COVID-19: Summary of measures introduced in Germany

A cura di Emma Moesle 

This article is intended to provide an overview of the current measures taken in connection with the spread of the coronavirus, particularly in tax law.

A. Material on tax measures in Germany;

B. Measures in other areas in Germany;

C. Government releases draft Corona

A. Tax measures in Germany

I. Notices on tax relief
1. Announcements from the Federal Ministry of Finance

The Federal Ministry of Finance has now added to its website information in English on the measures taken to combat the coronavirus, including a list of frequently asked questions.

Federal Ministry of Finance: Measures to combat the corona virus


On 3 April 2020, the Federal Ministry of Finance published a notice on its website regarding the tax impacts of COVID 19 lockdown on cross-border commuters (e.g situations, where under a double tax treaty agreement (“DTA”), exceeding a certain number of days on which the actual country of work is not visited can lead to a partial change in the right of taxation).
Under certain DTAs, such as Luxembourg, the Netherlands and Austria, an increased number of days working remotely from home can lead to a change in the distribution of taxation rights and thus to a change in the tax situation of the employees concerned.

The Federal Ministry of Finance has now signed temporary consultation agreements with Luxembourg, the Netherlands and Austria thereby creating a special arrangement for the period during which the health authorities continue to advise employees to work remotely from home due to the high risk of infection. The relevant employees will be treated during as if they had been able to carry out their work as usual at their actual place of work, thereby avoiding any adverse tax consequences. The agreements initially apply this fiction to working days in the period 11 March to 30 April 2020. The fiction will automatically apply to later periods, should this be necessary. The fiction will not apply to working days that would have been spent working remotely from home or in a third country independently of these measures, especially if the employees would have worked at home anyway according to the provisions of their employment contracts.


According to a notice published on the Federal Ministry of Finance’s website on 3 April 2020, employers can now pay their employees subsidies and support up to an amount of € 1,500 tax-free in cash or in kind. This covers special benefits received by employees between 1 March 2020 and 31 December 2020. This is subject to the condition that the allowances and benefits are paid in addition to the wages already owed. The tax-free benefits must be recorded in the payroll account. Other tax exemptions and valuation allowances remain unaffected. Further these allowances and benefits will not be subject to social security contributions.


The Federal Ministry of Finance (“MoF”) and the Supreme Tax Authorities of the Federal States (“the Länder”) released a circular and a decree (respectively) on 19 March 2020 introducing tax measures to combat the effects of the coronavirus (COVID- 19 /SARS-CoV-2). Measures include:

  • Taxable persons who can be shown to be directly and significantly affected by the impact of the coronavirus may – until 31 December 2020 – submit applications for the deferral of those taxes already due or becoming due up to that date, which are administered by the state financial authorities on behalf of the federal government, (income tax, corporation tax, solidarity surcharge and VAT). This does not include tax to be paid by a third party for the account of the taxpayer such as payroll tax or withholding tax.
  • In addition, applications for the adjustment of prepayments on income and corporation tax may be made.
  • The MoF decree further states that such requests may not be refused on the ground that the taxpayer cannot prove in detail the value of the damage incurred. The examination of the conditions for deferrals is not to be subjected to strict requirements. As a rule, interest on deferral can be waived.
  • Where the tax office is informed by a taxpayer subject to enforcement proceedings or where it otherwise becomes aware, that the taxpayer is directly and not insignificantly affected, no enforcement should be executed for periods up to and including 31 December 2020.
  • Tax offices can adjust the trade tax base for purposes of trade tax prepayments, where they become aware of a change of circumstances in the current period of assessment or where an application is made.
  • Where the tax office issues an assessment of the trade tax base for trade tax prepayment purposes, the relevant municipality will be bound by this when assessing the trade tax prepayments.
  • Where a taxpayer is affected by the coronavirus and wishes as a result to apply for a deferral or waiver of trade tax, he must generally make his application to the responsible municipality.


On 13th March 2020 German Finance Minister Olaf Scholz and Economics Minister Peter Altmaier presented a comprehensive package of measures to cushion the effects of the coronavirus. In order to improve liquidity for companies, the possibilities for deferring tax payments, reducing advance payments and in the area of enforcement are to be improved.

2. Announcements from the Federal States (“Länder”)

The main communications of the Länder on tax relief are:

I. Announcements of the General Customs Directorate

The Federal Ministry of Finance has instructed the main customs offices to provide appropriate assistance to taxpayers where the relevant duties are regulated under federal law and administered by the customs administration (e.g. energy tax and air traffic tax). The intention is to prevent the taxpayer suffering undue hardship. In accordance with the Ministry circular of 19 March 2020, measures are to include in particular deferral options, the postponement of enforcement and the reduction of advance payments.

