In the night of 3-4 June, coalition partners CDU/CSU and SPD agreed on a crisis management package to mitigate the economic impact of the COVID 19 pandemic.
The package includes the following tax measures:
- Statutory increase of the amount of losses available for tax carry-back for the years 2020 and 2021 to a maximum of EUR 5 million or EUR 10 million (in the case of joint assessment); in this regard a mechanism is being introduced to allow for this carry-back to become financially effective in the 2019 tax return, e.g. through the creation of a tax “corona reserve”, which is to be released by the end of 2022 at the latest;
- Modernization of corporation tax law, including a model for partnerships to opt for corporation tax;
- Increase of the factor under Section 35 Income Tax Act for the calculation of a reduction of income tax in relation to trading income to four times the trade tax base;
- Increase of the tax exempt amount of trade tax add-backs to EUR 200,000;
- Introduction of a degressive depreciation to the factor of 2.5 compared to the currently applicable depreciation up to a maximum of 25% per annum for movable fixed assets in the fiscal years 2020 and 2021;
- Reduction of the VAT rate from 19% to 16% and from 7% to 5% for a limited period from 1.7.2020 to 31.12.2020
- Postponement of the due date for import VAT to the 26th of the following month;
- Increase in the assessment basis for the tax research allowance under the Research Allowance Act to up to EUR 4 million per company. The increase is effective from 1.1.2020 retroactively and is available until 31.12.2025. In additon other measures in the area of research promotion are to be introduced.
Further planned measures include:
- Creation of attractive opportunities for employee participation (also for start-ups);
- Stabilisation of the renewable energy levy “EEG levy”: from 2021, in addition to the revenues from the national fuel emissions trading scheme, a further subsidy is to be provided from federal budget funds for the gradual and reliable reduction of the EEG levy (in 2021 this is to be 6.5 ct/kwh, in 2022 6.0 ct/kwh);
- Introduction of a pre-insolvency restructuring process for insolvent businesses;
- Draft for an established regulation for the receipt of reduced working-hours allowances from 1.1.2021; the draft should be availble as early as September;
- Link between motor vehicle tax for passenger cars and CO2 emissions to be enhanced (assessment base for new registrations as of 1.1.2021 is to be based mainly on CO2 emissions per km and raised in stages above 95g CO2/km; the ten-year motor vehicle tax exemption already in force for exclusively electric vehicles which is available until 31.12.2025 is to be extended to 31.12.2030).
Key Paper on the results of the Coalition Committee of 3 June 2020.