COVID-19 Coronavirus: Global Tax Update (Germany)

German Tax Relief Measures for COVID-19 Affected Tax Payers

The German Federal Ministry of Finance has published on March 19, 2020 a Tax Circular which (i) facilitates the procedure to defer tax payments and reduce prepayments and (ii) enforcement measures and late payment penalties will be waived until December 31, 2020.  

This includes:

• Make it easier to be granted tax deferrals. Tax offices can generally defer taxes which are already due and will become due until December 31, 2020 if their collection would lead to significant hardship of the taxpayer. No specific proof of evidence on the losses from the Covid-19 crisis are required. The relevant taxes include German income and corporate tax and German trade tax. It is expected that such tax deferals will be exempt from interest payments.

• Make it easier to reduce tax prepayments. According the German Federal Ministry of Finance, tax prepayments will be reduced in a swift and straightforward manner as soon as it becomes apparent that a taxpayer’s income in the current year is expected to be lower than in the previous year.

• Waive enforcement measures and late-payment penalties until December 31, 2020 if the debtor of a pending tax payment is directly affected by COVID-19.