II. Application procedure with regard to tax relief due to the effects of coronavirus

The Länder have published information for tax relief on their websites. Most have also published application forms.


Some of the Länder will also provide a refund of the special advance payment of value added tax. This relates to the VAT provision that entrepreneurs must generally file a preliminary VAT return with their local tax office by the tenth day of the calendar month.  The entrepreneur can apply to have the filing date for the return delayed by a month for the calendar year. This permanent extension is subject to a special advance payment amounting to 1/11 of the total VAT prepayments payable in the previous calendar year. The special advance payment is then set off against the payment due on the final advanced VAT return for the year. In order to provide entrepreneurs with more liquidity, some of the Länder have agreed to refund the advanced payment upon application. The measure has not been adopted by all Länder. The following Länder have announced they will participate in the measure:

  • Baden-Württemberg
  • Bavaria
  • Berlin
  • Brandenburg
  • Hessen
  • Mecklenburg-West-Pomerania
  • Lower Saxony
  • North-Rhine Westphalia
  • Rhineland-Palatinate
  • Saarland
  • Saxony
  • Saxony-Anhalt

III. Notification of the closure of tax offices for visitors

The tax authorities of the various Länder have issued information on the closure of tax offices for visitors on their websites.

B. Measures in other areas in Germany

I. Law on mitigating the consequences of the COVID 19 pandemic in civil, insolvency and criminal proceedings

A formulation by the Federal Ministry of Justice and Consumer Protection (MoJ) for a bill to mitigate the consequences of the COVID 19 pandemic in civil, insolvency and criminal procedural law was published. In addition to the suspension until 30 September 2020 of the obligation to file for insolvency already announced (see below), the MoJ’s formulation also provides for a temporary extension of the deadline in Section 17 (2) Sentence 4 Reorganisations Act from 8 to 12 months.


In the extraordinary current situation, the MoJ is preparing a legal regulation to suspend the obligation to file for insolvency until 30 September 2020 for companies affected by the corona epidemic in order to avoid the necessity of affected companies having to file for insolvency solely because the processing of applications for public aid or financing or restructuring negotiations cannot be completed within the obligatory three-week to file for insolvency. As a precondition for suspension the applicant will have to show that the insolvency is a result of the corona epidemic and that there are reasonable prospects for a restructuring following an application for public aid or serious financing or restructuring negotiations. In addition, an authorization for the MoJ to extend the measure further to 31 March 2021 at the latest is also to be proposed.

II. Impact of the coronavirus on accounting and auditing as well as company valuation issued by IDW

The IDW (Institute of Certified Accountants) issued a technical note in two parts, namely on 4 March 2020 on the effects of the coronavirus on accounting as of 31 December 2019 and its audit and on 25 March 2020 on its effects on company valuations.

III.   The Federal Ministry of Economics has introduced a 3-stage plan for economic aid

The Federal Ministry of Economics has introduced a 3-stage plan for economic aid:

Step 1:  Existing support measures for business e.g. established instruments such as Kreditanstalt für Wiederaufbau (“KfW” – the Credit Institute for Reconstruction, the largest German public development bank) loans to entrepreneurs (for existing enterprises) and ERP Universal Start-up Loans (for new businesses of under 5 years standing).

Step 2:  Existing measures to be extended made more flexible and will be provided with additional government funds if there is a need.

Step 3: MoE has prepared various models (using the lessons learned from the financial crisis 2008/2009) and has developed instruments in order to support business further should the crisis deepen. 

IV. Dealing with on-site inspections (Federal Financial Supervisory Authority – “BaFin”)

In a press release issued on 18 March 2020, BaFin announced that against the background of the spread of the corona virus, it will no longer send its auditors out on-site. In this context, BaFin made clear that this exception is only to apply while the restrictive measures to combat the pandemic are in place. The fundamental obligation to carry out the audits remains unchanged. In principle, companies must ensure that the documents required for the audit are made available to the auditors electronically. If a fully comprehensive “remote audit” is not possible due to lack of sufficient electronic access to all documents required for the audit, this must be carried out at a later date. Potential breaches of deadlines in these cases will not be pursued by BaFin. Furthermore, a formal interruption notice will not be required in these cases.

V. MoF: Overview of aid programmes for companies

The MoF has set up an internet site that provides an overview of the aid programmes provided through KfW.

VI. Deferral of social security contributions

The National Association of Statutory Health Insurance Funds (“GKV-Spitzenverband”) has recommended that all statutory health insurance funds should temporarily facilitate the deferral of social security contributions; this should enable companies and self-employed persons who have understandably got into financial difficulties due to the Corona crisis to pay social security contributions later for a limited period of time. A press release has been issued with an overview of the individual measures for financial support for employers in the payment of social security contributions published on 25 March 2020. The measures are initially limited in time until 30 April 2020 and will only take effect once other relief arrangements have been exhausted.

