Consequences and options in view of the Corona crisis
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Consequences and options in view of the Corona crisis
Effective date: 24 September 2020 (Changes, additions in green)
Dear Sir or Madam,
In view of the circumstances caused by the Coronavirus please find below the latest summary of all
issues:
1. New economic stimulus package of the German Federal Government
On 3 June 2020, the German Federal Government adopted a new economic stimulus package.
Below you will find the most relevant points from our point of view:
a. Reduction of value added tax
From 1 July to 31 December 2020, the VAT rate will be reduced from 19% to 16% and for
the reduced rate from 7% to 5%.
ð If you leave your net sales prices unchanged or reduce your gross sales prices
accordingly, the reduction in the VAT rate will have no effect on your business. If you
leave your gross sales prices unchanged or increase your net sales prices accordingly,
you can collect 100% of the VAT reduction for your business.
b. Child bonus
Parents receive a child bonus of € 300 once per child entitled to child benefit. The child
bonus is paid regardless of the income or assets of the parents or children. It is paid out
together with the child benefit over a period of 3 months (start date is currently
unknown). The bonus will be offset against the child allowance on the tax return, so
according to current estimates, the child bonus will only be effective up to a taxable
income of € 90,000.00. For families with a higher taxable income, the child bonus
represents a zero-sum game. However, the child bonus is not credited against the basic
provision - such as Hartz IV.
c. Relief amount for single parents
Due to the higher day care costs, especially for single parents in times of Corona, and the
resulting expenses, the relief contribution for single parents will be increased for a limited
period of 2 years from currently € 1,908 to € 4,000 euros for the years 2020 and 2021,
and thus more than doubled.
d. Subsidy for purchase fo electric vehicles
The purchase subsidies (direct subsidy from the state) for the purchase of climate- and
environmentally friendly electric vehicles will be doubled to € 6,000.00.
e. Interim aid
A € 25 billion package for interim aid is being set up for small and medium-sized
enterprises and the solo self-employed. All companies, organisations, solo self-employed
persons and self-employed members of the liberal professions as their main occupation
from all economic sectors are entitled to apply for interim aid, provided that they are not
eligible for the Economic Stability Fund (WSF), and provided that they had to cease their
business activities completely or to a significant extent due to the Covid-19 crises (=drop
in sales in April and May 2020 of at least 60 percent altogether compared to April and
May 2019).
The applicant must not have been in difficulty on 31 December 2019 by EU definition.
1
Under the interim aid a support to the following percentages is granted:
- 80 percent of the fixed costs are refunded in case of a drop in sales of more than 70
percent,
- 50 percent of the fixed costs are refunded in case of a drop in sales of between 50
and 70 percent,
- 40 percent of the fixed costs are refunded in case of a drop in sales of between 40
and less than 50 percent
in the month for which the support is granted compared to the corresponding month of
last year of up to € 150,000.00 max. for three months. In case of companies with up to
five employees the maximum amount of refund is € 9,000 for three months, in case of
companies with up to ten employees € 15,000 for three months. Any overcompensation
has to be paid back.
The grant applications have to be submitted by a tax consultant, auditor or certified
accountant (vereidigter Buchprüfer). The applications can be filed from 8 July 2020 on.
Applications for the so-called Interim aid I can only be submitted until 30 September 2020.
The interim aid is now extended (so-called Interim aid II). The eligibility conditions as well
as the amount of the financial aid are further improved with the result that, in case of
satisfaction of the conditions, also those companies can benefit from this support which
were not entitled to apply for Interim aid I.
Those are entitle to apply whose sales decreased for at least 50% in two consecutive
months (freely selectable) in the period from April to August 2020 compared to the same
months of last year or whose drop in sales was at least 30% on average in the months
from April to August 2020 compared to the same period in the previous year. The ceiling
amounts for SMEs of € 9,000 or € 15,000 were completely abolished.
You will find a calculation example of the eligibility to apply in attachment 6.
Furthermore, the support rates were adjusted. Under the interim aid a support to the
following percentages is now granted:
- 90 percent of the fixed costs are refunded in case of a drop in sales of more than 70
percent,
- 60 percent of the fixed costs are refunded in case of a drop in sales of between 50
and 70 percent,
- 40 percent of the fixed costs are refunded in case of a drop in sales of between 30
and less than 50 percent.
Within the final account, subsequent payments shall be possible just like reclaims.
Also under the new programme the applications have to be submitted by an “auditing
third party” (tax consultant, auditor, certified accountant, lawyer) in a completely
digitalised procedure.
Submission of the applications shall be possible from October 2020 on.
Currently, we assume that, if the conditions are satisfied, an application for Interim aid II
can also be filed if an application for Interim aid I has already been submitted, since with
Interim aid I the fixed costs for June, July and August were refunded, whereas with Interim
2aid II the refund of the fixed costs is now possible for September, October, November and
December.
f. Apprenticeship training position
A bonus of € 2,000 is to be granted to small and medium-sized companies if they do not
reduce the number of their trainees despite the virus crisis.
g. Declining balance method of depreciation
The declining balance method of depreciation for moveable assets will be reintroduced
for purchases in 2020 and 2021 at 25% per annum.
h. Social security contributions
Social security contributions will be capped at a maximum of 40% until 2021, so no
increases in social security contributions are expected for employers and employees until
2021.
i. Modernization of corporate tax law
In order to improve the competitive conditions for companies, the corporate tax law is
being modernised: among other things, an option model for corporate tax for
partnerships and the increase of the reduction factor for income from business operations
to four times the trade tax base.
j. Tax loss carryback
The tax loss carryback will be extended - by law - for the years 2020 and 2021 to a
maximum of EUR 5 million or EUR 10 million (in the case of joint assessment). A
mechanism will be introduced to enable this carryback to be used with immediate
financial effect in the 2019 tax return, e.g. by creating a tax corona reserve. The reserve
will be released by the end of 2022 at the latest.
