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.
Taxes and social security contributions may be deferred.
The advance payment has been adjusted.
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:
- 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
- The examination of the wage tax deferral, which is to be examined on an individual basis (in particular depending on the individual state)
Quick links for immediate help with
#TaxDeferral
- Federal Ministry of Finance to the aid package (total)
- Federal Ministry of Finance FAQ about Corona
- Federal Ministry of Finance on tax aid measures
- Federal Ministry of Finance letter on tax deferrals
- Federal Ministry of Finance Decree on trade tax
- Federal Ministry of Finance overview of competent authorities
- Customs - overview Corona
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
- 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
- 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:
- The application to the respective health insurance company
- 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
- 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
- The preparation of an overall concept for the restructuring process
Quick links for immediate help with
#TaxDeferral
further measures to mitigate COVID-19-related economic damages
*) 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