VII. Extension of statutory filing deadline for annual financial statements

The statutory annual deadline for the submission of the annual accounts for the financial year 2018 ended on 31 December 2019 for accounting periods based on the calendar year. The six-week grace period for disclosure provided for in the warning letter cannot generally be extended. On 15 April 2020 the Ministry of Justice has now granted an extension for any companies that have received a warning dated between 6 February 2020 and 20 March 2020. Provided the submission is made by 12 June 2020 at the latest any fine previously threatened in the warning letter will not become due is not set. This also applies to undertakings which, in the period between 6 February 2020 and 20 March 2020, received a further warning for the disclosure of accounting documents for previous financial years, which is linked to the imposition of an administrative fine. No separate application has to be made in either case.


Extension of the possibilities for export credit guarantees

On 30 March 2020 the Federal Ministry of Finance and the Federal Ministry of Economics agreed that with immediate effect export transactions on short payment terms (up to 24 months) can also be covered within the EU and in certain OECD countries by state export credit guarantees of the Federal Government. In particular, this should make it possible to absorb possible bottlenecks in the private export credit insurance market.

VIII Additional support for Start-Ups

On 1 April 2020, the Federal Government introduced additional support especially tailored to the needs of start-ups. Whilst, start-ups have access to all the support measures of the Corona Aid Package, classic credit instruments may not meet the needs of young start-ups.

The package includes the following measures in particular and will be implemented in stages:

  • Public venture capital investors at fund of funds and fund level (e.g. KfW Capital, European Investment Fund, High-Tech Start-Up funds, Coparion) are to be provided with additional public funds in the short term, which can be used for financing rounds of start-ups for co-investments with private investors.
  • Fund of funds investors KfW Capital and the European Investment Fund (EIF) are to be put in a position to take over shares from defaulting fund investors with additional public funds.
  • For young start-ups without venture capitalists among their shareholders and for small SMEs, financing with venture capital and equity substitutes is to be made easier.
  • Parallel to the implementation of measures, the Federal Government will continue to coordinate the structure of the Future Fund for Start-ups, which is intended to support the way out of the crisis in the medium term.

C. Government releases draft Corona – Tax Assistance Bill

At its meeting on 6 May 2020, the Federal Cabinet adopted the Corona Tax Assistance Bill, which – with the exception of editorial changes – essentially corresponds to the Federal Ministry of Finance’s original formulation. The only change worth noting here is an addition to the explanatory memorandum on the tax exemption on subventions by employers to reduced hours compensation payments and seasonal reduced hours compensation payments vis-à-vis corrections to salary withholding tax deducted prior to the Act taking effect.

Within the framework of the existing law (Act on the Implementation of Tax Aid Measures to cope with the Corona Crisis) more measures are to be introduced to cope with the impact of the COVID-19 pandemic; these include:

  • The VAT rate is to be reduced from 19% to 7% on restaurant and catering services supplied between 1 July 2020 and 30 June 2021.The reduction will not apply to the supply of beverages.
  • Following the treatment under social security provisions, a portion of subventions made by employers to top up reduced hours compensation payments and seasonal reduced hours compensation payments is to be tax exempted: the exempt amount should not exceed 80% of the difference between the target salary and the actual salary as defined by Section 106 Social Security Act III. The government bill differs from the original formulation of the Finance Ministry in that an addition is made to the relevant explanatory statement, according to which the salary withholding tax deductions made prior to the law coming into force on the assumption that the subventions were taxable, are generally to be corrected by the employer. Where the employer can no longer correct the salary withholding tax deduction because the employment relationship has been terminated in the meantime, a correction should be made in the income tax return. In this case, the taxable salary in the salary withholding tax certificate is to be reduced accordingly and the corresponding portion is to be included in the progression clause.
  • The tax retroactive periods in the Reorganisations Taxes Act (Sections 9 sentence 3 and 20 (6) sentences 1 and 3) are to be temporarily extended in line with the extension of the retroactive period in the Reorganisatons Act (Section 17(2) sentence 4) as set out in the Act on the Mitigation of the Consequences of the COVID 19 Pandemic in Civil, Insolvency and Criminal Procedure Law of 27 March 2020.

Let’s Talk

Per una discussione più approfondita ti preghiamo di contattare:

Giovanni Consiglio

PwC TLS Avvocati e Commercialisti


Emma Moesle 

PricewaterhouseCoopers GmbH