On 10 June 2022, the Bundesrat also approved the Fourth Corona Tax Relief Act. Prior to this, the Bundestag had made several amendments to the original draft bill in its plenary session. The purpose of the Fourth Corona Tax Relief Act is to finally overcome the hurdles of the pandemic by adopting new measures for businesses and employees and extending existing ones.
Discounting Requirement for Non-Interest-Bearing Liabilities and Provisions
Under the previous legal framework, liabilities with a remaining term of more than 12 months were subject to a discounting requirement of 5.5 percent pursuant to § 6 Abs. 1 Nr. 3 EStG. Exempted from this were liabilities with a remaining term of less than 12 months and liabilities based on down payments and advance performances. The legislator has now decided that, in the current phase of low interest rates, no further discounting needs to be applied. The discounting requirement is likewise abolished for provisions under § 6 Abs. 1 Nr. 3a Buchstabe e S. 1 EStG. The scope of application extends to calendar years ending after 31 December 2022. Upon application by the taxpayer, however, the legislative change may also be applied to earlier years.
Tax Return Filing Deadlines
The Bundestag has also made amendments to the filing deadlines for income tax returns. In the approved bill, the filing deadlines for income tax returns from assessment period (VZ) 2020 onwards have been extended, irrespective of whether cases are advised or non-advised. The following deadlines therefore apply to income tax returns:
Advised cases
- VZ 2020: until 31 August 2022 +6 months,
- VZ 2021: until 31 August 2023 +6 months,
- VZ 2022: until 31 July 2024 +5 months,
- VZ 2023: until 31 May 2025 +3 months,
- VZ 2024: until 30 April 2026 +2 months.
Non-advised cases
- VZ 2020: until 31 October 2021 +3 months,
- VZ 2021: until 31 October 2022 +3 months,
- VZ 2022: until 30 September 2023 +2 months,
- VZ 2023: until 30 August 2024 +1 month.
A gradual withdrawal of the extended filing deadlines has also been decided. For advised cases this means that, from VZ 2025 onwards, and for non-advised cases from VZ 2024 onwards, the original deadlines will apply once again.
Corona Bonus for Care Workers
As a token of recognition, a Corona bonus has been adopted for care workers and, in particular, for employees who worked in hospitals during the pandemic. The Fourth Corona Tax Relief Act now extends the group of eligible recipients to include outpatient surgery facilities, certain preventive care and rehabilitation facilities, dialysis facilities, medical and dental practices as well as emergency services. In addition, the tax-free Corona bonus under § 3 Nr. 11 EStG is being increased from the originally planned €3,000 to €4,500. The Bundesrat has also pushed for the bonus to remain tax-free not only when granted under federal or state regulations, but also when paid on the employer's own initiative. The Corona bonus may be paid out in the period from 18 November 2021 to 31 December 2022. It is important to note, however, that the bonus is only tax-free if it is paid in addition to the wages already owed.
Home Office Lump Sum
The Fourth Corona Tax Relief Act also extends the home office lump sum until 31 December 2022. The home office lump sum may be used if no home study is available or if the corresponding expenses are not claimed in the assessment period. If one of these conditions is met and the employee works from home, they may claim a flat-rate amount of €5 for each day spent in the home office, up to a maximum of €600 per calendar year.
Declining Balance Depreciation
The use of declining balance depreciation has also been extended for the 2022 calendar year. Accordingly, assets acquired or produced in calendar year 2022 may also be depreciated using the declining balance method pursuant to § 7 Abs. 2 S. 1 EStG. Declining balance depreciation may be used instead of straight-line depreciation in order to claim higher expenses initially. However, depreciation may not exceed two and a half times the straight-line rate or 25% above the straight-line depreciation amount.
Extended Loss Offset
An extension has also been made with regard to the extended loss offset under § 10d Abs. 1 EStG. This loss carryback of up to €10 million, or €20 million in the case of joint assessment, may also be used for calendar years 2022 and 2023. A reduction of the maximum loss offset to €1 million, or €2 million in the case of joint assessment, has been postponed from the originally planned VZ 2022 to VZ 2024.
Frequently asked questions
Frequently asked questions
When does the discounting requirement for non-interest-bearing liabilities cease to apply under the 4th Corona Tax Assistance Act?
The 5.5% discounting requirement for non-interest-bearing liabilities with a remaining term of more than 12 months under § 6 Abs. 1 Nr. 3 EStG no longer applies for fiscal years ending after 31 December 2022. The same applies to provisions under § 6 Abs. 1 Nr. 3a lit. e sentence 1 EStG. At the taxpayer's request, the new rule may also be applied to earlier years.
What extended filing deadlines apply to the income tax return from assessment period 2020 onwards?
For represented cases, filing deadlines were initially extended by 6 months (assessment period 2020 until 31/08/2022, assessment period 2021 until 31/08/2023), then gradually reduced up to assessment period 2024 (30/04/2026, +2 months). For non-represented cases, a 3-month extension applies (assessment period 2020 until 31/10/2021, assessment period 2021 until 31/10/2022), which is likewise phased out step by step. From assessment period 2025 (represented cases) or assessment period 2024 (non-represented cases), the original deadlines apply again.
How high is the tax-free Corona bonus for nursing staff, and who is eligible?
The tax-free Corona bonus under § 3 No. 11 EStG was raised to €4,500. Eligible recipients include hospital staff as well as employees of outpatient surgical facilities, certain preventive and rehabilitation facilities, dialysis centers, medical and dental practices, and rescue services. Payment must be made between 18 November 2021 and 31 December 2022 and must be granted in addition to the wages already owed; voluntary employer payments are also covered.
Until when does the home-office flat rate apply, and what is its amount?
The home-office flat rate has been extended until 31 December 2022. Employees without a home office room may claim a flat rate of EUR 5 for each full day worked from home, up to a maximum of EUR 600 per calendar year. The flat rate is not available if expenses for a home office room are claimed in the same assessment period.
What are the maximum amounts for the extended loss carryback under § 10d EStG?
The extended loss carryback has been prolonged to cover the 2022 and 2023 assessment periods. The maximum amounts are EUR 10 million for individual assessment and EUR 20 million for joint assessment. The original maximum amounts of EUR 1 million and EUR 2 million respectively will only apply again from the 2024 assessment period onwards.
Can declining-balance depreciation be used for assets acquired in 2022?
Yes, declining-balance depreciation under § 7 Abs. 2 S. 1 EStG has been extended to movable fixed assets acquired or produced during the 2022 calendar year. It may be chosen as an alternative to straight-line depreciation and is capped at 2.5 times the straight-line rate, but no more than 25%.