Coronavirus Crisis: Tax and Economic Relief Measures
As society as a whole battles the COVID-19 crisis in 2020, many businesses and taxpayers are facing financial losses. As a result, many business owners are concerned about their financial security. Fortunately, during an extended crisis such as the one we are currently experiencing, the government is providing support to business owners and taxpayers. A wide range of tax and economic relief measures are being granted in response to the COVID-19 pandemic. In a rapidly evolving crisis, it is difficult to keep track of everything. As tax advisors based in Düsseldorf and Oberhausen, we would therefore like to summarize in this article which relief measures are currently available.
What tax relief measures can taxpayers take advantage of?
The coronavirus, and especially the resulting restrictions, have led to many businesses and entrepreneurs facing significant losses. The government is striving to help businesses navigate the crisis as best as possible. To this end, federal and state tax authorities have made a wide range of tax relief measures available. These relief measures are granted only to taxpayers who are actually affected by the coronavirus crisis. Below, we will explain the most important relief measures.
- Deferral
Taxpayers may apply for a deferral for taxes such as income tax, corporate income tax, and sales tax. This applies to all taxes due by December 31, 2020. The deferral is generally granted interest-free. The taxpayer must submit an application and explain the relevant circumstances. Applications for a deferral of taxes due after December 31, 2020, must be specifically justified. It is also possible to apply for a deferral of trade tax. However, this should only be requested from the relevant local authorities.
- Adjustment of Advance Payments
Upon request, income tax and corporate tax can be adjusted. For example, advance payments may be reduced for a certain period. Such an adjustment is also possible for trade tax. In this case, the tax office reduces the tax assessment amount for advance payments. The respective municipality is then bound by the changes!
- Deferral of enforcement
Tax offices grant protection from enforcement. Upon request, all enforcement measures will be suspended until December 31, 2020. In addition, late payment penalties will be waived for the period from March 19, 2020, to December 31, 2020.
Note: The relief measures mentioned are only granted if there is “direct impact.” This does not mean that you must have been infected with the virus! Rather, there must be economic damage caused by the current crisis. Such damage would result, for example, if orders cannot be fulfilled or no new ones are coming in. The damage does not have to be proven in detail. However, it should be clear why the damage occurred.
What economic support is available during the coronavirus crisis?
In addition to tax relief, many businesses also need financial assistance. To mitigate the crisis, the Bundestag has therefore put together a comprehensive aid package. Below, we provide an overview of the financial support available.
- Emergency aid for small businesses
Small businesses and startups have been particularly hard hit by the crisis. They often lack risk reserves. After just a few days, many business owners find themselves fearing for their businesses. For this reason, economic assistance programs are available specifically for the self-employed and small business owners. The measures apply to all sectors of the economy. To ensure liquidity, small businesses will receive a one-time payment covering three months.
- Businesses with up to five employees receive up to €9,000
- Companies with up to ten employees will receive up to €15,000
Provided there is no overcompensation, the one-time payments do not have to be repaid! The one-time payments are intended to secure the economic viability of business owners. Ongoing operating costs, such as rent or lease payments, are intended to be covered by the payment. Applications for emergency aid can be submitted to the relevant municipal authorities until May 31, 2020.
In addition to emergency aid, business owners naturally also have the option of claiming other social benefits, such as Unemployment Benefit II or the Child Supplement. For more information on this, please contact the relevant authority.
- Further Liquidity Assistance for Businesses
The aforementioned emergency aid is merely short-term assistance and is not always sufficient. Fortunately, there is additional liquidity support available for businesses. A new loan program has been established for this purpose. The KfW Special Program launched on March 23, 2020. The special program is available to small, medium-sized, and large businesses. Low interest rates and a simplified risk assessment are intended to provide relief. Loans of up to 10 million euros can be granted. Applications for a special loan are submitted to the business’s regular bank.
- Changes to Short-Time Work Benefits
Many companies are having difficulty paying their employees due to the crisis. Short-time work benefits (KUG) are intended to provide relief. In response to the coronavirus crisis, a wide range of measures have been adopted to simplify access to short-time work benefits. Short-time work can be registered with the Federal Employment Agency. This can be done by mail or online. In this article, we do not intend to cover all changes to the KUG. However, it is important that business owners and employees are aware of the options available. Further information can be found on the Federal Employment Agency’s website.
Tax Support During the Coronavirus Crisis
We know that many business owners are overwhelmed by questions and concerns during the current crisis. As tax advisors in Düsseldorf and Oberhausen, we would therefore like to assist taxpayers with questions regarding tax matters during and after the crisis. Our team is working hard to guide businesses through the crisis as best as possible. Many questions can also be answered by phone or email.
We hope that you and your business will navigate these turbulent times successfully. Stay healthy and stay positive!
Your team at Trimborn . Partner
