27
Mar
2020

Unternehmensteuerrecht

Easing the taxpayers’ economic burden during the Corona pandemic: Overview of tax relief measures in Germany

Rebecca Haß

In order to relieve the pressure on businesses’ liquidity due to the negative impacts of the coronavirus pandemic, the Federal Ministry of Finance together with the federal provinces developed and constantly continues to develop several unbureaucratic tax related aid measures. We will monitor all developments closely and provide updates accordingly, as further reliefs can be expected.

Tax payment deferrals without deferral interest
Businesses that are economically effected by the pandemic can apply for the temporary and interest-free deferral of tax payments regarding income tax, corporate income and trade tax and VAT due in 2020. Such applications can be filed with the respective local tax office or municipality until December 31, 2020. Tax offices are instructed to process such applications without strict requirements, i.e. taxpayers simply have to lay out that they are directly and not negligibly affected by the pandemic without the need to quantify the expected economic impact in great detail. Several federal tax administration provided simplified relief application forms, which can be found online.

As of today, the possibility to defer tax payments does not apply for withholding taxes such as wage tax and capital gains tax. However, it is currently being discussed if and under which circumstances wage tax could also be deferred in order to ease businesses’ liquidity situation even further.

Adjustment (reduction) of tax prepayments
Taxpayers are also given the opportunity to apply for an adjustment of their tax prepayments, if they expect their income in the current year to be lower than expected prior to the coronavirus pandemic. This applies for income tax, corporate income and trade tax. Prepayments for the first quarter of 2020 that have already been paid can be adjusted retroactively.

Some federal provinces have decided to also refund the special VAT-prepayment for a permanent extension of the filing deadline for VAT returns upon application without revoking the filing extension. 

Suspension of tax enforcement measures
Enforcement measures regarding overdue taxes (i.e. income tax, corporate income and trade tax and VAT) including late-payment penalties will be waived for taxpayers that are substantially affected by the pandemic until the end of 2020.

Customs administration will also grant these relief measures for import VAT, energy duty and aviation tax.

Extension of filing deadlines
Up to now, no official extension of filing deadlines for tax returns has been granted yet. However, many ministries of finance indicate a willingness to react proactively and unbureaucraticaly towards applications for an extension of filing deadlines filed by affected taxpayers on an individual basis. This shall apply not only for VAT and wage tax returns, but also retroactively for annual corporate tax returns for 2018, which were due in most cases at the end of February 2020. It seems likely that penalties for late filing will either not be assessed or revoked upon taxpayers’ request.

Presently, all tax relief measures are limited until end of 2020. This might however become subject to change depending on the economic development related to the Coronavirus pandemic.

 

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