#TaxDeferral

Taxes and social security contributions may be deferred.
The advance payment has been adjusted.

Taxes and social security contributions may be deferred.
The advance payment has been adjusted.

If a company proves that it is directly and severely affected by COVID-19, an application for a tax deferral can be submitted immediately. In this case, the advance payments, for example for income tax, are also adjusted. The following information provides an overview of the topic.

Conditions for deferral of taxes and adjustments of advance payments

Deferral of tax payments:

  • Tax payments which are due in 2020 cannot be deferred due to the consequences of the COVID-19 pandemic
  • Demonstration that the company is directly concerned

Adjustment of advance payments:

  • Evidence that taxpayers' income in the current year is likely to be lower than expected before the corona pandemic

Suspension of enforcement measures:

  • Possible as long as companies are directly and significantly affected by COVID-19

Measures

Deferral of tax payments

  • Time limit and interest-free deferral of payments
  • Application to the competent tax office until December 31, 2020
  • Concerns income and corporate tax as well as VAT
  • A deferral of income tax (with the exception of the flat-rate wage tax) is legally not possible. In the federal states of Bavaria and North Rhine-Westphalia, however, extensions of up to two months for wage tax registrations are possible upon application. Other federal states may follow suit

Adjustment of advance payments

  • Advance payments on income and corporate tax of companies, self-employed and freelancers can be adjusted
  • The adjustment of trade tax advance payments is also possible
  • A refund of special VAT prepayments is possible (however, the individual regulations of the respective Länder have to be respected).
  • Analogous validity for the factor regarding the purposes of advance payments of trade taxes
  • Any applications for deferral and remission must be addressed to the municipalities and only then to the competent tax office if the assessment and collection of trade tax has not been transferred to the municipalities
  • The competent authorities have announced a simple and rapid reduction in advance payments

Enforcement

Suspension of enforcement measures

  • Waiver of enforcement of overdue tax debts until the end of 2020
  • Remission of surcharges for late payment which are legally due during this period
  • Concerns income and corporate tax as well as turnover tax
  • Analogous approach for customs administration (including energy tax and air traffic tax), insurance tax and turnover tax (insofar as administered by the Federal Central Tax Office)

PLUTA provides support for:

  1. The avoidance of liability risks. The timely submission of deferral requests and acceptances is necessary to avoid liability in accordance with § 69 German Fiscal Code in a legally secure manner
  2. The examination of the wage tax deferral, which is to be examined on an individual basis (in particular depending on the individual state)

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Conditions for the deferral of social security contributions

Social security contributions can be deferred under the conditions of § 76, Subsection 2, Sentence 1, No. 1, Social Security Code IV

  1. if immediate collection would constitute a considerable hardship for the company. Considerable hardship is given if the company is temporarily in serious financial difficulties due to unfavorable economic circumstances or would get into such difficulties if the social security contributions due were to be collected immediately
  2. and if the claim is not endangered by the deferral. Repayment is at risk if the payment difficulties are not only temporary or if over-indebtedness obviously cannot be reduced in the foreseeable future.

The prerequisite should be that short-time work compensation is taken up with priority, followed by other support measures (subsidies, loans).

Measures

  • The deferral request must be submitted to the respective health insurance fund as the competent collecting agency, which means that several requests may have to be submitted
  • At the request of the employer, contributions already due or still to be due may be deferred initially for the actual months March 2020 to April 2020, and possibly until May 2020
  • A deferral by the employers' liability insurance association is also possible; this regulation also applies to voluntarily insured persons
  • A deferral of wage tax (with the exception of the flat-rate wage tax) is legally not possible. In the federal states of Bavaria and North Rhine-Westphalia, however, extensions of up to two months for wage tax registrations are possible upon application. It is possible that other federal states will follow in this respect.
  • The regulations on short-time work compensation have been adjusted; among other things, there is now the possibility of reimbursement of social security contributions that are borne solely by the employer when short-time work compensation is received. As a result, a deferral in these cases is only possible until the short-time working allowance is granted.
  • No late payment surcharges or reminder fees are to be levied for the above-mentioned period. Insofar as employers are significantly affected by the crisis, enforcement measures may be provisionally waived for the above-mentioned period in the case of all contributions in arrears or contributions due up to this point in time.
  • A deferral of income tax (with the exception of the flat-rate wage tax) is legally not possible. In the federal states of Bavaria and North Rhine-Westphalia, however, extensions of up to two months for wage tax registrations are possible upon application. Other federal states may follow suit

We will be pleased to support you in substantiating your applications and demonstrating that you have been directly affected by the COVID-19 pandemic as well as all further requirements to substantiate your application (considerable hardship of confiscation, advice on liability issues, etc.).

PLUTA provides support for:

  1. The application to the respective health insurance company
  2. The avoidance of liability risks. Only if a deferral is granted in good time before the normal due date can a civil liability risk and potential criminal liability be avoided in accordance with § 266a German Criminal Code; the total amount deferred must be paid before the end of the deferral period in order to avoid further liability risks
  3. The exhaustion of other measures provided by the Federal Government to strengthen liquidity. In principle, the deferral of social security contributions is only subsidiary to the other measures taken by the Federal Government to increase liquidity
  4. The preparation of an overall concept for the restructuring process

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further measures to mitigate COVID-19-related economic damages

#ShortTimeWork

  • Application possible retroactively to March 1st.
  • Allowed in case of absence from work by >10% (previously 30%) of the workforce with more than 10% of the salary
  • Full refund of social security contributions
  • Also applies to temporary employment agencies
  • Abstention from building up negative working time accounts
  • Term up to 12 months

#COVInsAG*

  • Conditional suspension of the obligation to file for insolvency until September 30, 2020, if the insolvency maturity is based on the consequences of the COVID 19 pandemic and there are prospects of eliminating the insolvency
    • Insolvency maturity is due to the spread of the COVID-19 virus and
    • prospect of eliminating an existing insolvency if no insolvency had occurred by December 31, 2019
  • Extensive suspension of liability and rescission rules as well as criminal law treatment

#KfWLoans

  • Risk assumption by KfW of up to 90% of the loan volume
  • Application for and granting of loans via intermediary financing partners ("house banks")
  • Up to 800 TEUR with 100% assumption of the credit default risk

#LiquidityAid

  • Liquidity assistance from the Bundesländer for companies and the self-employed (including emergency aid, guarantees, bridging loans, mezzanine)

#CovCivilLaw

  • Temporary right to refuse performance in the context of continuing obligations (for consumers and micro-entrepreneurs**)
  • Temporary deferral within the framework of consumer loan agreements
  • Restriction of the possibility of termination of a rental and lease agreement by the landlord
  • Holding of general meetings and shareholders' meetings by means of electronic communication
  • Measures for holding staff council elections in order to ensure that staff councils as well as works councils have the basic capacity to act and make decisions (implementation planned)

*) Act on the mitigation of the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings of March 27, 2020, Federal Law Gazette Part 1 No. 14, 569 ff.

To mitigate COVID-19-related economic damage, further extensive measures by companies are necessary.

PLUTA supports