Tax simplifications

In addition to measures to secure liquidity, Germany’s Federal Ministry of Finance and the federal government are granting further relief to cushion the effects of the coronavirus crisis. These measures include organisational simplifications due to a lack of personnel and social distancing as well as tax measures of a rewarding nature.

Key aspects:

Mergers on 31 December 2019 can be entered into the commercial register by 31 December 2020.
Special payments can be paid free of tax and social security contributions up to an amount of EUR 1,500.
Various extensions of the deadline can be claimed.
Goods needed to combat the effects of the COVID-19 outbreak are exempt from customs duties and importation VAT.
Companies have until 12 June 2020 to publish annual financial statements for 2018.
Prevention of the transfer of the right of taxation of cross-border commuters to Belgium, Luxembourg, the Netherlands and Austria.

German Transformation Act amendment

Due to the limited possibility of holding shareholders’ meetings, an amendment to the German Transformation Act (Umwandlungsgesetz – UmwG) was adopted with the “Law on measures in company law, law of cooperatives, law of associations, foundations and residential ownership law to combat the effects of the COVID-19 pandemic”. Section 17(2) sentence 4 UmwG stipulates that a merger may be entered in the register solely if the balance sheet has been prepared as per a cut-off date preceding the application for entry in the register by no more than eight months. This period has been extended to 12 months for applications for conversions made in 2020. In the case of a merger as of 31 December 2019, the merger must therefore be filed with the commercial register by 31 December 2020 at the latest. In addition, the law stipulates that the Federal Ministry of Justice and Consumer Protection may extend this arrangement until 31 December 2021 by statutory order.

It is still unclear whether the regulation for contributions according to Section 20 or Section 24 of Germany’s Transformation Tax Act (Umwandlungssteuergesetz – UmwStG) should also apply. The problem in these cases is that Germany’s Transformation Tax Act has not been adapted to the new regulation in the German Transformation Act and therefore continues to refer to the period of eight months. A letter from Germany’s Federal Ministry of Finance could provide final legal certainty here.

Special payments

Furthermore, Germany’s Federal Ministry of Finance has announced its intention to reward the hiring of employees during the coronavirus crisis. Employers can make special payments to their employees free of tax and social security contributions up to an amount of EUR 1,500. This also applies if a contribution in kind is granted instead of cash. The special payments must be paid between 1 March 2020 and 31 December 2020 and in addition to the salary already due.

Deadline extensions

Due to short-time working or isolation measures, it can be difficult for companies to meet their tax obligations on time. For this reason, in a letter dated 23 April 2020, Germany’s Federal Ministry of Finance granted the possibility of extending the deadline for submitting payroll tax returns by a maximum of two months upon request. This only applies if proof can be provided that the payroll tax return cannot be submitted on time through no fault of the applicant’s own.

In addition, various states, such as the NRW tax authorities, are granting deadline extensions.

The following deadline extensions may be considered (list not exhaustive):

Deadline extension for the submission of the annual tax return
Deadline extension for subsequent submission of requested documents and supporting evidence

We would be happy to provide you with comprehensive information on the specific federal state relief granted by the individual tax authorities.

Exemption from customs duties and importation tax

The European Commission has decided to waive customs duties and VAT on the import of goods needed to fight the effects of the COVID-19 outbreak. It is up to each Member State to determine which goods are exempt from the duties. The following conditions apply to the exemption:

The goods are being imported for release into free circulation by or on behalf of public organisations such as government agencies, public bodies and other bodies governed by public law or by or on behalf of organisations approved by the competent authorities in the Member States.
The goods are intended for one of the following purposes:

- They will be distributed free of charge by the above-mentioned bodies or organisations to persons suffering from, at risk of contracting or involved in the control of the spread of COVID-19.
- They will be made available free of charge to persons suffering from, at risk of contracting or involved in the control of the spread of COVID-19, with the items remaining the property of the aforementioned bodies or organisations.
The goods meet the requirements under Articles 75, 78, 79 and 80 of the EC Regulation No 1186/2009 and Articles 52, 55, 56 and 57 of the Council Directive 2009/132/EC (restriction of exemption from customs duties on goods imported for the benefit of disaster victims).

The exemption decision will be applicable retroactively from 30 January 2020 until 31 July 2020, with a possibility for further extension in consultation with the Member States.

Publication of annual financial statements

The Federal Office of Justice (BfJ) has decided on several measures to ease the burden on those companies that have not yet been able to submit their annual financial statements for the 2018 financial year on time.

The deadline for publication in the Federal Gazette was 31 December 2019 for a financial year with the same calendar year. Although the statutory publication deadline under Section 325 of the German Commercial Code (HGB) continues to apply, the BfJ is automatically granting a deadline extension to all companies that have received a notice of impending fine with issue date between 6 February 2020 and 20 March 2020. For this extension to be granted, the missed publication of the annual financial statements must be correctly published by 12 June 2020 at the latest. If the annual financial statements are published by 12 June 2020, the fine previously threatened will not be imposed. The BfJ does not intend to initiate administrative fine proceedings before 1 July 2020 against capital market oriented companies whose deadline for publication of the 2019 annual financial statements normally expires on 30 April 2020.

Furthermore, no new enforcement measures will be initiated and, on request, payments will be deferred in cases where enforcement has already commenced.

Taxation of cross-border commuters to Belgium, Luxembourg, the Netherlands and Austria

Germany’s Federal Ministry of Finance (BMF) has concluded a memorandum of understanding or consultation agreement with Belgium, Luxembourg, the Netherlands and Austria. A temporary special regulation for cross-border workers was agreed with the three countries.

The background to the agreements are cross-border commuters who normally commute daily from their place of residence in one state to their place of work in the other state. If, as a result of the coronavirus pandemic, these commuters now increasingly work at home, this can lead to a change in the states’ right of taxation.

Within the framework of the agreements, it has now been agreed with Belgium, Luxembourg, the Netherlands and Austria that working days on which cross-border commuters work from home in their home country due to the coronavirus pandemic are counted as working days in the country of employment. This agreement is intended to avert the unwanted tax consequences of working from home due to the crisis. Cross-border commuters must keep appropriate records.

The rules apply to working days in the period from 11 March 2020 to 31st May 2020. They will be automatically extended for one month after 31st May 2020 unless terminated by one of the three contracting states.

No special agreements are (yet) in place for cross-border commuters to France and Switzerland. Previous regulations apply in these cases until further notice.

Click these links for the memorandum of understanding with Luxembourg and the consultation agreement with Belgium and with the Netherlands.