Dear Sir or Madam, dear Clients, dear friends,
The coronavirus pandemic has been affecting us for more than a year now.
As this has also had negative economic consequences for many taxpayers, the German government is attempting to cushion these to some extent. It is therefore important to us to draw your attention once again to the main measures that have been taken.
Improvement of the Corona subsidies
For affected solo self-employed persons, the new start-up aid has been extended and increased. Previously, up to 1.250 euros per month could be applied for January to June 2021. The new start-up aid plus for July to September 2021 allows a maximum of an additional 1.500 euros per month.
The funding period for the interim aid III has also been extended by 3 months and now also runs until September 2021 as the interim aid III plus.
Eligible companies can also apply for personnel cost assistance in the form of a restart premium if personnel are brought in from short-time work for the reopening or new personnel are hired.
In order to prevent insolvencies, legal fees and court costs of up to EUR 20.000 per month for restructuring measures in the event of imminent insolvency will be eligible for reimbursement in the future.
The application deadlines for initial applications and amendments to the interim aid III and new start aid have also been extended and now end on October 31, 2021.
Special fund for cultural events
The federal government provides a special fund for the resumption and financial planning of concerts, theatre performances, cinema screenings, etc. An application for the funds has been possible since 15.06.2021 via https://www.sonderfonds-kulturveranstaltungen.de/index.html.
Funding is provided in the form of economic assistance for smaller events and / or cancellation insurance for larger events. For details, please refer to the above application platform and its FAQ.
Adjustment of advance tax payments 2020 and 2021
Upon request, the reduction of advance payments for income tax, trade tax and corporate income tax is possible at a flat rate of 30%. For a higher reduction, the usual evidence must be provided.
If you expect a reduction in income, especially for 2021, please contact us. As part of our service for accounting tasks we keep an eye on the situation.
Lump-sum preliminary loss carryback from 2021 to 2020
A loss expected to arise in 2021 can generally be carried back to the income tax burden for 2020 as part of the return for 2021. In order to achieve liquidity effects, a lump-sum preliminary loss carryback amounting to 30% of the total amount of income can already be claimed in the return for 2020.
The final loss carryback has been increased to EUR 10 million per taxpayer.
Income tax changes
In order to reduce the tax burden, degressive depreciation was reintroduced for a limited period of time for 2020 and 2021. Movable fixed assets can therefore be deducted from profits in these two assessment years at a maximum rate of 2.5 times the regular straight-line depreciation. The higher depreciation is limited to 25% of the value of the asset.
Retroactively from January 1, 2021, the ordinary useful life of computer hardware and software was reduced from 3 years to 1 year.
In addition, the maximum weighting amount of trade tax on the income tax burden was increased. Previously, a maximum of 3.8 times the trade tax measurement amount was credited against income tax. The tax legislator has now increased the credit to 4 times. In addition, the allowance for trade tax additions has been doubled to 200.000 euros as of the 2020 assessment period.
In order to relieve the liquidity of taxpayers, it was previously possible to take into account investment deductions amounting to 40% of the future planned acquisition costs of investments in fixed assets in previous fiscal years in order to reduce profits. The amount of this investment deduction was raised to a maximum of 50% from 2020. In addition, the operating assets limit as a starting requirement has been replaced by a profit limit in the amount of 200.000 euros. In addition, the 3-year investment period, if it ended in 2020, was extended by 1 year to December 31, 2021.
Changes in sales tax
In the restaurant industry, 7% will continue to apply to restaurant services, except for beverage sales, until December 31, 2022.
In addition, the government will waive the sales tax on donations in kind from business assets (e.g., inventory) by taxpayers not insignificantly affected to tax-exempt organizations until Dec. 31, 2021.
Important changes for and with regard to employees
Due to the pandemic-related temporary closures of some companies and the slow opening of stores, a large number of employees have been placed on short-time work. Subsidies paid for short-time work compensations (top-ups) between February 29, 2020 and December 31, 2021 are tax-free up to 80% of the difference between target remuneration and actual remuneration, but are subject to the so-called progression proviso, i.e. they increase the personal tax rate. Employees who have received short-time work compensations are therefore obliged to submit income tax returns for the corresponding years if the short-time work compensation plus other wage replacement benefits, such as parental allowance, sick pay or similar, have exceeded 410 euros per year.
The deadline for the granting of corona bonuses amounting to a maximum of 1.500 euros has been extended once again and now expires on March 31, 2022. These bonuses paid in addition to the wages owed are not subject to the progression proviso. The bonus payments are also possible for each employment relationship, meaning that employees can receive them tax-free several times in successive employment relationships.
Further relief is to be provided to employees by the fact that a lump sum of 5 euros can be deducted as income-related expenses in the income tax return for each day of work performed exclusively in the home office (maximum 600 euros per year). However, since the amount is not granted in addition to the flat-rate income-related expenses amount, this does not have any effect for many taxpayers.
The relief amount for single parents has been increased to 4.008 euros for 2020 and 2021 to take account of the additional expense due to the possible elimination of childcare services.
From the 2021 assessment period, the lump-sum allowance for training supervisors will increase to 3.000 euros and the lump-sum allowance for voluntary work to 840 euros. It should be noted here that the activities may be performed for a maximum of 14 hours per week and must be carried out on behalf of a legal entity under public law (e.g. registered associations), as otherwise tax exemption is not granted.
With a view to further promoting the reduction of CO-2 emissions, the purchase price limit for purely electric company vehicles eligible for tax relief was also raised from EUR 40.000 to EUR 60.000. For these vehicles, private use is only to be assessed at 0.25% instead of 1% of the gross list price.
From the 2022 assessment period, the exemption limit for non-cash benefits will increase from 44 euros to 50 euros.
The tax retroactive period for certain conversion transactions has been extended from 8 to 12 months.
If you need action or advice, or have questions about individual opportunities, please contact us - we will be happy to assist you!