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Coronavirus: Companies in Germany Can Count on These Tax Breaks

Tax breaks for German companiesThe coronavirus continues to cause financial distress in the German economy. Managing directors and board members are obliged to use all reasonable possibilities to reduce operating costs and to inform themselves about financing possibilities.

As a tax office, we would like to provide information at this point about all currently planned tax relief for companies.

Deferments are made easier

The Federal Government has decided to facilitate the granting of deferrals. Tax payments due are to be postponed with no interest. As of now, the tax authorities can defer taxes if the collection would cause considerable difficulty. The tax authorities are instructed not to impose strict requirements in this regard. This will support the liquidity of companies by deferring the date of tax payment.

Enforcement measures and late payment surcharges are suspended

Enforcement measures and late payment penalties will be foregone until Decembe 31, 2020. However, this only applies as long as the tax debtor is directly affected by the effects of the coronavirus.

Advance payments will be more easily adjusted

Advance payments can now be adjusted more easily. This applies initially to income and corporation tax. As soon as it is clear that a company’s income is likely to be lower in the current year, the tax prepayments are quickly and easily reduced. Unfortunately, it is currently still unclear whether this also applies to trade tax.

Relief for advance turnover tax returns and wage tax registration

The Federal Ministry of Finance and the tax authorities are also currently planning further measures. For example, quick solutions are planned for the submission of advance VAT returns and the submission of wage tax returns. The tax offices have been called upon to use their discretionary and decision-making powers in favor of the companies concerned.

Deferral of German social security contributions

It is also possible to defer social security contributions. This is regulated in the Social Security Code (§ 76 Para. 2 Sentence 1 No. 1 SGB IV). In essence, claims to the total social security contribution may be deferred if immediate collection would entail significant hardship for the company and the claim is not jeopardized by the deferment.

Significant hardship is assumed to exist for a company if it is temporarily in serious financial difficulties due to unfavorable economic circumstances or if the company would get into serious payment difficulties if the social security contributions due were to be collected immediately. The current corona crisis is causing such «significant hardship” in many places.

No deferral for long-term difficulties

However, a deferral may not be granted if this would jeopardize the claim. This is the case if the payment difficulties are not only temporary or if over-indebtedness obviously cannot be reduced in the near future.

The deferral is subject to a corresponding application by the company, whereby the existence of the above-mentioned conditions must be proven. The health insurance company as the competent collecting agency decides on the deferral application at its own discretion.

WINHELLER supports companies in all applications for deferral and advance payments

Our experienced tax advisors will be happy to assist you with advice and support. As a tax office, we provide assistance with

  • legally compliant completion of deferral requests,
  • Application for a reduction of the advance payment of income and corporation tax,
  • Communication process with the responsible tax offices.

Are you interested in applying for a German tax deferral or reduction of advance payments? Would you like to check if you meet all requirements? Our tax team is at your disposal. Please feel free to contact us!

Continue reading:
Full coverage of our corona articles
Coronavirus: Short-term Financial Assistance for Companies in Germany

Stefan Winheller

Attorney Stefan Winheller has specialized in tax law for about 20 years, especially in the areas of cryptocurrencies, foundations/nonprofits and international tax law.

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