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Recommended action for companies and self-employed individuals

One of the most pressing problems of companies, freelancers, and self-employed individuals in the coronavirus crisis is the associated liquidity bottleneck. For this reason, we are presenting some of the emergency measures that are already available. In this regard Bavaria provides liquidity to those affected (item 1), besides Federal measures like tax relief (item 2), deferral of social security contributions (item 3), short-time work allowance (item 4), and other measures (item 5) assist in saving expenses, at least temporarily.

1.    Emergency assistance Bavaria

a.    Purpose of the emergency assistance?

The subsidies are granted to overcome the financial situation or liquidity bottleneck threatening the existence of companies and that was caused by the corona crisis in the spring of 2020.

b.    Who is eligible to apply?

Commercial enterprises and members of the independent professions with up to 250 employees with permanent establishments in Bavaria.

c.    What does liquidity bottleneck mean?

Liquidity bottleneck means that there is insufficient liquidity to pay current liabilities.

d.    Do private liquid assets have to be used?

Available liquid private assets must be used prior to using emergency assistance. This means that non-liquid assets for long-term old-age provision (shares, real estate, life insurance, etc.) or funds for living expenses are not to be used.

e.    How much is the amount of emergency assistance?

Emergency assistance is graduated according to the number of workers:

up to 5 employees maximum EUR 5,000,

  • up to 10 employees maximum EUR 7,500,
  • up to 50 employees maximum EUR 15,000,
  • up to 250 employees maximum EUR 50,000,

f.    Is there a legal entitlement to emergency assistance?

In the Bavarian State Government’s application form, applicants must acknowledge not to have a legal claim to emergency assistance. If conditions for emergency assistance are met in an individual case, however, it may be argued, upon initial superficial assessment, with good faith, that a claim is justified on the merits, but that the competent authority has some freedom to decide when granting emergency assistance within the scope of the specified amounts.

g.    For whom or for what will there be no emergency assistance? 

Applications are not eligible in the following cases:

  • relating to liquidity bottlenecks that arose prior to March 11, 2020
  • for companies in financial difficulties according to paras. 20 a) to c) of the Guidelines on State aid for rescuing and restructuring non-financial firms in financial difficulties (204/C 249/01), i.e.,
    • German limited liability companies (GmbHs) in which more than half of the subscribed share capital has been lost as a result of accumulated losses;
    • companies in which at least some shareholders have unlimited liability for its debts, where more than half of the equity reported in the company accounts have been lost as a result of accumulated losses;
    • companies which are the subject of insolvency proceedings or which meet the requirements for the initiation of insolvency proceedings at the request of their creditors,

unless the financial difficulties are due to the corona crisis.

h.    What declarations are to be made?

  • In lieu of an oath, applicants must declare that all information provided is true and correct to the best of the applicant’s knowledge and belief; negligent or intentional false or incomplete information may result in prosecution for subsidy fraud.
  • Upon request, the competent authority is to be provided with the documentation and information necessary to examine the facts and to process the application.
  • The data protection provisions laid down in the Guidelines and a possible review by the Court of Auditors must be approved.
  • Assurance is to be given that the limits of EUR 200,000 in state, federal and EU aid within the last three years will not be exceeded by the emergency assistance (de minimis limits).
  • Applicants must declare that the emergency assistance granted will be indicated when applying for subsequent grants.

2.    Tax relief

a.    What can I do?

Request for deferral of all taxes due or becoming due and unpaid until December 31, 2020, specifically

  • both back taxes (e.g., for 2018), and 
  • “subsequent advance payments” (e.g., for 2019, if the 2019 annual tax return has not yet been filed)


application for a reduction of the advance payments for the current year 2020 on the basis of the now re-estimated profits (or losses) due to the coronavirus crisis.

b.    What types of tax are affected?

Income tax (including solidarity surcharge), corporation tax (including solidarity surcharge), trade tax and value-added tax.

c.    Consequence?

Interest-free deferral of taxes

d.    Are there any requirements?

The tax payments cannot be made as a result of the coronavirus. Requests for deferral of taxes due after December 31, 2020 and adjustment of advance payments that only concern periods after December 31, 2020 must be specially justified.

e.    Are application forms already available?

You will find the necessary form here (in German). We will gladly assist you in completing it.

3.    Social security contributions

a.    May social security contributions also be deferred?

Under certain conditions, a company’s social insurance contributions may also be deferred (Section 76(2) sentence 1 (1) Social Code SGB IV).

b.    Requirements?

Immediate collection must constitute a significant hardship, i.e., if the company is in serious financial difficulties temporarily as a result of unfavorable economic circumstances, or where it would be in serious financial difficulties if the social security contributions due were to be collected immediately.

c.    In which cases will there be no deferral?

The entitlement to social security contributions must not be jeopardized. This means that deferrals may not be granted if the payment difficulties are not only temporary or if it is obvious that over-indebtedness cannot be reduced in the foreseeable future.

d.    Who should be contacted?

Applications for deferrals need to be filed with the competent health insurance fund, in which the requirements are to be substantiated.

4.    Short-time work allowance

If at least 10% of the workforce are affected by the loss of work, employers may apply for short-time work allowance retroactively to March 1, 2020.
See Update Q+A on short-time workand Overview of the main aspects of short-time work in the corona crisis.
5.    Other measures

a)    Savings through terminations?

Terminate all contracts that are not necessary (such as fruit for the office, gardening work, etc.)

b)    How to ensure long-term liquidity for my company?

  • Development bank Kreditanstalt für Wiederaufbau (KfW) offers generous guarantees for bank loans. Applications for such loans are filed via a company’s principal bank.
  • Development bank Förderbank Bayern (LfA) also provides support in the form of loans and guarantees.
  • See also Coronavirus: Support at the federal level and in Bavaria

Status: March 23, 2020


Gerd Seeliger

Dr. Gerd Seeliger


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Heiko Wunderlich

Heiko Wunderlich


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