COVID 19: Summary of measures introduced to combat the effects of the coronavirus (COVID 19/SARS-CoV-2)

This article is intended to provide an overview of the current measures taken in connection with the spread of the coronavirus, particularly in tax law.

A. Tax measures in Germany

I. Notices on tax relief

1.Announcements from the Federal Ministry of Finance

The Federal Ministry of Finance has now added to its website information in English on the measures taken to combat the coronavirus, including a list of frequently asked questions. Here is the link:

Federal Ministry of Finance: Measures to combat the corona virus


On 3 April 2020, the Federal Ministry of Finance published a notice on its website regarding the tax impacts of COVID 19 lockdown on cross-border commuters (e.g situations, where under a double tax treaty agreement (“DTA”), exceeding a certain number of days on which the actual country of work is not visited can lead to a partial change in the right of taxation).

Under certain DTAs, such as Luxembourg, the Netherlands and Austria, an increased number of days working remotely from home can lead to a change in the distribution of taxation rights and thus to a change in the tax situation of the employees concerned.

NEW: The Federal Ministry of Finance has now signed temporary consultation agreements with Luxembourg, the Netherlands and Austria theraby creating a special arrangement for the period during which the health authorities continue to advise employees to work remotely from home due to the high risk of infection. The relevant employees will be treated during as if they had been able to carry out their work as usual at their actual place of work, thereby avoiding any adverse tax consequences. The agreements iniatially apply this fiction to working days in the period 11 March to 30 April 2020. The fiction will automatically apply to later periods, should this be necessary. The fiction will not apply to working days that would have been spent working remotely from home or in a third country independently of these measures, especially if the employees would have worked at home anyway according to the provisions of their employment contracts.


According to a notice published on the Federal Ministry of Finance’s website on 3 April 2020, employers can now pay their employees subsidies and support up to an amount of € 1,500 tax-free in cash or in kind. This covers special benefits received by employees between 1 March 2020 and 31 December 2020. This is subject to the condition that the allowances and benefits are paid in addition to the wages already owed. The tax-free benefits must be recorded in the payroll account. Other tax exemptions and valuation allowances remain unaffected. Further these allowances and benefits will not be subject to social security contributions.


Tax measures introduced to combat the effects of the coronavirus (COVID-19/SARS-CoV-2)For more information see our blog of 19 March 2020: 

Tax Authorities release tax measures to combat the effects of coronavirus (COVID 19/ SARS-CoV-2)


On 13th March 2020 German Finance Minister Olaf Scholz and Economics Minister Peter Altmaier presented a comprehensive package of measures to cushion the effects of the coronavirus. In order to improve liquidity for companies, the possibilities for deferring tax payments, reducing advance payments and in the area of enforcement are to be improved. For details, see our blog.

Joint ministerial notice released introducing support measures against the impact of the Corona Virus

2. Announcements from the Federal States (“Länder”)

Trade tax measures to take account of the effects of coronavirus (COVID-19/SARS-CoV-2) (For more information see our blog of 19 March 2020 (see link above))


The other communications of the Länder on tax relief are summarized in this blog:

I. Announcements of the General Customs Directorate

The Federal Ministry of Finance has instructed the main customs offices to provide appropriate assistance to taxpayers where the relevant duties are regulated under federal law and administered by the customs administration (e.g. energy tax and air traffic tax). The intention is to prevent the taxpayer suffering undue hardship. In accordance with the Ministry circular of 19 March 2020, measures are to include in particular deferral options, the postponement of enforcement and the reduction of advance payments.

II. Application procedure with regard to tax relief due to the effects of coronavirus

The Länder have published information for tax relief on their websites. Most have also published application forms.


Some of the Länder will also provide a refund of the special advance payment of value added tax. This relates to the VAT provision that entrepreneurs must generally file a preliminary VAT return with their local tax office by the tenth day of the calendar month.  The entrepreneur can apply to have the filing date for the return delayed by a month for the calendar year. This permanent extension is subject to a special advance payment amounting to 1/11 of the total VAT prepayments payable in the previous calendar year. The special advance payment is then set off against the payment due on the final advanced VAT return for the year. In order to provide entrepreneurs with more liquidity, some of the Länder have agreed to refund the advanced payment upon application. The measure has not been adopted by all Länder. The following Länder have announced they will participate in the measure:

  • Baden-Württemberg
  • Bavaria
  • Berlin (NEW)
  • Brandenburg
  • Hessen
  • Mecklenburg-West-Pomerania
  • Lower Saxony (NEW)
  • North-Rhine Westphalia
  • Rhineland-Palatinate
  • Saarland
  • Saxony
  • Saxony-Anhalt


III. Notification of the closure of tax offices for visitors

The tax authorities of the various Länder have issued information on the closure of tax offices for visitors on their websites.

