BACKGROUND

The coronavirus epidemic (COVID-19) has serious repercussions for all areas of society and especially for the economy. The extent of the economic consequences cannot yet be seriously assessed. However, it should be clear that many companies are already threatened in their existence and face significant financial challenges. In order to support companies in coping with possible crises, the Federal Government announced on March 13, 2020 a package of measures worth billions ("Protection shield for employees and companies"). This package of measures comprises the following key regulations:

1. Flexible short-time work allowance & working time regulations;

2. Unlimited aid commitments for complete liquidity coverage;

3. European cooperation;

4. Tax policy measures.

The financial administrations of the federal states have now taken the first steps to implement the tax policy measures.

TAX POLICY MEASURES OF THE PROTECTIVE SHIELD

The following tax policy measures are planned as part of the protective shield for employees and companies:

• Easier tax deferrals: The tax authorities should be able to defer taxes (without interest) if their collection would represent "considerable hardship". To this extent, the tax authorities are instructed not to make any strict demands on the existence of a substantial hardship required for the deferral.
• Adjustment of tax prepayments: Tax prepayments should be reduced quickly and easily as soon as it is foreseeable that income will likely be lower in the current year.
• Waiver of enforcement measures and late payment surcharges: For taxpayers directly affected by the coronavirus, enforcement measures (e.g. attachment of accounts) and late payment surcharges should be waived until December 31, 2020.
• Accomodation of certain tax authorities: In the case of taxes that are managed by the customs administration (e.g. energy tax and air traffic tax), the Directorate General of Customs has been instructed to accommodate the taxpayers. The same applies to the Federal Central Tax Office, which is responsible for sales tax and insurance tax. This tax could also be accommodated by applying the above-mentioned measures accordingly (ie deferrals, adjustment of advance payments, provisional waiver of enforcement).

FIRST IMPLEMENTATION BY THE FINANCIAL ADMINISTRATION

Individual tax authorities have already taken the first concrete steps to implement the tax policy measures.

On March 17, 2020, the Bavarian State Office for Taxes published an application form for "Tax relief due to the effects of the corona virus" (form ). This form allows taxpayers to submit the following applications:

• Interest-free deferral: If the taxpayer is no longer able to pay tax due to the corona virus , an interest-free deferral can be applied for for three months. The taxpayer must state whether and in what amount monthly installments may be considered.
• Reduction in advance tax payments : As a result of the corona virus, taxpayers can apply for a reduction in advance payments on income, corporate and trade tax.

On March 16, 2020, the Ministry of Finance of Schleswig-Holstein published a (not yet available) decree, which is to implement the following measures with immediate effect:

• Deferral: Taxpayers directly and significantly affected can submit applications for deferral of the taxes already due or due by December 31, 2020, stating their circumstances. When checking the conditions for deferrals, no strict requirements have to be made. In such cases, it should generally be possible to dispense with the payment of deferred interest. Requests for deferral of taxes due after December 31, 2020, and requests for adjustments to advance payments that only affect periods after December 31, 2020 must be justified.
• Reduction of tax prepayments : Taxpayers directly and significantly affected can submit requests for adjustments to the prepayments on income, corporate and trade tax until December 31, 2020, stating their circumstances. The resulting damage does not have to be proven in terms of value.
• Exclusion of enforcement measures: For taxpayers who are directly and significantly affected, enforcement measures should be waived until December 31, 2020 for all taxes that are in arrears or due by that time. In the cases in question, the late payment surcharges for these taxes in effect from the date of publication of the decree until December 31, 2020 must be waived until December 31, 2020.

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

OUTLOOK

It can be expected that the financial authorities of the other federal states will also take further steps to implement the package of measures in the short term. In addition, it can be assumed that the previous package of measures will be expanded or specified by the Federal Government. The Federal Ministry of Justice and Consumer Protection announced on March 16, 2020 that it would like to flank the planned liquidity measures by means of a legal regulation suspending the insolvency application until September 30, 2020 for affected companies.

From a tax perspective, further aid measures are currently being discussed at all levels. These include, for example, 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. It is still open whether and to what extent the legislator will take appropriate measures. In any case, the Federal Government has made it clear that it is willing and willing to provide any support to companies.

We will keep you up to date with further developments.

[View source.]