Yesterday, the German government presented a comprehensive economic stimulus package to combat the effects of coronavirus. The main fiscal points can be summarised as follows:

  • From 1 July 2020 until 31 December 2020, the VAT rates from 19% to 16% and from 7% to 5% respectively.
  • The Due date of the import sales tax is postponed to the 26th of the following month.
  • The Tax loss carryback will be extended - by law - for 2020 and 2021 to a maximum of €5 million or €10 million (in the case of joint assessment). A mechanism will be introduced to allow this carry-back to be utilised directly in the 2019 tax return, e.g. by creating a coronavirus tax reserve. The reserve will be released by the end of 2022 at the latest.
  • As a tax incentive for investment, a Degressive amortisation  (AfA) with a factor of 2.5 compared to the currently applicable AfA and a maximum of 25% per cent per year for movable Fixed assets introduced in the 2020 and 2021 tax years.
  • In order to improve the competitive conditions for companies, the Corporate income tax law modernised: including an option model for corporation tax for partnerships and an increase in the reduction factor for income from business operations to four times the trade tax base.
  • The opportunities for employees to participate in their companies will be improved. The special situation of start-up companies is to be taken into account and a programme developed for them. Attractive opportunity for employee participation be created.
  • In order to safeguard the existence of small and medium-sized enterprises, a coronavirus-related loss of sales is Bridging aid programme was launched. The volume of the programme is set at a maximum of 25 billion euros. The bridging aid will be granted for the months of June to August. The bridging aid applies across all sectors.
  • With a one-off Child bonus 300 per child for each child entitled to child benefit, families particularly affected by the restrictions are supported. This bonus is offset against the tax-free allowance for children, which is comparable to child benefit.
  • The subsidy rate of the Research tax allowance is granted retroactively to 1 January 2020 and limited until 31 December 2025 on an assessment basis of up to EUR 4 million per company.
  • The Vehicle tax for passenger cars will be more strongly orientated towards CO2 emissions, which is intended to have a noticeable steering effect towards lower-emission or emission-free vehicles.
  • The federal government's existing environmental bonus to promote the replacement of the vehicle fleet with more climate and environmentally friendly electric vehicles will be introduced as a new "Innovation premium" doubled. The manufacturer's premium remains unaffected by this. This means, for example, that up to a net list price of the e-vehicle of up to 40,000 euros, the federal subsidy increases from 3,000 to 6,000 euros. This measure is limited until 31.12.2021.
  • For the taxation of all-electric company cars at 0.25%, the purchase price limit will be increased from €40,000 to €60,000.

Yours TAXGATE team will be happy to provide you with further information at any time.