B. Measures in other areas in Germany

I. Law on mitigating the consequences of the COVID 19 pandemic in civil, insolvency and criminal proceedings

A formulation by the Federal Ministry of Justice and Consumer Protection (MoJ) for a bill to mitigate the consequences of the COVID 19 pandemic in civil, insolvency and criminal procedural law was published. In addition to the suspension until 30 September 2020 of the obligation to file for insolvency already announced (see below), the MoJ's formulation also provides for a temporary extension of the deadline in Section 17 (2) Sentence 4 Reorganisations Act from 8 to 12 months.


In the extraordinary current situation, the MoJ is preparing a legal regulation to suspend the obligation to file for insolvency until 30 September 2020 for companies affected by the corona epidemic in order to avoid the necessity of affected companies having to file for insolvency solely because the processing of applications for public aid or financing or restructuring negotiations cannot be completed within the obligatory three-week to file for insolvency. As a precondition for suspension the applicant will have to show that the insolvency is a result of the corona epidemic and that there are reasonable prospects for a restructuring following an application for public aid or serious financing or restructuring negotiations. In addition, an authorization for the MoJ to extend the measure further to 31 March 2021 at the latest is also to be proposed.

You can read more interesting articles on this topic on our PwC Legal website:  Impact of COVID 19

II. Impact of the coronavirus on accounting and auditing as well as company valuation issued by IDW

The IDW (Institute of Certified Accountants) issued a technical note in two parts, namely on 4 March 2020 on the effects of the coronavirus on accounting as of 31 December 2019 and its audit and on 25 March 2020 on its effects on company valuations.

III.   The Federal Ministry of Economics has introduced a 3-stage plan for economic aid

The Federal Ministry of Economics has introduced a 3-stage plan for economic aid:

Step 1:  Existing support measures for business e.g. established instruments such as Kreditanstalt für Wiederaufbau (“KfW” – the Credit Institute for Reconstruction, the largest German public development bank) loans to entrepreneurs (for existing enterprises) and ERP Universal Start-up Loans (for new businesses of under 5 years standing).

Step 2:  Existing measures to be extended made more flexible and will be provided with additional government funds if there is a need.

Step 3: MoE has prepared various models (using the lessons learned from the financial crisis 2008/2009) and has developed instruments in order to support business further should the crisis deepen. 

IV. Dealing with on-site inspections (Federal Financial Supervisory Authority – “BaFin”)

In a press release issued on 18 March 2020, BaFin announced that against the background of the spread of the corona virus, it will no longer send its auditors out on-site. In this context, BaFin made clear that this exception is only to apply while the restrictive measures to combat the pandemic are in place. The fundamental obligation to carry out the audits remains unchanged. In principle, companies must ensure that the documents required for the audit are made available to the auditors electronically. If a fully comprehensive "remote audit" is not possible due to lack of sufficient electronic access to all documents required for the audit, this must be carried out at a later date. Potential breaches of deadlines in these cases will not be pursued by BaFin. Furthermore, a formal interruption notice will not be required in these cases.

V. MoF: Overview of aid programmes for companies

The MoF has set up an internet site that provides an overview of the aid programmes provided through KfW.

VI. Deferral of social security contributions

The National Association of Statutory Health Insurance Funds (“GKV-Spitzenverband”) has recommended that all statutory health insurance funds should temporarily facilitate the deferral of social security contributions; this should enable companies and self-employed persons who have understandably got into financial difficulties due to the Corona crisis to pay social security contributions later for a limited period of time. A press release has been issued with an overview of the individual measures for financial support for employers in the payment of social security contributions published on 25 March 2020. The measures are initially limited in time until 30 April 2020 and will only take effect once other relief arrangements have been exhausted.

