations will be implemented, as demanded by Bavaria. In detail, the following facilitations are to be made:

– The requirement that at least one-third of the workforce be affected by the loss of working hours will be lowered to a threshold of 10 per cent.

– Social security contributions will be paid in full by the Federal Employment Agency.

– There will be a partial or complete waiver of the accumulation of negative working time balances.

– Temporary employees can also receive short-time working benefits.

– As already decided by the Federal Government on January 29, 2020, an extension of the short-time working allowance from 12 to 24 months will be made possible at the same time.

Financial support offers
Affected companies can use the loan products of LfA Förderbank Bayern, the loan products of KfW and various guarantee programmes to cope with the economic consequences of coronavirus. The Free State of Bavaria is increasing the number of counter-guarantees to ensure that LfA Förderbank Bayern can assume additional risks.

Objective of the financial assistance: The primary objective is to provide additional liquidity to enable companies to bridge the difficult period and stabilise.

Financing prerequisite: A prerequisite for the support of the companies is a fundamentally viable business model and the willingness of the house banks to integrate the subsequent offers into the overall financing.

Hardship funds Corona
The Bavarian State Government will set up an emergency aid programme aimed at companies that have been particularly damaged by the corona crisis.

Eligible applicants: Applications may be submitted by small and medium-sized commercial enterprises each with fewer than 250 employees, either with an annual turnover of no more than 50 million euros or an annual balance sheet total of no more than 43 million euros and with a permanent establishment in Bavaria.

Amount of emergency aid: The emergency aid is graduated according to the size of the company and amounts to between EUR 5,000 and EUR 30,000.

Insolvency protection
In order to protect companies that get into financial difficulties as a result of the corona epidemic and wish to take advantage of liquidity assistance, the obligation to file for insolvency is to be suspended until 30 September 2020. The Federal Ministry of Justice and Consumer Protection is preparing a corresponding regulation.