Tax measures for German businesses during the coronavirus pandemic

Many businesses are currently struggling with liquidity problems. The German tax authorities are helping with various measures to assist all businesses affected by the coronavirus pandemic. Businesses will receive tax-related assistance in order to boost their liquidity during the COVID-19-virus (“Corona”) pandemic. In coordination with the highest revenue authorities of the German Länder, the German Federal Ministry of Finance (BMF) has adopted a circular specifying tax relief measures to support affected taxpayers.

Deferral of tax debts

If, as a result of the economic effects caused by the coronavirus pandemic, businesses cannot afford to pay taxes that are due in 2020, they can apply for temporary, interest-free deferrals of these payments. Businesses can file applications with their respective tax offices until 31 December 2020.

The approval of deferrals will not be subject to strict conditions. Businesses will be required to explain that they are directly affected, but they will not have to document in detail the amount of economic damage. This will support taxpayers’ liquidity, because the timing of tax payments will be delayed. This measure applies to income tax, corporation tax and VAT.

Reduction of advance payments

In addition, companies, self-employed persons and freelancers can request adjustments to the amount of their income tax prepayments and corporation tax prepayments. The same applies to the base tax amount used to determine trade tax prepayments. They can do this by filing an application with their respective tax office. As soon as it becomes clear that a taxpayer’s income in the current year will be lower than expected prior to the coronavirus pandemic, tax prepayments will be reduced in a swift and straightforward manner. This will boost their liquidity.

Waiver of enforcement measures and late payment surcharges

Measures to enforce the payment of overdue taxes will be waived through the end of 2020. Late-payment penalties that fall due under the law during this period will be waived as well. This applies to income tax, corporation tax and VAT.

Measures of further German authorities

The German customs administration, which administers import VAT, energy duty and aviation tax, will grant the same relief. This relief also applies to insurance tax and to VAT administered by the German Federal Central Tax Office.

Further Information

These tax-related assistance measures form part of a multibillion-euro protective shield for Germany. Further information and answers to FAQs are available here:

• Multibillion-euro protective shield for Germany
• Finance Ministry circular (in German only)

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19