VII. NEW: Extention of statutory filing deadline for annual financial statements

The statutory annual deadline for the submission of the annual accounts for the financial year 2018 ended on 31 December 2019  for accounting periods based on the calendar year. The six-week grace period for disclosure provided for in the warning letter cannot generally be extended. On 15 April 2020 the Ministry of Justice has now granted an extension for any companies that have received a warning dated between 6 February 2020 and 20 March 2020. Provided the submission is made by 12 June 2020 at the latest any fine previously threatened in the warning letter will not become due is not set. This also applies to undertakings which, in the period between 6 February 2020 and 20 March 2020, received a further warning for the disclosure of accounting documents for previous financial years, which is linked to the imposition of an administrative fine. No separate application has to be made in either case..


Extension of the possibilities for export credit guarantees

On 30 March 2020 the Federal Ministry of Finance and the Federal Ministry of Economics agreed that with immediate effect export transactions on short payment terms (up to 24 months) can also be covered within the EU and in certain OECD countries by state export credit guarantees of the Federal Government. In particular, this should make it possible to absorb possible bottlenecks in the private export credit insurance market.

VIII Additional support for Start-Ups

On 1 April 2020, the Federal Government introduced additional support especially tailored to the needs of start-ups. Whilst, start-ups have access to all the support measures of the Corona Aid Package, classic credit instruments may not meet the needs of young start-ups.

The package includes the following measures in particular and will be implemented in stages:

  • Public venture capital investors at fund of funds and fund level (e.g. KfW Capital, European Investment Fund, High-Tech Start-Up funds, Coparion) are to be provided with additional public funds in the short term, which can be used for financing rounds of start-ups for co-investments with private investors.
  • Fund of funds investors KfW Capital and the European Investment Fund (EIF) are to be put in a position to take over shares from defaulting fund investors with additional public funds.
  • For young start-ups without venture capitalists among their shareholders and for small SMEs, financing with venture capital and equity substitutes is to be made easier.
  • Parallel to the implementation of measures, the Federal Government will continue to coordinate the structure of the Future Fund for Start-ups, which is intended to support the way out of the crisis in the medium term.

C. Measures at European level

Temporary framework to support the economy in the context of the COVID 19 outbreak

On 16 March 2020, the European Commission sent a draft proposal for a Temporary Framework for State aid to support the economy in the context of the COVID 19 outbreak to the Member States for consultation. The proposal was based on Article 107(3)(b) TFEU and was intended to remedy a serious disturbance in the economies of the Member States.

The proposed new Temporary Framework should allow four types of aid:

  • Aid in the form of direct grants or tax benefits (up to EUR 500 000 per company)
  • Aid in the form of subsidised guarantees for loans taken out by enterprises with banks
  • Aid in the form of subsidised interest rates on public loans to enterprises
  • Arrangements for banks to channel the support to the real economy

See in detail the statement of Executive Vice-President Margrethe Vestager on the draft proposal of the European Commission.

On 19 March 2020, the European Commission adopted the Temporary Framework.  In addition to the draft proposals of 16 March 2020, the temporary framework now includes aid in the form of repayable advances and short-term export credit insurance.

On 27 March 2020, the European Commission sent to the Member States for consultation a draft proposal for an extension of the temporary framework for State aid to support the economy adopted on 19 March 2020. The European Commission aims bringing the extended framework into force this week (14th calendar week). The Commission proposes to extend the temporary framework with the following measures:

  1. Support for relevant research and development (R&D) in relation to the current health crisis;
  2. Support for the construction and expansion of test facilities for products relevant to the control of coronavirus;
  3. Support for the manufacture of products relevant to the fight against coronavirus;
  4. Support in the form of tax deferrals and/or deferrals of employers' social security contributions to avoid redundancies; and
  5. Support in the form of wage subsidies to avoid redundancies.


NEW: The proposals were adopted on 3 April 2020.

NEW:  See also: Council Regulation (EU) 2020/521 of 14 April 2020 activating the emergency support under Regulation (EU) 2016/369, and amending its provisions taking into account the COVID‐19 outbreak


NEW: The EU Commission decided on 3 April 2020 to exempt certain goods from of import dutie and import VAT, where the goods

are involved in combatting the COVID-19 outbreak. (Commission decision of 3 April 2020)

D. Measures of Third Countries

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