2. Employees
a. Short-time working allowance
As to short-time working allowance, please take note of our summary in appendix 1.
b. Refund pursuant to Infection Protection Act (Infektionsschutzgesetz)
Pursuant to Sec. 29 and Sec. 30 Infection Protection Act the Public Health Department can
decide to place people in quarantine. In case of illness of the person concerned the
provisions regarding sick pay apply. Those placed in quarantine as a precautionary
measure without being sick are entitled by law to a compensation of their loss of income
to the amount of their net income. For the moment the employer is responsible for
compensating the loss of income. Pursuant to Sec. 56 Infection Protection Act he has the
possibility to file an application for refund of the amounts paid within three months.
c. Facilitations regarding certificates of incapacity
Incapacity for work after an anamnesis by phone can be certified only for a maximum of 7
days, one week. An extension by phone is possible if the disease continues to be mild, and
if no Coronavirus infection is suspected. The certificate is sent by post.
3d. Data protection
Information with regard to processing of personal data by the employer in connection with
the Coronavirus pandemic is available at www.bfdi.bund.de.
e. Dismissal of employees
The dismissal of employees or the non-renewal of fixed-term employment contracts are,
of course, options in this situation. However, this should be well considered, because when
the situation gets better in a few months as is the case in China, there might be a lack of
precisely these employees. In general we ask you to discuss the dismissal of employees
with a specialist for labour law, since pronounced dismissals are effective only if certain
conditions are satisfied.
f. Unemployment benefits
The duration of unemployment benefits I (Arbeitslosengeld I) is to be prolonged for three
months for all beneficiaries whose entitlement would end between 1 May and 31
December 2020.
g. Support for the installation of home office workplaces
According to the Federal Ministry of Economics and Energy (BMWi), small and medium-
sized enterprises (SMEs) and local craftsmen can now receive financial support if they
install home office jobs at short notice. Up to 50 percent of the costs of a supporting
consultation by a consulting firm authorized by the BMWi will be reimbursed. The BMWi's
"go-digital" support programme provides for a special, fast and unbureaucratic procedure
for this purpose:
SMEs and local craftsmen wishing to benefit from the funding must first search for a
consulting firm in their region via the consultant map and conclude a consulting contract
with it. From this point on, the consultancy firm takes over all further steps for the
companies: from applying for the subsidy to implementing tailor-made and secure
measures to setting up home office workplaces:
https://www.innovation-beratung-
foerderung.de/INNO/Navigation/DE/Karten/Beratersuche-go-
digital/SiteGlobals/Forms/Formulare/beratersuche-go-digital-formular.html
3. Ensuring liquidity
a. Assumption of consulting fees caused by the Corona crisis
On 3 April 2020 a modified directive on the promotion of entrepreneurial know-how for
companies affected by Corona entered into force (BAnz AT 02.04.2020 B5).
The subsidy granted for all SMEs affected by the Corona crisis will be 100 % of the charged
consulting fees. The maximum eligible consulting fees amount to EUR 4,000 in these cases.
Apart from the fee, the eligible consulting fees comprise also out-of-pocket expenses and
travel expenses of the consultants, but not the value added tax.
The subsidy is directly paid out to the consulting firm.
The application has to be submitted online. All relevant consulting invoices have to be
enclosed.
4Click here to get to the application
We are happy to assist you with any question regarding the application.
b. Rental payments
If you are no longer able to pay the current rental obligations (e.g. rent for a shop) due to
the current Corona crisis, you can unilaterally suspend the rental payments with reference
to the Corona crisis, because if you are in arrears with rental payments from the period 1
April to 30 June 2020, the rental agreement cannot be terminated by the landlord. You
can then repay these rental arrears until the end of June 2022. The landlord is entitled to
charge 4% interest p.a. for these arrears of rental payments. However, landlords have the
right to have a court check whether the tenants concerned meet the relevant
requirements due to the Corona crisis.
Important: we strongly recommend that you contact your landlord in advance in case of a
planned suspension of rental payments, so that an amicable solution can be found for both
parties.
c. Public support packages for companies and freelancers
As to public support packages, please take note of our summary in appendix 5.
d. Bank loans
Currently the following credit programmes are available:
i. All companies
All established enterprises that have been in existence for at least five years can ap-
ply for a KfW Entrepreneur Loan. The ERP Start-up Loan is available for younger en-
terprises that have not yet been in existence for five years.
The maximum loan amount per group of companies is EUR 1 billion. Various terms
of up to 5 years are offered. With such a loan domestic projects can be financed by
providing the liquidity and financing the warehouses (= equipment) as well as real
investments, asset deal and share deal (=investment). Operating resources include
all current costs. These include, for example, rent and deposit for office and com-
mercial premises or personnel costs.
ii. Medium-sized and large enterprises
Medium-sized and large companies can take advantage of a KfW loan for growth.
Financing is offered from a loan amount of EUR 25 million. The maximum loan
amount is unlimited if the company can demonstrate a corresponding liquidity re-
quirement. KfW participates in the financing in a manner customary in the market
and on the same terms as other financing partners. The loan can be used to finance
investments or operating funds.
Important: Companies ought to contact Kreditanstalt für Wiederaufbau (KfW) or LFA via
their main bank now. We ask you to do that in a timely manner, since a significant number
of those applications to the banks can be expected. The current processing time of
applications is two to three weeks. It might make sense to request a tax deferral for this
period if substantial tax payments become due in the near term.
5Before you go to your bank we recommend to prepare the following which we are happy,
of course, to support you with:
a. Preparing a liquidity plan, ideally on the basis of different scenarios (e. g. lifting of
restrictions on travel already at the end of March (Scenario I) and lifting of
restrictions on travel only at the end of May (Scenario II)).
b. Determining the financial needs in all simulated scenarios. The planning should, for
logical reasons, be done until the end of the year in order to take into consideration
delayed funding gaps.
c. Communication with your main bank and, when appropriate, requesting a limited
overdraft facility covering the worst case scenario.
d. Clarifying if short-time work is reasonable, and, when appropriate, take it into
account in the liquidity plan.
e. Assembling of the necessary documents:
- for loans of up to EUR 3 million, KfW does not request any (risk) documents;
documents are required only for main bank,
- for loans from EUR 3 million to EUR 10 million the financial statements of the last
two years or of the last year and the business assessment as of 31/12/2019 have to
be submitted to KfW; the main bank can request different documents also in this
case,
- for loans of more than EUR 10 million the complete planning documentation is
required also for KfW
Important: Since negotiations with the bank concern the entrepreneurial risk sphere, you
have to conduct these negotiations yourself, and need to sign and submit the
corresponding supporting documents yourself after a critical review. Our task is limited
to the preparation of the calculations or consultation in the context of the preparations.
e. Reimbursement of the VAT special prepayment 2020
Companies affected by the Corona crisis have the option of applying for a refund of the
VAT special prepayment for 2020, which has already been paid; the permanent extension
of the filing deadline will remain in force. Currently, this is officially possible in the federal
states of Bavaria, Hesse and North Rhine-Westphalia, but we assume that the other fed-
eral states will also allow reimbursement in the near future.
The tax offices recommend using the application for the permanent extension of the filing
deadline (see appendix 3); we will be happy to do this for you.
Important:
The Bavarian State Ministry of Finance specified the introduced opportunity for reimburs-
ing the VAT special prepayment as to 31/03/2020 to the extent that this measure is only
destined for those companies directly and significantly affected by the Corona crisis.
When requesting a reimbursement of the VAT special prepayment, the applicant com-
pany thus has to substantiate that it is directly and significantly affected by the Corona
crisis, and therefore, has need of this measure supporting the company’s liquidity. The
justification can be classified according to the effects on the respective branch, i. e. for a
stand builder the indication of the branch is in principle enough, whereas for a pharmacist
a more detailed explanation is necessary.
For applications that were already filed, the tax offices request an appropriate justification
of the effects on the company in not obvious cases.
6f. Tax deferral, suspension of enforcement, interest freeze
According to the letter from the Supreme Tax Authorities of the Länder dated 19 March
2020, an interest-free deferral of taxes due or becoming due and applications for reduc-
tions in advance payments with reference to economical difficulties due to the Corona
crisis are now possible on request for currently three months (brief explanatory statement
should be attached to the application, specific documents to verfiy the allegations is not
required). The following types of tax can currently be deferred:
§ Income tax
§ Corporate income tax
§ Trade tax (depending on the municipality/city)
§ Value added tax
At the end of the three-month deferral period, a further deferral request may have to be
submitted. We therefore urgently recommend to compile liquidity plan up to 31/12/2020
before applying for deferral.
Please note: Wage taxes and capital gains taxes are not deferrable, therefore the deferral
is rejected (Sec. 222 S. 3, 4 AO). This also applies to Corona-related cases. Here, an appli-
cation for a stay of execution can be filed with a more comprehensive justification, but
the same simplified approval requirements as for immediate tax relief do not necessarily
apply to this application.
Applications for deferrals of taxes due beyond 31 December 2020 must be applied for
separately.
The tax authorities will also refrain from taking enforcement measures against tax arrears
until 31 December 2020 in the case of taxpayers affected by the Corona crisis, and no late
payment fee will be levied for the period from 19 March to 31 December 2020. A written
application together with a written explanation of the economic burden caused by the
corona virus is required.
This is very important especially for freelancers and small companies which should contact
their tax office in this regard. We are happy to file the appropriate application for you.
It’s not clear yet how this shall affect VAT and wage tax. Quarterly declaration or payment
of VAT irrespective of the amount are also being discussed.
Currently, there is a form of the tax offices in Bavaria regarding tax deferral (see appendix
2). In our opinion you can, however, try to use this form also for applications in other
Federal States which do not have their own form yet. According to our information an
interest-free deferral is possible for three months. However, please take into account in
your liquidity plan the payment that you’ll have to make in three months.
g. Social insurance contributions during regular operations
In the event of a financial emergency due to the Corona crisis, the social security
contributions could be deferred until May 2020 at the request of the employer. This means
that the total contributions for March 2020, April 2020 and May 2020 become due at one
stroke with the May settlement on 27/05/2020.
The condition to be satisfied for deferral is that first of all, other opportunities to relieve
the burden on the company need to be exploited, such as short-time working allowance,
taking up of credits etc.
7Important: This is currently only a deferral option until May 2020 and therefore only a
short-term measure until, for example, loans are paid out. The deferred social security
contributions are currently to be repaid in May. Please take this into account in your
liquidity planning if you apply for a deferral.
The nine employers’ liability insurance associations (Berufsgenossenschaften) also grant
facilities in payment in case of problems with paying the contributions. Applications for
deferral etc. can also be filed with the employers’ liability insurance associations (see
below). IMPORTANT: The employers’ liability insurance associations point out that the
notifications of contribution to the employers’ liability insurance association 2019 have to
be available.
The Artists' Social Insurance Fund allows facilities in payment for its members, such as
interest-free deferral of contributions and prepayments first until 30/06/2020.
When it can be foreseen that in the current year salaries subject to this contribution will
be significantly less than in the previous year due to the Corona virus, the monthly
prepayments can be reduced upon request. The request can be filed by phone or sent via
e-mail to abgabe@kuenstlersozialkasse.de as informal letter indicating the sum of salaries
subject to this contribution to be expected in 2020 with a short justification.
h. Support of micro-companies and self-employed persons
The German Chamber of Industry and Commerce currently supports the establishment of
a fund to support micro-companies and self-employed persons. There is no decision yet.
i. Tax subsidies for catering trade
According to a recent decision, the VAT for food in the catering trade will be reduced from
currently 19% to the reduced tax rate of 7% from 1 July 2020 to 30 June 2021.
j. Lump-sum loss carryback after 2019
Taxable persons directly and significantly negatively affected by the Corona crisis (gener-
ally, affection can be assumed if the advance payments for 2020 were reduced to EUR 0,
and if the taxable person assures that he/she expects a significant negative amount of
revenues for the advance payments 2020 due to the Corona crisis) who are subject to in-
come tax or corporation tax, and who are not yet assessed for the assessment period 2019
can in general file for a reduction in the established advance payments for 2019 within the
time limits set forth in Sec. 37 par. 3 third sentence of the EStG. An adequate forecast and
illustration of such losses in individual cases is often difficult especially in the current situ-
ation because of the uncertainty of the economic development. For this reason there shall
be the possibility to process applications for reduction in advance payments for the ad-
vance payment period 2019 on the basis of a generally determined loss carryback from
2020 for all persons involved in a simplified manner; the submission of detailed documen-
tation is, however, still possible. The generally determined loss carryback from 2020
amounts to 15% of the balance of the relevant profit income and/or the income from let-
ting and leasing on which the assessment of the advance payments for 2019 has been
based. It has to be deducted up to an amount of € 1,000,000 or in case of joint return of
up to € 2,000,000. (Letter of the Federal Minister of Finance dated 24 April 2020)
4. Self-employed persons
a. Infection Protection Act
Pursuant to Sec. 56 Infection Protection Act self-employed persons whose company or
practice activities are suspended during an ordered quarantine can request a “reasonable
8compensation of the not covered operating expenses continuing during this time” at the
competent authority.
Please note that the Infection Protection Act is not applicable if the government decides
to close shops in general, for example. There is a lack of a concrete, case-specific order in
this case.
b. “Short-time working allowance” for self-employed persons
Short-time working allowance is intended to prevent mass dismissals. For this reason,
there is naturally no short-time working allowance for self-employed persons. They have
to care themselves about the compliance with their agreements in order to maintain their
income.
It could be different in case of voluntary contributions to unemployment insurance by the
self-employed persons. However, there are no decisions yet in this context.
c. Emergency fund and basic income for self-employed persons
The Federal Minister of Labour announced the establishment of an emergency fund for
self-employed persons. The money provided from this fund shall be used to cover the
running costs of the company.
Furthermore, the access of self-employed persons and small entrepreneurs to basic
income shall be facilitated.
d. Health insurance contributions
Under current law an adjustment of the contributions to statutory health insurance is
possible in case of a reduction of the income. For the calculation of the contribution a
minimum revenue of currently EUR 1,061.67 is assumed, even if the self-employed
person’s revenue is less or non-existent.
If revenues change for more than 25 percent, full-time self-employed persons who are
members of statutory health insurance can already now request a reduction of
contributions. They have to prove the reduction of their revenues, however. The
corresponding forms are available from the health insurances. An application for a
reduction of contributions is effective only from the month following the application.
As to private health insurance, please contact them for information. Currently, there are
no general regulations.
5. Contractual relationships
a. Claims for damage in case of businesses fallen through (keyword: force majeur)
If contractual obligations can’t be met, it is recommended to demonstrably reach an
agreement with the business partner, as the case may be, with prior consultation with a
lawyer. Unfortunately, there is no general answer in this context.
b. Options in case of breakdown of supply chains
If you want to compensate breakdowns in your supply chain in the short or long term, the
competent Chamber of Commerce (AHK) can help you with its network.
6. Miscellaneous
a. Professional events
You will find information and recommendations for actions of Robert-Koch-Institute of the
Government regarding professional events at the following link:
https://www.rki.de/DE/Content/InfAZ/N/Neuartiges_Coronavirus/Risiko_Grossveranstal
tungen.pdf?__blob=publicationFile
9b. Business trips
As soon as this will be relevant again, the list of countries of the International Air Transport
Association (IATA) at www.iatatravelcentre.com can provide important information
regarding the air transport with the single states.
Please make sure to inform yourself by all means beforehand at the Foreign Office or the
Deutsche Messe AG as far as fairs are concerned.
c. Information obligation of customers/employees
The Federal Office for Health Education (Bundeszentrale für gesundheitliche Aufklärung)
provides quickly available information graphics and hygiene tips in six languages for you
to download for free at www.infektionsschutz.de.
d. Obligations of the employer in case of suspicion of Corona in your company
If employees in your company show symptoms of Corona virus disease 19, these
employees have to be instructed to stay away from their workplace with immediate effect.
Employees who are tested positive for a COVID-19 disease, should (there is currently no
obligation) inform their employer, and are not allowed to go to their workplace in any
case. The employer is only obliged to inform the responsible Public Health Department in
the cases defined in Sec. 8 Infection Protection Act.
e. Corona fishing e-mails
Currently cybercriminals use their chance to profit from Coronavirus. Please make sure
that e-mails concerning Coronavirus aren’t fishing e-mails.
f. Suspension of the obligation to file for insolvency
The government has decided to suspend the obligation to file for insolvency and the
payment prohibitions until 30 September 2020. Exceptions are cases in which the
insolvency is not due to the effects of the Covid 19 pandemic or in which there is no
prospect of eliminating an insolvency that has occurred. For a three-month transition
period, the right of creditors to request the opening of insolvency proceedings is also
suspended. The suspension of the obligation to file for insolvency as well as the regulation
on the reason for opening insolvency proceedings in the case of creditor insolvency
applications is to be extended by ordinance until 31 March 2021.
g. Report of compensation levy for non-employment of the severely disabled
The Bavarian Centre for Family and Social Affairs (Zentrum Bayern Familie und Soziales)
points out that there is an extension of the deadline for employers to report and pay for
the compensation levy for non-employment of the severely disabled. Employers with
regularly more than twenty workplaces are obliged to employ a prescribed number of
severely disabled persons or to pay a corresponding compensation levy. The reporting
deadline for this is now 30/06/2020 (instead of 31/03/2020). Further information can be
found here:
https://www.bayreuth.ihk.de/blueprint/servlet/resource/blob/4746328/3d1636555933
6e4720cfe6deeee1d594/fristverlaengerung-entrichtung-der-ausgleichsabgabe-data.pdf
10Appendix 1
New provisions regarding short-time working arrangements in Germany because of the
Coronavirus disease
Short-time working allowance because of the Coronavirus disease
In principle, there is an entitlement to short-time working allowance because of an unavoidable event
or economic reasons (Sec. 96 Social Security Code III). This applies for instance if deliveries do not arrive
or if production needs to be restricted. An event is considered unavoidable also if companies are closed
e. g. because of public precautionary measures. According to the latest announcements of the Federal
Employment Agency also the Coronavirus generally represents a reason for short-time work. The
competent Employment Agency decides whether the conditions for granting short-time working
allowances are satisfied. The employer has to apply for this allowance.
Conditions to be satisfied for granting short-time allowance (Kug)
The cumulative conditions for granting short-time allowance (so-called Kug) are as follows:
1. Significant non-productive time with loss of income, i. e.:
1.1. the non-productive time is due to economic reasons or an unavoidable
event (in this case the Coronavirus disease),
1.2. is temporary,
1.3. is unavoidable and
1.4. if, in the respective calendar month (entitlement period), at least one third (10 % according to
the new draft legislation - Coronavirus disease) of the company employees (case-by-case-assess-
ment if company also means the single permanent establishments) are affected by a loss of in-
come (temporary substantial change of the usual working hours) of more than ten percent of their
monthly gross salary (renouncing totally or in part the balance of working time accounts - Coro-
navirus disease).
2. Employment relations subject to compulsory insurance
As things stand at present, it is not possible to apply for short-time allowance for “mini-jobbers”
and short-term employees. They do not pay into the corresponding social insurance.
If mini-jobbers currently do not work anymore, do not receive earnings, a contribution statement
with a zero amount has to be submitted to Minijob-Zentrale nevertheless.
However, for mini-jobbers and other employees there is now the possibility of a non-contributory
special payment in the amount of € 1,500.00, which will not be taken into consideration when
calculating the annual limit of € 5,400.00.
Important: This applies in case of an agreement reached because of and during the Corona crisis,
and if this special payment is paid in addition to the wage owed to the employees anyway.
Please have us check such agreements in view of wage tax or social security-related effects before-
hand.
Caution: Those mini-jobbers able and ready to work can request continued payment of remuner-
ation from their employer, if the operating activity is temporarily suspended because of Corona
virus diseases-19. That is the employer’s entrepreneurial risk sphere.
The employer’s only remaining possibility is to dismiss the employee or to reach an agreement
with this employee. It is advisable to contact a labour law specialist in this context.
11Appendix 1
Trainees are generally to be exempted from short-time work. If there is no possibility of employ-
ment at all, as in the case of closure, short-time work compensation can be ordered for them if
necessary. It is advisable to check the cases specifically before submitting the application.
In the case of special groups of pensioners, students, or persons subject to social insurance contri-
butions abroad (see also Special Cases below), a check must be made before an unsuccessful ap-
plication is made.
We would be happy to assist you in checking the eligibility of trainees or special groups to apply
for short-time work.
Excursus: In case of sickness of mini-jobbers and short-term employees an application for reim-
bursement in the so-called U1 procedure (sick pay) or in case of satisfaction of the conditions can
be filed pursuant to the Infection Protection Act.
If a mini-jobber works more than usual due to the Corona crisis, and thus exceeds the so-called
minor employment threshold of EUR 5,400.00 per year, this does not compromise their classifica-
tion as mini-jobber since the Corona crisis is considered as an unforeseeable event. For the transi-
tional period from 1 March 2020 to 31 October 2020 the income limit can be exceeded five times
according to the current information from Minijob-Zentrale.
