on 03.06.2020 our German parliament launched the next measures to strengthen the conjuncture and to "unleash" the economy as a coronavirus economic stimulus package.
The main points of the planned measures are listed below in brief:
1) Tax measures
- Reduction of VAT: from 01.07.2020 to 31.12.2020 the VAT rate is to be reduced from 19% to 16% and from 7% to 5% respectively.
- In 2020 and 2021, movable fixed assets will be depreciated by the declining balance method at a rate of 2.5 times the current straight-line depreciation and a maximum of 25% per year as operating expenses or income-related expenses. It is not yet clear whether this applies only to new acquisitions or also to investments already made.
- The purchase premium for e-vehicles up to a net list price of 40 thousand euros is to be increased from 3 thousand euros to 6 thousand euros. In addition, the purchase limit for the preferential taxation of private use of company e-cars is to be increased to 60 thousand euros.
- The due date for import sales tax is to be postponed to the 26th of the following month.
- The tax loss carryback is to be extended from currently 1 million or 2 million euros (in the case of Joint assessment) for the years 2020 and 2021 to a maximum of 5 million euros or 10 million euros (in the case of joint assessment). A mechanism will probably be introduced to make this carryback directly financially effective in the 2019 tax return, e.g. by creating a tax coronavirus reserve. The reserve should be released by the end of 2022 at the latest.
- In addition, corporate income tax law is to be modernised, including an option model for corporate income tax for partnerships and an increase in the reduction factor for income from commercial operations from the current 3.5 times to 4 times the trade tax base.
- In the case of trade tax, the allowance for existing additions is to be increased from 100K euros to 200K euros.
- The relief contribution for single parents is to be increased from the current 1,908 euros to 4,000 euros for the years 2020 and 2021.
2) Non-tax measures
- Parents are to receive a one-off payment of 300,00 euros per child. However, this bonus will be offset against the child allowance.
- Small and medium-sized companies are to be reimbursed a part of the fixed operating costs upon request. Eligible for application would be companies whose sales in April and May 2020 were down by at least 60% compared to April and May 2019 due to coronavirus and whose sales continued to fall by at least 50% in the months June to August 2020. Up to 50% of the fixed operating costs would be reimbursed in the event of a decline in revenue of at least 50% compared with the same month of the previous year. Up to 80% of the fixed operating costs can be reimbursed in the event of a revenue decline of more than 70%. The Maximum reimbursement amount is 150K euros for three months. For companies with up to five employees, the reimbursement amount should exceed 9K euros, for companies with up to 10 employees 15K euros only in justified exceptional cases. Any claimed reductions in turnover and fixed operating costs must be audited and confirmed by a tax consultant or auditor in a suitable manner. Overpayments are to be reimbursed. The application deadlines end in each case on 31.08.2020 at the latest and the payment deadlines on 30.11.2020.
- Companies that do not reduce their training place offer in 2020 compared to the three previous years are to receive a one-time premium of 2,000 euros for each newly concluded training contract, which will be paid out after the end of the probationary period. Such companies that even increase the number of training places on offer are to receive EUR 3 thousand for the additional training contracts.
- After an insolvency, a quick restart should be made easier. Therefore, the debt relief procedure for natural persons is to be shortened to three years. In the area of corporate insolvencies, a pre-insolvency restructuring procedure is to be introduced.
A wide range of further measures has been decided, particularly on the subject of investments in the future and investments in climate technology. An overview of the overall planned innovations can also be found on the website of the Federal Ministry of Finance:
The concrete implementation of the measures is still unclear in many respects. It can therefore be expected that the open questions will be clarified in the further legislative process.
The Corona Tax Assistance Act has now been passed by the Federal Council. This includes the following measures:
- The supply of food for consumption on the spot will be taxed at the reduced VAT rate for sales carried out between 01.07.2020 and 30.06.2021 - i.e. specifically at 5% or 7%. However, this does not apply to beverages!
- Employers' contributions to short-time work compensation and seasonal short-time work compensation are tax-exempt up to 80% of the difference between the target pay and the actual pay.
- The "Corona premium" in the amount of 1,500 euros, which was previously tax-exempt by letter from the Federal Ministry of Finance, now has a legal basis (Section 3 No. 11a of the Income Tax Act). This applies to additional payments by the employer to the employee from 01.03.2020 to 31.12.2020.
- The continued payment of wages to parents due to officially ordered closures of schools and day-care centres in accordance with § 56 of the Infection Protection Act will be extended from 6 to 10 weeks per person with custody. For single parents 20 weeks apply.
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