On 3 June 2020, the German government announced a fiscal package. The aim is to help families, companies and local authorities to better manage the economic consequences emerging from the Covid-19 pandemic.
In the following article, the most important points for entrepreneurs are highlighted. A paper drafted by the Federal Government, which constitutes key issues, can be found here (in german).
- reduction of the VAT rate from 19% to 16% and from 7% to 5%, temporarily from 1 July 2020 to 31 December 2020 (no. 1 key issues paper)
- stabilization of social security contributions at a maximum of 40% by 2021 (no. 2 key issues paper)
- postponing of the due date regarding the import VAT to the 26th of the following month (no. 4 key issues paper)
- extension of the tax loss carryback for the years 2020 and 2021 to a maximum of EUR 5m (no. 5 key issues paper)
- degressive depreciation for wear and tear (Abschreibung für Abnutzung, AfA) with a factor of 2.5 compared to the currently applicable AfA, and a maximum of 25% per year for moveable economic assets in the fiscal years 2020 and 2021 (no. 6 key issues paper)
- modernization of corporate tax law: option model (Optionsmodell) for corporate tax for partnerships, increase of the reduction factor for income from commercial activities to four times of the trade tax base (Gewerbesteuermessbetrag) (no. 7 key issues paper)
- improving opportunities for employees to participate in their companies, to exploit the potential of a well-regulated, modern and efficient capital market and strengthen Germany as a location for investment in future and growth companies (no. 8 key issues paper)
- The debt relief procedure after insolvency is shortened to three years for natural persons. Introduction of a pre-insolvency restructuring process for companies (no. 9 key issues paper)
- simplification of public procurement law: shortening of award deadlines in EU procurement procedures, adjustment of thresholds for restricted invitations to tender and direct awards in Germany (no. 11 key issues paper)
- bridging aid for small and medium-sized companies, whose sales have fallen by at least 60% in April and May 2020 compared to April and May 2019 due to the Covid-19 pandemic, and whose sales declines continue to fall in June to August 2020 by at least 50% (no. 13 key issues paper)
- research tax allowance is granted retroactively as of 1 January 2020 and limited until 31 December 2025 on an assessment basis of up to EUR 4m per company (no. 32 key issues paper)
- co-financing obligations in application-oriented research are reduced (no. 33 key issues paper)
- the purchase price limit for the taxation of purely electric company cars is increased from EUR 40,000 to EUR 60,000 (no. 35 b key issues paper)
- bonus programme for future investments by vehicle manufacturers and the supply industry for the years 2020 and 2021 (no. 35 c key issues paper)
If you have any further questions or need assistance in this regard, feel free to reach out to us!
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Dr. Tara Kamiyar-Müller
Attorney at law
act legal Germany
AC Tischendorf Rechtsanwälte
Frankfurt, Germany
Phone: +49 69 24 70 97 35
Send an email
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