On March 13, 2020, the German government announced a billion-dollar package of measures (“protective shield for employees and companies”) to support companies economically affected by the effects of the coronavirus (COVID-19 / SARS-CoV-2). A key pillar of this protective shield are, among other things, tax policy measures that are intended to promote the liquidity of companies (see also our Client Alert dated March 18, 2020).

Against this background, the Federal Ministry of Finance (BMF), in agreement with the highest financial authorities of the federal states, published a letter on March 19, 2020 on the implementation of individual tax policy measures.

TAX MEASURES

The BMF letter regulates the following tax relief measures, which essentially relate to the period until December 31, 2020:

1. HOUR OF TAXES

• The taxpayers, who can be proven to be directly and not insignificantly affected, can submit applications for deferral of the taxes already due or due by December 31 , 2020, which are administered by the state tax authorities on behalf of the federal government (e.g. income and corporation tax).
• These applications must also be granted if the taxpayers cannot prove the damage caused in terms of value.
• It is generally not necessary to charge deferred interest.
• A deferral is not considered for taxes that a third party has to pay for the account of the tax debtor (e.g. capital gains tax; wage tax; withholding taxes according to § 50a EStG for limited taxpayers, etc.).
• Applications for deferral of taxes due after December 31, 2020 must be specifically justified.

2. REDUCTION OF TAX PAYMENTS

• The taxpayers who can be shown to be directly and not insignificantly affected can submit requests for adjustments to the advance payments due or due to be made by December 31, 2020 on income tax or corporate income tax.
• These applications must also be granted if the taxpayers cannot prove the damage caused in terms of value.
• Requests for adjustments to the advance payments, which only affect periods after December 31, 2020, must be justified in particular.

3. EXCLUSION OF ENFORCEMENT MEASURES

• Provided that the tax office knows - in whatever way - that the enforcement debtor is directly and not negligibly affected, enforcement measures should be waived until December 31, 2020 for all taxes that are due or payable up to that point (within the meaning of Section 1) become.
• In the cases in question, the late payment surcharges for these taxes that were forfeited in the period from March 19, 2020 to December 31, 2020 must be waived by December 31, 2020 .

4. DIRECTLY AFFECTED

The BMF draws attention to the fact that the general principles apply to (only) those directly affected, ie that they are not entitled to the measures described above.

Taxpayers affected are advised to contact their responsible tax office at an early stage. It should be noted that the tax offices are currently closed to the public due to the coronavirus epidemic.

CONCLUSION

With the letter, the BMF has created further clarity in the implementation of the aforementioned measures.

It is expected that further tax relief measures will be taken in the near future. Further measures are currently being discussed at all levels, such as adjustments to the tax submission deadlines (in particular with regard to advance sales tax returns), the expansion of depreciation options, the early abolition of the solidarity surcharge or a further deduction of trade tax.

We will keep you up to date with further developments.

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