With this letter we would like to inform you about important changes in tax law concerning the payment and collection of due taxes in times of the coronavirus crisis.
Extension of the deadline for submitting the payroll tax registration
Since the deferral of payroll tax in the сoronavirus period was rejected after initial announcements, the legislator has now created the possibility of extending the deadline for submitting payroll tax registrations. This is an indirect deferral of the payroll tax, as the payment of the payroll tax is only due after the submitting the payroll tax registration.
The Deadline extension may be a maximum of 2 months. The possibility exists for both monthly and quarterly payroll tax registrations. The new regulation applies nationwide and with immediate effect.
However, the prerequisite for the extension of the deadline is that the employer or the person responsible for payroll accounting and payroll tax registration is demonstrably prevented through no fault of their own from submitting the payroll tax registration on time. Unfortunately, the decree does not contain any specific information as to what exactly it means. Due to the current situation, an overly restrictive interpretation is probably not to be assumed. The decree itself states that “In large parts of Germany, employers are prevented through no fault of their own by the coronavirus crisis from submitting monthly or quarterly payroll tax registrations on time”. The decision in individual cases is the responsibility of the local tax office.
Flat-rate loss carryback
Are you so affected by the current coronavirus crisis that a loss is expected in 2020? Have you already made tax advance payments for 2019? If so, the legislator has provided for further relief for you, which we explain below:
By submitting a corresponding reduction application, the tax prepayments already made for 2019 can be reimbursed on the basis of a loss for 2020 calculated as a lump sum.
The flat-rate loss carryback amounts to 15% of the relevant income for 2019 and is limited to EUR 1 million.
Only companies affected by the coronavirus crisis can apply for the flat-rate loss carryback to be taken into account. If the tax office has already reduced the advance tax payments for 2020 to EUR 0 as a result of a reduction application by the taxpayer filed because of the coronavirus crisis, the taxpayer is generally deemed to be "affected" and can file the corresponding application for the flat-rate loss carryback.
Practical example for a better understanding of the procedure
In 2019, A-GmbH made quarterly advance payments of corporate tax of EUR 12,375 each, for a total of EUR 49,500 (the solidarity surcharge is not calculated in this example). The corporate tax advance payments were calculated on the basis of an expected profit in 2019 of EUR 330,000.
The coronavirus crisis has led to a slump in sales at A-GmbH. Due to the resulting loss and in view of its financial circumstances, A-GmbH can apply to the tax office for a retroactive reduction of the tax prepayments with reference to the regulations on the flat-rate loss carryback.
In the case of the A-GmbH, the flat-rate loss carryback is determined as follows:
expected Profit from the year 2019 in the amount of EUR 330,000.00 x 15% = EUR 49,500.00
On the basis of the application, the tax office will assess the advance payments in 2019 on a taxable income in the amount of EUR 280,500.00 (EUR 330,000.00 - EUR 49,500.00) and will refund the corporate tax advance payments in 2019 in the amount of EUR 7,425.00.
If you wish to extend the deadline for submitting your payroll tax registration or reduce the tax advance payments for 2019, please send us a brief notification. We will gladly support you!