Germany’s federal government has drawn up various measures in an attempt to mitigate the economic impact of the coronavirus pandemic, including tax relief measures.
The crisis surrounding the coronavirus is hitting businesses, freelancers, and the self-employed hard and – aggravated by tax liabilities – undermining their economic viability. We at the commercial law firm MTR Rechtsanwälte can report than the federal government’s plans include tax relief measures to ensure that businesses, freelancers, and the self-employed are able to maintain liquidity and that they do not come under additional strain from tax liabilities. Among the main features is the option to apply for an interest-free deferral of tax payments.
Many businesses are seeing orders either partially or completely dry up as a result of the coronavirus crisis, making it all the more difficult for them to meet their tax obligations. The German Federal Ministry of Finance, the Bundesfinanzministerium, has come up with a comparatively unbureaucratic solution. If businesses cannot afford their tax payments because of the economic impact of the coronavirus pandemic, the payments due this year can be limited, and it is normally possible to have them deferred interest-free. An application needs to be submitted to the relevant tax office by December 31, 2020.
The authorities are obliged to refrain from making their approval of deferral applications conditional on overcoming high barriers. Taxpayers are nevertheless required to demonstrate that the coronavirus crisis is having a direct economic impact on them. It is not necessary to declare the extent of the damage or loss. Thanks to this measure, income tax, corporation tax, and sales tax can be deferred interest-free.
Additionally, it is possible to adjust the level of advance payments on income tax, corporation tax, and trade tax. Applications to adjust advance payments are also submitted to the relevant tax office. The advance payments will be adjusted downward if it is clear that the taxpayer’s financial performance is deteriorating due to the coronavirus pandemic.
Furthermore, enforcement measures for overdue tax liabilities will be suspended until the end of the year. Statutory late payment fines accrued during this period will be waived. This measure also applies to income tax, corporation tax, and sales tax.
Lawyers with experience in the field of tax law can advise businesses, freelancers, and the self-employed.