<small>Coronavirus Crisis: </small><br/>The Current Economic Stimulus Package at a Glance

New: Bridging Assistance

On 3 June 2020, the Coalition Committee agreed on a programme for bridging assistance. The bridging assistance is granted for the months of June to August. It applies across all sectors, while taking appropriate account of the particular circumstances of especially affected sectors such as the hotel and restaurant industry, caterers, pubs, clubs and bars, accommodation facilities operated as social enterprises such as youth hostels, school country homes, providers of youth facilities for international youth exchange, facilities for assistance to people with disabilities, travel agencies, professional sports clubs in lower leagues, showmen, companies in event logistics, and companies in the field of trade fair events. Eligible to apply are companies whose turnover declined by at least 60% in April and May 2020 compared with April and May 2019 due to the coronavirus, and whose turnover decline continues at a level of at least 50% in the months of June to August 2020. Corona – Information for Steuerberater (German Certified Tax Advisors) and their clients (as of 4 June 2020) 47. Note: For companies founded after April 2019, the months of November and December 2019 are to be used as the reference period. Up to 50% of fixed operating costs are reimbursed in the case of a turnover decline of at least 50% compared with the same month of the previous year. In the case of a turnover decline of more than 70%, up to 80% of fixed operating costs can be reimbursed. The maximum reimbursement amount is EUR 150,000 for three months. For companies with up to five employees, the reimbursement amount should only exceed EUR 9,000, and for companies with up to 10 employees EUR 15,000, in justified exceptional cases. Claimed turnover declines and fixed operating costs must be reviewed and confirmed in a suitable manner by a Steuerberater or Wirtschaftsprüfer (German Statutory Auditor). Overpayments must be reimbursed. The application deadlines end no later than 31 August 2020 and the disbursement deadlines on 30 November 2020.

Source: Result of the Coalition Committee of 3 June 2020

New: Economic Stimulus Programme

On 3 June 2020, the Coalition Committee agreed on an economic stimulus and crisis management package. To strengthen the economy, the following points in particular were adopted:

• From 1 July 2020 until the end of the year, the VAT rate will be reduced from 19% to 16%, and the reduced rate from 7% to 5%.
• Social security contributions will be stabilised at a maximum of 40% as part of a "Social Guarantee 2021".
• The EEG levy (renewable energy surcharge) will be gradually reduced so that it stands at 6.5 ct/kWh in 2021 and 6.0 ct/kWh in 2022.
• The due date for import VAT will be postponed to the 26th of the following month.
• The tax loss carry-back will be extended by law for the years 2020 and 2021 to a maximum of EUR 5 million (or EUR 10 million in the case of joint assessment).
• Movable fixed assets may be depreciated on a declining-balance basis in 2020 and 2021 (with a factor of 2.5 compared to the currently applicable depreciation and a maximum of 25% p.a.).
• Corporate income tax law will be modernised: partnerships will be given an option model for corporate income tax. The reduction factor for income from business operations will be raised to four times the trade tax base amount.
• The opportunities for employee participation schemes will be improved. Corona – Information for Steuerberater and their clients (as of 4 June 2020) 59
• Restarting after insolvency will be facilitated. Among other things, the debt relief procedure for natural persons is to be shortened to three years on a temporary basis.
• Public procurement law is to be temporarily simplified.

In addition, economic and social hardships will be cushioned, among other things, by the following measures:

• In September, a regulation for the receipt of short-time work benefits (Kurzarbeitergeld) from 1 January 2021 will be presented.
• To safeguard the existence of SMEs, a programme of bridging assistance is being launched for coronavirus-related loss of turnover. (cf. keyword: Bridging Assistance)
• Simplified access to basic income support for jobseekers is extended until 30 September 2020.
• For non-profit organisations, the federal government is launching a special loan programme through KfW for the years 2020 and 2021.
• A programme to mitigate the effects of the coronavirus pandemic in the cultural sector will be launched.
• The preservation and sustainable management of forests will be supported; modern timber industry promoted. The agreement also provides for the strengthening of the federal states and municipalities. Current trade tax losses are to be compensated. In addition, young people and families are to be supported through the following measures, among others:
• EUR 300 child bonus per child for every child entitled to child benefit.
• The relief amount for single parents will be raised to EUR 4,000 on a two-year basis.
• A premium system is to strengthen the supply of training places at SMEs.

In addition, the coalition agreed on future investments and investments in climate technologies. Among other things, the following measures have been adopted:

• The funding rate of the tax research allowance will be granted retroactively to 1 January 2020 and on a temporary basis until 31 December 2025 on an assessment basis of up to EUR 4 million per company.
• In applied research, the co-financing obligations for companies that are particularly affected economically by the coronavirus crisis will be reduced. Large non-university research organisations will be supported by a fund.
• Project-based research (including the SINTEG programme and energy transition real-world laboratories) will be expanded.
• The Climate Protection Programme 2030 is to be continued and accelerated, the structural change in the automotive industry supported, and future-proof value chains established.

With various funding programmes and further investment incentives, mobility is to be strengthened and greater sustainability and climate protection ensured.

The federal government intends to present a "National Hydrogen Strategy" in the short term. In implementing the hydrogen strategy, Germany will build foreign trade partnerships with countries where hydrogen can be efficiently produced due to their geographical location.

• Renewable energies will be further promoted.
• Quantum technology will be supported.
• The fibre-optic broadband expansion will be driven forward and a nationwide 5G network expanded.

Furthermore, the coalition factions have agreed on various measures to strengthen the healthcare system and to improve protection against pandemics.

Start-ups

The EUR 2 billion package of measures for start-ups announced on 1 April 2020 is now in place. The EUR 2 billion package of measures is intended to specifically address start-ups and small and medium-sized enterprises with a sustainable business model. The package of measures is based on two pillars: Pillar 1 – the so-called Corona Matching Facility: First, additional public funds are made available to venture capital funds via the new Corona Matching Facility so that investors can also finance highly innovative and promising start-ups during the coronavirus crisis. This is intended to ensure that young companies can continue their growth course even in the Corona – Information for Steuerberater and their clients (as of 4 June 2020) 48 current phase. Through the Corona Matching Facility, existing cooperations with public partners, such as KfW Capital and the European Investment Fund, are used to make public funds quickly available to start-ups via venture capital funds. Pillar 2 for start-ups and small SMEs (without access to Pillar 1): For start-ups and small SMEs that have no access via the Corona Matching Facility, further avenues for securing their financing are being opened up. To this end, there will be close cooperation with the federal states, including via cooperation with state-owned development companies. Source: (BMF, press release of 30 April 2020)

Taxes: flat-rate loss carry-back from 2020 to 2019 possible

Taxpayers directly and not insignificantly negatively affected by the coronavirus crisis who have not yet been assessed for the 2019 assessment period may apply for a reduction of the prepayments set for 2019 on the basis of a flat-rate loss carry-back. The use of the flat-rate loss carry-back from 2020 to retroactively reduce the prepayments for 2019 is only possible upon application. The application must be submitted in writing or electronically (e.g. via ELSTER) to the tax office responsible for assessing income tax or corporate income tax. The application for reduction of prepayments in the flat-rate procedure may be submitted together with the application for reduction of prepayments for 2020. The flat-rate loss carry-back from 2020 may be claimed by taxpayers who generate profit income or income from letting and leasing. The flat-rate loss carry-back from 2020 amounts to 15 percent of the balance of the relevant profit income and/or income from letting and leasing on which the assessment of the prepayments for 2019 was based. It is to be deducted up to an amount of EUR 1,000,000, or in the case of joint assessment, EUR 2,000,000 (§ 10d Abs. 1 Satz 1 EStG). The prepayments for 2019 are to be recalculated and reassessed taking into account the flat-rate loss carry-back from 2020. An amendment to the assessment of prepayments leads to a refund claim. For further details and a summary, please refer to the BMF letter of 24 April 2020.

