Tax Payments in Times of Corona

Tax Reliefs during the Pandemic

The Federal Ministry of Finance and the highest tax authorities of the Federal States (Länder) have decided on several tax reliefs in order to help companies that have economic difficulties caused by the Corona crisis.

1.     The tax payers have the possibility to defer the tax payments free of interest.
The request for deferral of taxes due by the 31st of December 2020 can be made only after their assessment. The interest-free deferrals are granted for three months, at most till March 31, 2021. This applies to the income tax, corporate tax, church tax, solidarity surcharge and sales tax. Excluded from deferral are the tax on wages and the capital gains tax.

2.     The enforcement of taxes due is refrained till December 31, 2020 and no late payment fines will be billed.

3.     The finance office may reduce the tax prepayment upon request and already paid tax advance may be refunded under certain conditions.

4.     Special advance payments for permanent time limit extension may be reduced upon request.

5.     For present losses caused by the Corona crises the reduction of the income tax 2019 may be requested within the frame of a tax loss carryback determined in advance on a flatrate basis if the prepayment for 2020 was set to zero Euro.

6.     A reduction of the so-called tax rate (Steuermessbetrag) for purposes of prepayment of the trade tax may be requested at the tax administration.

7.     Upon request the tax office may grant a deadline extension for the submission of the tax declaration 2018 till May 31, 2020.

8.     The employer may pay his employees in the period March 1, 2020 – December 31, 2020 tax-free aids and subsidies for the mitigation of the additional hardships caused by the Corona crises up to the amount of 1500 Euro in addition to the wages due. These tax-free aids and subsidies are not entered on the wage tax card, they are not declared in the income tax return and they are not subject to the so-called exemption with progression (progression proviso),

9.     Support benefits from the Corona assistance programmes (for ex. urgent financial assistance, interim aid or similar assistance programmes) of the German federal and state governments are not subject to sales tax and are not to be reported in the turnover tax advance return or the annual VAT return. However, these support payments are generally subject to income- or corporate tax and trade tax.

10.  What treatment are the various donations like donations in cash, donations in kind (e.g. breathing masks) and donations of resources and services (e.g. supply of human resources at no charge) given in terms of sales tax?

A correct fiscal treatment of your matters is extremely important!

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