To support companies and employees during the Corona pandemic, a wide range of tax-related relief measures has been introduced. On 6 May, the Federal Cabinet launched a further package with the Corona Tax Assistance Act. Among other things, it provides for a temporary reduction of the VAT rate on food to 7 %, to help restaurants and similar businesses get through the crisis.
All citizens and businesses should come through this crisis as well as possible. Tax policy also contributes to stabilising those parties that are particularly affected economically and helping them recover quickly after the crisis.
Tax Relief for Companies – Overview
To help companies improve their liquidity position during the Corona pandemic, a number of tax relief measures have been introduced. The Federal Ministry of Finance has coordinated a series of specific tax facilitations with the highest tax authorities of the federal states.
New: Additional support for the hospitality sector: uniform VAT rate of 7 % (temporary)
Restaurants and similar businesses have been particularly affected by the Corona crisis. Once the current restrictions are eased and restaurants, cafés and other hospitality businesses can resume operations, they should be able to get back on their feet quickly. For this reason, VAT on food served in the hospitality sector will be reduced to the reduced rate of 7 % from 1 July 2020 until 30 June 2021. It is important that this measure is time-limited, as it is intended as a boost for the period after the crisis, so that hospitality businesses can quickly return to operating under their own steam. The corresponding statutory provision is part of the Corona Tax Assistance Act adopted by the Federal Cabinet on 6 May.
New: Bonus payments to employees: EUR 1,500 tax-free in 2020
Many employees work every day to provide people in Germany with essential supplies and services. Since the outbreak of the Corona pandemic, they have been doing so under difficult conditions – whether as nursing staff, at supermarket checkouts, as doctors in hospitals or behind the wheel of a lorry. Numerous employers have therefore announced their intention to pay their employees a bonus.
Employers can now pay their employees subsidies and support of up to EUR 1,500 tax-free in 2020, either in cash or as benefits in kind. The prerequisite is that such subsidies and support are granted in addition to the wages already owed.
Frequently asked questions
Frequently asked questions
What is the VAT rate on food in the hospitality sector from 1 July 2020?
From 1 July 2020 to 30 June 2021, VAT on food served in the hospitality sector is temporarily reduced to the lower rate of 7%. The measure was introduced by the Corona-Steuerhilfegesetz (Corona Tax Assistance Act) of 6 May 2020 and is intended to provide economic relief to restaurants, cafés and similar businesses following the crisis. Beverages are not covered by this rule.
Up to what amount can coronavirus bonus payments to employees be made tax-free in 2020?
In 2020, employers can pay their employees subsidies and support of up to EUR 1,500 tax-free, either in cash or as benefits in kind. The condition is that the payment is made in addition to the regular wages already owed. The tax exemption applies to all industries, not only to systemically relevant professions.
What is the requirement for the tax exemption of the 1,500 EUR Corona special payment?
The special payment must be granted in addition to the wages already owed. Converting previously agreed salary or wage components into a tax-free Corona allowance is not permitted. The benefit may be provided as a cash payment or as a benefit in kind.
What does the Corona Tax Relief Act of 6 May 2020 regulate?
The Corona Tax Relief Act, adopted by the Federal Cabinet on 6 May 2020, comprises several tax relief measures. Key elements include the temporary reduction of the VAT rate for restaurant meals to 7%, along with flanking provisions designed to address the economic impact of the Corona pandemic on businesses and employees.
How long does the reduced VAT rate of 7% on restaurant meals apply?
The reduced VAT rate of 7% on food served in the restaurant sector is limited to the period from 1 July 2020 to 30 June 2021. It is intended as start-up support for the post-crisis period, enabling restaurant businesses to quickly return to operating on their own again.