Assistance for Students

Students have the option of applying for a loan from the Kreditanstalt für Wiederaufbau (KfW) that is interest-free in the initial phase – on the basis of the long-established KfW student loan. This applies both to new applicants and to those who already have ongoing loans disbursed by March 2021. The interest-free loan is up to EUR 650 per month and can be applied for online with minimal bureaucracy. For the particularly affected group of foreign students, the student loan is to be opened up from July 2020 to March 2021. In addition, the Federal Ministry of Education and Research is providing EUR 100 million to the German National Association for Student Affairs for the emergency aid funds of the local student services organisations. Source: Federal Ministry of Education and Research, press release of 30 April 2020 Corona – Information for Steuerberater and their clients (as of 4 June 2020) 49. Furthermore, on 15 May 2020, the Bundesrat approved the "Act on the Support of Science and Students" adopted by the Bundestag on 7 May 2020: Under this Act, the contractual maximum fixed-term limits for academic and artistic staff in a qualification phase may be extended by the period during which there are pandemic-related restrictions on academic operations. Corresponding employment relationships can be extended by up to six months – provided they exist between 1 March and 30 September 2020. The Act contains improvements for BAföG recipients: They are aimed specifically at students who are engaged in combating the coronavirus crisis: If they work in a sector or in an occupation that contributes to containing the pandemic, they can supplement their BAföG rate without deductions from the income for this activity. The regulations come into force retroactively as of 1 March 2020. Source: German Bundestag, brief information of 7 May 2020, Bundesrat Kompakt of 15 May 2020, Act on the Support of Science and Students due to the COVID-19 Pandemic

Special Regulations for Cross-Border Commuters

When employees, as recommended by the health authorities, increasingly work from their home office, this can also trigger tax consequences, for example when, under the underlying provisions of the double taxation agreement between the two states concerned, exceeding a certain number of days on which the actual state of activity is not visited leads to a partial change in the right of taxation. The Federal Ministry of Finance aims to agree bilateral special regulations to prevent the effect associated with an unintended change in the right of taxation. Please refer to the announcement of the Federal Ministry of Finance of 3 April 2020. By letter of 6 April 2020, the BMF commented on the taxation of cross-border commuters to Luxembourg. The letter can be found here. By letter of 8 April 2020, the BMF announced a corresponding consultation agreement between the Federal Republic of Germany and the Netherlands. By letter of 16 April 2020, the BMF announced a corresponding consultation agreement between the Federal Republic of Germany and the Republic of Austria. Corona – Information for Steuerberater and their clients (as of 4 June 2020) 51. By letter of 7 May 2020, the BMF announced a corresponding consultation agreement between the Federal Republic of Germany and the Kingdom of Belgium. This was extended until 30 June 2020 by BMF letter of 26 May 2020. By letter of 25 May 2020, the BMF announced a corresponding consultation agreement between the Federal Republic of Germany and the French Republic.

Emergency Aid Programme for Independent Orchestras and Ensembles

Minister of State for Culture Monika Grütters is providing up to EUR 5.4 million in emergency aid for independent orchestras and ensembles. The aid programme aims to enable artistic work despite the coronavirus pandemic. Corona – Information for Steuerberater and their clients (as of 4 June 2020) 58. The emergency aid programme runs until the end of 2020 and is aimed at professional orchestras and ensembles based in Germany. The prerequisite is that the applicants' projects are carried out within Germany and that the project orchestras and ensembles are not predominantly publicly financed. The funds for the emergency aid programme come from the funding programme "Excellent Orchestral Landscape Germany", which was first carried out from 2017 to 2020. Source and further information: Press and Information Office of the Federal Government, communication no. 140

Additions: Short-Time Work Benefits (Kurzarbeitergeld)

Short-time work benefits Supply bottlenecks arising in connection with the coronavirus, or official business closures with the consequence that companies have to restrict or cease their production, can lead to an entitlement to short-time work benefits for employees affected by the loss of work. To this end, the federal government has eased the requirements for receiving short-time work benefits:

It is sufficient if 10 percent of the employees of a business are affected by loss of work for a company to apply for short-time work. Previously, at least one third of the employees had to be affected.

Social security contributions are fully reimbursed by the Federal Employment Agency in the case of short-time work.

Short-time work benefits are also possible for temporary agency workers.

In businesses where agreements on working time fluctuations are used, the build-up of negative working time accounts is waived.

These easings will take effect retroactively as of 1 March 2020 and will also be paid retroactively. It is important that companies notify their responsible Employment Agency of short-time work in the event of need. This can also be done online. To do so, you must register on the website of the Federal Employment Agency (BA): https://anmeldung.arbeitsagentur.de/portal

Whether the requirements for granting short-time work benefits are met is examined by the responsible Employment Agency on a case-by-case basis. Short-time work benefits can be granted for a period of up to twelve months. They are paid at the same level as unemployment benefits. Short-time work benefits amount to 60 percent of the difference between the flat-rate net wage that would have been paid without loss of work and the flat-rate net wage from the wage actually received. It amounts to 67 percent if at least one child lives in the household. Tables for calculating the KUG: https://www.arbeitsagentur.de/datei/kug050-2016_ba014803.pdf https://www.arbeitsagentur.de/datei/kug51-tabelle-2016_ba015003.pdf

Additions: Short-Time Work Benefits for Low-Income Earners

On 29 April 2020, the federal government decided to increase short-time work benefits for those receiving KUG for their working time reduced by at least 50%, namely from the fourth month of receipt to 70% (or 77% for households with children) and from the seventh month of receipt to 80% (or 87% for households with children) of the flat-rate net wage, no later than until 31 December 2020. In addition, the opportunities for additional earnings for short-time workers are being expanded: From 1 May 2020, they may earn additional income in all occupations up to the full amount of their previous monthly income. The restriction to systemically relevant occupations is being lifted. The regulation likewise applies until 31 December 2020. On 15 May 2020, the Bundesrat approved the so-called Social Protection Package II, which the Bundestag had adopted one day earlier. The federal government will also be authorised until 2021 to extend the duration of the benefit from 12 to 24 months in extraordinary circumstances. Such an extension is normally only possible if there is an overall disruption of the labour market.

In addition, the Act ensures that additional earnings are not counted against short-time work benefits if the newly taken-up secondary employment is a minijob in a systemically relevant area. These provisions were only incorporated into the original government bill through the Bundestag resolution. Source and further information: Bundesrat Kompakt of 15 May 2020, Information of the BMAS of 14 May 2020, Communication of the federal government of 29 April 2020, Information of the BMAS of 29 April 2020, Social Protection Package II, BGBl. 2020 I p. 1055

Additions: Short-Time Work Benefits for Statutory Health Insurance Medical Practices Under an internal instruction of the Federal Employment Agency, statutory health insurance medical practices generally do not receive short-time work benefits. The reason given is the compensation payments for contracted physicians and psychotherapists adopted by the Bundestag in March pursuant to § 87a Abs. 3b S. 3 SGB V (the so-called protective shield for practices). The compensation payments operate like business interruption insurance, so that the required economic grounds for entitlement to short-time work benefits are absent, according to the authority's internal instruction. There is therefore no scope for the payment of short-time work benefits. The position can only be different if a practice suffers existence-threatening losses in turnover due to the absence of privately insured patients. Source and further information: Current information from the KBV. Information on the protective shield for medical practices.

The agencies are available for enquiries and consultations on the subject of short-time work benefits. The number of the service hotline for employers is 0800 45555 20.