Immediate tax measures to ensure taxpayers’ liquidity

20.03.2020 – Deferral of tax payments/adjustmend of tax prepayments as appropriate instruments to bridge liquidity crisis

WHICH MEASURES CAN BE IMMEDIATELY TAKEN BY ENTREPRENEURS OR SELF-EMPLOYED TAXPAYERS

  • Deadlines for tax declarations and advanced tax returns

Taxpayers still have to comply with the current deadlines for tax declarations and advanced tax returns.

  • Income Tax

A refund of already paid income taxes might be applied for in case certain requirements are met. This relief, however, is limited to tax prepayments made for the year 2020 relating to Personal Income Tax, Corporate Income Tax, Trade Tax and Solidarity Surcharge. In order to make use of such benefit the taxpayer has to file an application for a reduction of income tax or trade tax prepayments with the local tax office (an additional application with the local city or municipality is not required) The same procedure applies with regard to all future tax prepayments relating to the year 2020.

  • Value Added Tax

With regard to VAT, taxpayers might apply for an extension of tax payments (tax payment deferral). This includes, in particular, tax payments in connection with the upcoming advanced Value Added Tax Return for March 2020, which is generally due on April 10,2020 or May 10, 2020 (assuming a filing extension has already been granted by the tax office) or an application for a reduction of the 2020 special VAT prepayment (1/11 of last years VAT total VIAT Liability), which was due on February 10, 2020.

According to our information it should be possible to defer VAT payments for a period of up to three months without suffering interest or any other penalties.

  • Social security contributions

Generally, payment of Social Security Contributions can be deferred (§ 76 SGB IV). However, the Social Security Tax Authorities did not yet publish any guidance how to deal with the challenges of the current Corona crisis. Payment extension applications can be filed, but decisions by the authorities are currently on hold. Please consider, that applications must be filed with every individual health insurance company separately. Therefore, it might be necessary to file numerous applications.

  • Wage Tax

A tax payment deferral for wage tax purposes is not possible.

Note

The applications for tax payment deferrals or tax prepayment reductions must be filed in writing and it must either include the applicants original signature or submitted by facsimile.

What's next?

We will keep you posted on any further developments concerning both short-term as well as medium-term measures appropriate to ensure taxpayers liquidity.

WHERE DO I FIND ADDITIONAL INFORMATION?

Further to our below mentioned experts you can gather information from the following websites Website der Bundessteuerberaterkammer or aktuellen Verlautbarungen des Bundesministeriums der Finanzen .

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