There are also facilitations for employments of brief duration. An activity pursued exclusively in
the period from 01/03/2020 to 31/10/2020 is also considered as brief, if it is limited to a maximum
of 5 months or 115 working days.
Despite the crisis it is, however, important to properly document everything for a later audit.
The Minijob-Zentrale unbureaucratically grants deferments of payments or payments by instal-
ments to employers concerned. This applies equally to employers who have already requested
deferral of payment of contributions, and to those who have only contacted the Minijob-Zentrale
after having received a request for payment in case of return debits by the Minijob-Zentrale.
3. Agreement with the employees
If there are no provisions relating to short-time work in the employment contract or in the com-
pulsory collective agreement, an agreement on the introduction of short-time work has to be
reached with the employees concerned. This is because the reduction in working hours is a change
to the bilateral employment contract.
IMPORTANT: For reasons of liability, such agreements have to be compiled by a lawyer. Tax con-
sultants can only provide support. As the case may be, we are happy to recommend a lawyer who
also speaks English and Italian.
Appendix 4 contains a sample of the employees’ agreement for the Employment Agency. Accord-
ing to an information of a labour law specialist, this agreement is, however, not sufficient to legally
bindingly introduce short-time work. There is a liability risk for the employer in case of a trial before
labour court.
4. Written announcement of short-time work using the following
https://www.arbeitsagentur.de/datei/anzeige-kug101_ba013134.pdf
5. To the competent Employment Agency as follows:
https://con.arbeitsagentur.de/prod/apok/metasuche/suche/dienststellen?in=arbeitsagenturen
12Appendix 1
6. Previous use of overtime and, if applicable, vacation
New in the case of short-time work compensation due to Corona losses is that according to the
present state of information overtime must be reduced in advance and vacation must be taken.
However, these are only overtime hours for which, according to the agreement between the
employee and employer or the collective agreement, time off in lieu can also be granted.
In addition, the employer must order or take the holiday entitlement from prior year(s) before
applying for short-time work compensation.
It is not clear whether this applies to leave that has already been approved and is planned for
September, for example.
The extent to which the employer is required to demand holiday leave based on the current year
holiday entitlement for compelling operational reasons (in this case losses due to Corona) has also
not been clearly defined. According to current information, approximately 50% of this year's leave
could be ordered. In any case, the leave exceeding the statutory entitlement or the previous year's
leave will have to be taken.
The reduction of overtime or the use of holidays would have to be agreed with the employee in
writing in advance, unless this is provided for in the employment contract or in any existing
collective agreement. Otherwise, the proof of the requirements for the application for short-time
work compensation cannot be fully demonstrated.
Appendix 4 contains the Employment Agency’s model for an agreement.
Calculation/amount of short-time working allowance
The short-time working allowance is calculated on the basis of the net loss of income. Employees on
short-time work generally receive 60 percent of the lump-sum net income. If the employer has at least
one child , short-time working allowance amounts to 67 percent of the lost lump-sum net income. The
maximum duration of short-time working allowance is 12 months. For those who receive short-time
allowance for working hours reduced by at least 50%, the short-time allowance increases to 70% and
77% for households with children from the 4th month of receipt and to 80% and 87%for households
with children from the 7th month of receipt - at the latest until the end of 2020. In addition, employees
in short-time work (all sectors) have the opportunity to earn additional income up to the full amount
of their previous monthly income without deductions from 1 May 2020 until the end of 2020.
Note: We are happy to calculate the short-time working allowance for your employees concerned.
Increase in short-time working allowance
The employer can pay cash supplements for short-time work, which are tax-free under the new law.
The tax exemption applies to subsidies "up to 80% of the difference between the target and actual
remuneration", and is to apply for the period from 1 March 2020 to 31 December 2020. The subsidy
was previously only exempt from social insurance contributions.
Note: If cash supplements have been paid out under the old regime, the respective payroll accounting
must generally be corrected retroactively in accordance with Sec. 41c (1) sentence 1 no. 2 and sentence
2 of the EStG.
13Appendix 1
If the employer can no longer correct the wage tax deduction, for example because the employment
relationship has been terminated in the meantime, the correction shall be made within the income tax
return of the respective employee.
Please contact us in this regard, because the allowances were agreed individually depending on the
agreement, and the depiction of all alternatives would go too far at this point.
Alternative special payment
Instead of increasing the short-time working allowance, there is now also the possibility of a special
tax and social security free payment of € 1,500.00, which was previously only available for the nursing
care sector. This agreement must have been made demonstrably. It is not possible to reinterpret the
agreement on the supplement to the short-time working allowance as a special payment.
Important: This applies only to agreements that were made because of and during the Corona crisis
and arepaid in addition to the wages that are owed anyway.
Please send us the agreement in advance so that we can review it before the payment is being made.
New because of the Coronavirus: Additionally, the social security contributions of those employees
receiving short-time working allowance which the employer usually has to bear alone also during
short-time work should be refunded to the employer. This is only the employer's contribution to social
insurance in relation to the notional remuneration that would be paid instead of the short-time
working allowance. This is 80 percent of the difference between actual remuneration (reduced
remuneration paid by the employer, or 0 if necessary) and planned remuneration (which would have
been paid without reduced hours).
Note: Unemployment insurance is not paid. However, the employees remain insured in
unemployment insurance.
