COVID-19: Germany Allowing Businesses To Defer Taxes

by Ulrika Lomas, Tax-News.com, Brussels

30 March 2020

The German Ministry of Finance has adopted a circular including various tax relief measures for businesses affected by the coronavirus outbreak.

Under the support measures, businesses unable to pay their taxes as a result of the coronavirus pandemic can apply for temporary, interest-free deferrals of these payments. This measure applies to income tax, corporation tax and value-added tax.

While taxpayers will need to explain to the tax authorities that they have been directly affected by the virus, they will not need to document this in detail when requesting a deferral. Businesses can file applications with their respective tax offices until December 31, 2020.

In addition, companies, self-employed persons and freelancers can request downward adjustments to advance payments of income tax and corporate tax if their income in the current year is expected to be lower than anticipated due to the coronavirus. The same applies to the base tax amount used to determine trade tax prepayments. Taxpayers must also submit an application to their local tax office to benefit from this measure.

Furthermore, the enforcement of overdue taxes, as well as late payment penalties, will be waived for the remainder of 2020. This applies to income tax, corporate tax, and VAT. The customs administration, which administers import VAT, energy duty, and aviation tax, will grant the same relief, the ministry confirmed. This relief also applies to insurance tax and to VAT administered by the Federal Central Tax Office.

The Ministry of Finance has also adopted a measure to exempt from tax alcohol used by pharmacies in the production of disinfectants.

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