Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure DE-2020-13/408 – Updated – measures in Germany
|Country||Germany , applies nationwide|
|Time period||Temporary, 23 March 2020 – 30 June 2022|
|Type||Legislations or other statutory regulations|
Supporting businesses to stay afloat
– Direct subsidies (full or partial)
|Author||Sandra Vogel and Marc Breitenbroich (IW)|
|Measure added||09 April 2020 (updated 07 July 2023)|
The Federal Government modified the tax law, in order to help businesses, free lancers and self-employed people with their tax payments and improve their liquidity. All companies/entrepreneurs can apply at the local tax authority office to have their tax prepayments reviewed and lowered. This measure is part of the support package to stabilise the German economy and help out firms during the COVID-19 crisis.
The package was adopted by the Federal Government at the end of March 2020.
The measure regards income and corporate tax. