The coronavirus pandemic continues to place a significant burden on businesses and private individuals. For this reason, additional support measures are intended to offset the economic consequences of the pandemic. The coalition committee (CDU/CSU and SPD) has now submitted the Third Corona Tax Relief Act to the Bundestag for discussion. Families in particular are again set to receive stronger support. Socially disadvantaged families especially are suffering from the consequences of the coronavirus pandemic, as children in homeschooling often have only inadequate technical equipment available.
One-off child bonus 2021
The one-off child bonus of €300 already granted in 2020 is to be available again in 2021. It will amount to €150 and will be paid in addition to the child benefit (Kindergeld). This bonus payment will then be taken into account within the family equalisation scheme, so that the potential tax relief through the child bonus is reduced proportionally to total income. The child bonus is paid out in accordance with all the rules that otherwise apply to the payment of child benefit. For this reason, only one of the two parents can receive the one-off bonus payment. In addition, May 2021 serves as the basis for entitlement. The child bonus will therefore be paid for every child entitled to child benefit in May 2021. However, children who are not entitled to child benefit in May can also receive this bonus. To qualify, the child only needs to have an entitlement to child benefit in another month of the 2021 calendar year.
One-off Corona allowance for basic income support recipients
The one-off bonus payment of €150 is now also to be made available to adult recipients of basic income support — that is, individuals entitled to social benefits or unemployment benefit II during the 2021 calendar year.
Continuation of the VAT reduction in the hospitality sector
The reduced VAT rate of 7 percent is to be extended until the end of 2022 for restaurant and catering services, with the exception of beverages. The original limitation until the end of June 2021 is to be extended because the hospitality sector was unable to benefit substantially from the reduced rate due to the lockdown.
Increase in the loss carryforward
Companies that recorded substantial losses in the previous financial year and therefore show a negative total of income have the option of offsetting these losses against profits from other financial years. However, the loss carryforward for tax-free profits is capped at €1 million, or €2 million in the case of joint assessment. Under the new Corona Tax Relief Act, additional investment incentives for entrepreneurs are to be created; the cap is therefore to be raised from €1 million to €10 million, or to €20 million in the case of joint assessment.
Frequently asked questions
Frequently asked questions
How much is the 2021 child bonus (Kinderbonus) and who receives it?
The 2021 Kinderbonus is a one-time payment of 150 euros per child, paid in addition to the regular child benefit (Kindergeld). Eligible recipients are those entitled to Kindergeld for the child in May 2021; alternatively, entitlement in any other month of 2021 is sufficient. Payment follows the Kindergeld rules, so only one parent receives the bonus. Under the family benefits equalization (Familienleistungsausgleich), the bonus is offset against the child allowance (Kinderfreibetrag).
Will recipients of basic social security receive a Corona supplement in 2021?
Yes, adult recipients of basic social security will receive a one-time Corona supplement of 150 euros. The requirement is an entitlement to social benefits (Sozialgeld) or unemployment benefit II (Arbeitslosengeld II) in the 2021 calendar year.
Until when does the reduced VAT rate of 7% apply in the hospitality sector?
The reduced VAT rate of 7% on restaurant and catering services has been extended until 31 December 2022. Beverages are excluded and remain subject to the standard rate of 19%. The extension was granted because the hospitality sector, due to lockdown restrictions, could not sufficiently benefit from the reduction originally limited to June 2021.
How does the Third Corona Tax Relief Act change the tax loss carryback?
The maximum loss carryback is raised from EUR 1 million to EUR 10 million. For jointly assessed taxpayers, the limit increases from EUR 2 million to EUR 20 million. This is intended to create additional investment incentives for businesses that incurred substantial losses during the pandemic.
Does the child bonus affect the parents' tax assessment?
Yes, the child bonus is taken into account within the family benefits equalisation (Familienleistungsausgleich). It is included in the comparative assessment (Günstigerprüfung) between child benefit (Kindergeld) and the child tax allowance (Kinderfreibetrag), so the tax relief may be reduced proportionally depending on the parents' total income.