Coronavirus: Federal level support and in Bavaria
In the current situation in view of the coronavirus, both the federal and state governments have provided support and assistance. The article below explains what this is like at the federal level and in Bavaria.
[Update March 19, 2020, 4 pm]
In addition to our information on the steps taken by the federal government and the Free State of Bavaria to support companies, self-employed individuals, and freelancers of March 17, 2020 and on the application form of the Bavarian tax authorities for tax deferral and/or the reduction of tax advance payments of March 19, 2020, the following documents (in German) are attached:
- the notice of the Federal Ministry of Finance of March 19, 2020 on the fiscal measures to take into account the effects of the coronavirus (COVID-19/SARS-CoV-2) and
- identical decrees of the supreme tax authorities of the German states on trade tax measures to take into account the effects of the coronavirus (COVID-19/SARS-CoV-2), according to which the revenue offices may adjust trade tax for municipalities if a reduction of income tax/corporate tax is requested.
Of course, we are always glad to assist you with filing any applications for deferral and/or reduction.
[Update March 19, 2020, 12 am]:
On March 17, 2020, we provided information about the steps taken by the federal government and the Free State of Bavaria to support companies, self-employed individuals, and freelancers. Now the application forms of the Bavarian tax authorities for tax deferral and/or the reduction of tax advance payments and of the Bavarian state government for “Corona Emergency Aid” are available, which are attached for your information. We will gladly assist you with filing the relevant applications.
- Application form of the Bavarian tax authorities for tax deferral and reduction of advance payments
- Application form for “Corona Emergency Aid” [“Corona Soforthilfe”] of the Bavarian State Government including explanations
I. Support at federal level
The coronavirus is a hard hit for self-employed individuals, freelancers, and companies alike. In view of the massive cuts that this crisis is entailing, the Federal Minister of Finance and the Federal Minister of Economic Affairs and Energy presented a far-reaching set of measures on March 13, 2020 to provide those affected with sufficient liquidity. This “protective shield” is based on four pillars:
1. Making short-time allowance more flexible
If there is no longer enough work for employees, applications for short-time allowance may be filed. While previously this was only possible if one third of employees were without work, 10% will now be sufficient for the state subsidy. Short-time allowance will also be granted for temporary workers, and social security contributions will be reimbursed by the Federal Employment Agency.
2. Fiscal liquidity support for companies
The options for tax payment deferrals, advance payment reductions, and in the area of enforcement will be enhanced to improve liquidity. In detail:
a. Taxes may be deferred if collection of the tax represents a considerable hardship. Tax authorities are instructed not to impose strict requirements in this respect.
b. Advance payments may be adjusted more easily. As soon as it turns out that income is likely to be lower in the current year, tax advances are supposed to be reduced quickly and easily.
c. Enforcement measures (such as account seizures) or late payment surcharges will be waived until December 31, 2020 as long as debtors of tax payments due are directly affected by the effects of the coronavirus.
These tax relief measures give businesses, the self-employed, and freelancers the option to use the deferred liquidity for ongoing costs instead.
3. “Protective shield” for businesses and companies
The liquidity of companies and employees is to be protected by measures of unlimited scope to compensate for involuntary sales declines and the associated financial difficulties,. For this purpose, bank KfW will use existing loans for businesses, the self-employed, and freelancers and improve access conditions and terms of those loans:
a. Companies existing for more than 5 years
- Risk assumption (liability exemptions) of up to 80% for on-lending financing partners (usually the borrowers’ principal banks) for working capital loans of up to EUR 200 million loan volume. Higher risk assumption usually facilitates the financing partners’ willingness to grant loans.
- Opening of liability exemption also for large companies with annual sales of up to EUR 2 billion (previously: EUR 500 million).
KfW loan for growth
- Temporary extension to general corporate financing including working capital by way of syndicated financing (previously limited to investments in innovation and digitalization)
- Increase of sales limit for eligible companies from EUR 2 billion to EUR 5 billion.
- Increase of pro-rated risk assumption to up to 70%. This will facilitate access for SMEs and larger companies to individually structured, tailored syndicated financing.
b. Start-up companies
ERP Start-up loan – Universal
- Risk assumption of up to 80% for on-lending financing partners (usually the borrowers’ principal banks) for working capital loans of up to EUR 200 million. Higher risk assumption usually facilitates the financing partners’ willingness to grant loans.
- Opening of liability exemption for large enterprises with annual sales of up to EUR 2 billion (previously: EUR 500 million).
c. KfW special programs
KfW will prepare special programs for companies and introduce them as soon as possible. These are still subject to approval by the European Commission.
4. Strengthening European cohesion
At European level, the German government is committed to a coordinated and determined approach.
In addition to support at the federal level, Bavaria will set up an emergency aid program aimed at companies that are particularly affected by the corona crisis.
1. Corona hardship fonds
Small and medium-sized industrial enterprises and members of the independent professions, each with fewer than 250 employees and either annual sales of no more than EUR 50 million or an annual balance sheet total of no more than EUR 43 million and with a permanent establishment in Bavaria are eligible to apply. The emergency aid is tiered according to business size and amounts to between EUR 5,000 and EUR 30,000.
2. LfA Förderbank Bayern
Affected businesses, self-employed individuals, and freelancers may also contact LfA Bayern bank for questions as to how to overcome the financial difficulties of the coronavirus and receive free advice on the following loan programs and guarantees.
a. Universal loan
The universal loan may be used to finance investments, working capital (including goods), and for the rescheduling of short-term liabilities for industrial enterprises with annual (consolidated) sales of up to EUR 500 million.
- Loans ranging from EUR 25,000 to EUR 10 million are possible.
- Where loans of up to EUR 2 million cannot be sufficiently collateralized for small or medium-sized companies, 60% release from liability (in case of LfA risk up to EUR 250,000 in accelerated procedure) is possible.
b. Immediat loan
The immediate loan is the special program for financing companies in liquidity and profitability difficulties. Working capital to maintain solvency and the rescheduling of short-term liabilities (current account overdrafts, trade payables, other liabilities) are eligible for funding.
- Industrial enterprises with annual (consolidated) sales of up to EUR 500 million euros are eligible to apply.
- The loan amount is EUR 2 million.
LfA provides default guarantees for loans to medium-sized enterprises and members of the independent professions.
- The guarantees cover investment, working capital, and guarantee loans that could otherwise not be granted due to a lack of bank collateral.
- The maximum guarantee amount is EUR 5 million.
Status: March 19, 2020
BMF letter on the income tax treatment of virtual currencies and of tokens from June 17, 2021 - part 1 - After a long wait for a statement from the German Federal Ministry of Finance on…
SKW Schwarz advises Volue on acquiring the ProCom energy business - SKW Schwarz Rechtsanwälte advises Volue ASA on acquiring 100% of ProCom GmbH.
Handelsblatt “Germany's Best Lawyers 2021”: Two awards and over 50 lawyer recommendations for SKW Schwarz - A total of 53 SKW Schwarz lawyers in 20 practice areas can count themselves…