Terms and duration of short-time working allowance
The beginning of the payment of short-time working allowance depends on when short-time work is
announced to the competent Employment Agency.
Note: We are happy to help you with the announcement to the competent Employment Agency.
Short-time working allowance can be granted for a maximum of 12 months per company. The terms
may still be changed because of the Coronavirus disease. There is no current statement in this respect.
The regulations which are intended to be the legal ground hereof will presumably only become
effective in April 2020, and are intended to be limited until the end of 2020 for the moment.
Note: In view of the limited duration of receiving short-time working allowance (max. 12 months) it
might be of advantage to cushion the non-productive time due to the Coronavirus at first with internal
measures (e. g. repair and maintenance works, trainings, company holiday, reduction of overtime),
and to apply for short-time working allowance only at the middle of April 2020.
Exceptions
Examination on a case-by-case basis because of facilitation of payment of short-time working
allowance in the area of supply of temporary workers.
14Appendix 1
If the employee receives other payments, such as claims for damage, continued remunerations or
other social compensations, the payment of short-time working allowance for this employee is of
lower priority.
The following applies to jobs with international connections:
Entitlement to benefits such as daily sickness allowance and short-time working allowance is governed
by the law of the competent Member State, i.e. the State in which the employee was previously
covered by social security. As a rule, this is the country of employment. Temporary corona-conditioned
teleworking (home office, smart working) does not lead to a change in the applicable social security
law. Employees remain insured in the same state as before.
Employees posted to Germany are therefore covered by the social security system of their country of
posting.
Cross-border commuters to Germany can therefore receive short-time work compensation if they are
absent from work in the German company.
The law of the country of employment applies to cross-border commuters from Germany.
Please inform us if you have such employees. Then we can assess the conditions for short-time work
for you on a case-by-case basis.
15Appendix 2 16
Appendix 3 17
Appendix 4 18
Appendix 5
Overview of emergency programmes
First of all: The not repayable emergency aids are intended to cover liquidity shortages which threaten the very existence of companies because of the Corona
crisis (there is a liquidity shortage if, due to the Corona pandemic, the ongoing revenues from the business operations are presumably not sufficient to pay the
liabilities from the ongoing commercial material and financial expenses (e. g. commercial rents, rents, lease installments) in the three months following the
application). Such shortage also has to be assured in the context of the application, it won’t be verified, however, if there really is a shortage. It cannot be
excluded, though, that a check is done on a random basis or at the end of the Corona crises, and that illegitimately requested emergency aids have to be repaid.
Private and other (= also commercial) cash funds do not have to be used (any more) to cover the liquidity shortage.
ð When filing the application, it should be credibly assured that there is a liquidity shortage which threatens the very existence of the company, and that
the applicant or their shareholders do not have any other available cash funds for covering the liquidity shortage. Besides, it has to be taken into account
that emergency aids which are simultaneously available are offset with each other.
Please find below an overview of the currently available emergency aids. As to the calculation of the number of gainfully employed persons in case of part-time
jobs, to our knowledge, only Bavaria has published a conversion table for part-time workers and 450 euro jobs into full-time equivalents. It can be assumed,
however, that this table can be used for the other federal states, as well.
Employees up to 20 hours = factor 0.5
Employees up to 30 hours = factor 0.75
Employees with more than 30 hours = factor 1
Employees with 450 euro jobs = factor 0.3
Important:
1. There have to be economic difficulties due to Corona virus. The applicant must not have been in economic difficulties before 11 March 2020. Application:
electronically, if possible; existential threat or liquidity shortage due to Corona virus have to be assured. False statements can constitute subsidy fraud, and
may have criminal consequences.
2. The request for emergency aid of the federal government can often be filed together with the request for emergency aid of the single federal states.
3. A prerequisite for the emergency aid of the federal states is that there is at least one permanent establishment (this also applies to permanent establishments
of foreign companies in Germany) in the respective federal state.
4. The emergency aids of the federal states are granted in addition to the emergency aid of the federal government or top them up.
19Appendix 5
5. Since the emergency aid programmes continuously change, we recommend you to inform yourself on the respective homepage or to contact us before filing
the application.
Federal state Emergency aid Application via Applies for Homepage
Federal - Up to 5 gainfully employed persons: EUR 5,000.00, PDF form Micro-companies and self- Federal
government employed persons government
- Up to 10 gainfully employed persons: EUR 15,000.00
Bavaria - Up to 5 gainfully employed persons: EUR 5,000.00, Online procedure Companies and freelancers Bavaria
- Up to 10 gainfully employed persons: EUR 7,500.00
https://www.stmwi.bayern.de/soforthilfe-
- Up to 50 gainfully employed persons: EUR 15,000.00 corona/
(planned increase on 31 March 2020 to EUR 30,000.00)
- Up to 250 gainfully employed persons: EUR 30,000.00
(planned increase on 31 March 2020 to EUR 50,000.00)
Baden- - Up to 5 gainfully employed persons: EUR 9,000.00, PDF form and upload to bw- Commercial companies and Baden-
Wuerttemberg soforthilfe.de social enterprises, solo self- Wuerttemberg
- Up to 10 gainfully employed persons: EUR 15,000.00
employed persons, professionals
- Up to 50 gainfully employed persons: EUR 30,000.00
Berlin Currently no own emergency aids, only interest-free bridge - - Berlin
loans up to EUR 500,000.00 with a term of up to 2 years
Brandenburg - Up to 5 gainfully employed persons: EUR 9,000.00, PDF form Commercial companies and Brandenburg
professionals
- Up to 15 gainfully employed persons: EUR 15,000.00
- Up to 50 gainfully employed persons: EUR 30,000.00
- Up to 100 gainfully employed persons: EUR 60,000.00
Bremen Depending on the amount of the liquidity shortage illustrated PDF form Micro-companies with less than Bremen
10 employees and less than 2
up to EUR 5,000. In specific well-founded cases up to a
million euro of annual turnover
maximum of EUR 20,000 if the corresponding supporting as well as solo self-employed
evidences are submitted. and freelancers
Hamburg - Solo self-employed: EUR 2,500.00, Via Homepage Small and medium-sized Hamburg
businesses and freelancers
- Up to 10 gainfully employed persons: EUR 5,000.00
- Up to 50 gainfully employed persons: EUR 10,000.00
- Up to 250 gainfully employed persons: EUR 25,000.00
20Appendix 5
Federal state Emergency aid Application via Applies for Homepage
Hesse - Up to 5 gainfully employed persons: EUR 10,000.00 Online form Micro-companies and self- Hesse
employed, increase of the
- Up to 10 gainfully employed persons: EUR 20,000.00
emergency aid of the federal
- Up to 50 gainfully employed persons: EUR 30,000.00 government
Mecklenburg- - Up to 5 gainfully employed persons: EUR 9,000.00, PDF form Commercial companies, solo Mecklenburg-
Western self-employed, professionals Western
- Up to 15 gainfully employed persons: EUR 15,000.00
Pomerania Pomerania
- Up to 24 gainfully employed persons: EUR 25,000.00
- Up to 49 gainfully employed persons: EUR 40,000.00
Lower Saxony - Up to 5 gainfully employed persons: EUR 3,000.00, Homepage NBank Commercial companies, solo Lower Saxony
self-employed, professionals, in
- Up to 10 gainfully employed persons: EUR 5,000.00
addition to emergency aid of the
- Up to 30 gainfully employed persons: EUR 10,000.00 federal government
- Up to 49 gainfully employed persons: EUR 20,000.00
North Rhine- - Up to 5 gainfully employed persons: Application for federal Online Commercial companies and North Rhine-
Westphalia professionals, increase of Westphalia
aid
emergency aid of the federal
- Up to 10 gainfully employed persons: Application for federal government
aid
- Up to 25 gainfully employed persons: EUR 25,000.00
Artists having their residence in North Rhine-Westphalia: EUR
2,000.00
Rhineland- - Up to 5 gainfully employed persons: Application for federal PDF form Commercial companies and Rhineland-
Palatinate social enterprises, solo self- Palatinate
aid + EUR 10,000.00 of immediate loan (term: 6 years,
employed persons, professionals
interest- and redemption-free until the end of 2021)
- Up to 10 gainfully employed persons: Application for federal
aid + EUR 10,000.00 of immediate loan (term: 6 years,
interest- and redemption-free until the end of 2021)
- Up to 30 gainfully employed persons: up to EUR 30,000.00
of immediate loan (term: 6 years, interest- and redemption-
21Appendix 5
Federal state Emergency aid Application via Applies for Homepage
free until the end of 2021) + subsidy of 30 % of the amount
borrowed
Saarland - Up to 10 gainfully employed persons: EUR 3,000 to PDF form Commercial company (max. Saarland
turnover of EUR 700,000 or
EUR 10,000
balance sheet total of EUR
350,000) and artists
Saxony - Up to 5 gainfully employed persons: EUR 9,000.00 Online portal Commercial companies and Saxony
social enterprises, solo self-
- Up to 10 gainfully employed persons: EUR 15,000.00
employed persons, professionals
Saxony-Anhalt - Up to 5 gainfully employed persons: EUR 9,000.00, PDF form Commercial companies and Saxony-Anhalt
social enterprises, solo self-
- Up to 10 gainfully employed persons: EUR 15,000.00
employed persons, professionals
- Up to 25 gainfully employed persons: EUR 20,000.00
- Up to 50 gainfully employed persons: EUR 25,000.00
Artists having their residence in Saxony-Anhalt: EUR 400.00
per month for 2 months
Schleswig- - Solo self-employed: EUR 2,500.00, PDF form Micro-companies, small traders Schleswig-
Holstein and solo self-employed, without Holstein
- Up to 5 gainfully employed persons: EUR 5,000.00
entitlement to federal aid
- Up to 10 gainfully employed persons: EUR 10,000.00
Thuringia EUR 5,000 up to EUR 30,000 (for companies from 1 (incl. PDF form Commercial companies and Thuringia
social enterprises, solo self-
owner) to 50 employees)
employed persons, professionals
22Appendix 6
Example for the calculation of the entitlement to apply for Interim aid II
Months April May June July August Total
Sales 2019 650,000.00 480,000.00 550,000.00 600,000.00 430,000.00 2,710,000.00
Sales 2020 530,000.00 310,000.00 620,000.00 115,000.00 111,000.00 1,686,000.00
in % -18% -35% 13% -81% -74% -38%
not entitled
to apply -26% entitled to apply
not entitled to
apply -10%
not entitled to
apply -36%
entitled to apply -78%
1st check: When checking the decline in sales in two consecutive months, the limit of 50% has been exceeded for July and August with the result that
the undertaking is entitled to apply for support.
2nd check: When checking the total decline in sales for the period from April to August, the limit of 30 % has been exceeded with the result that the
undertaking is entitled to apply for support.
An undertaking is entitled to apply for support if the limit is exceeded in one of the two checks.
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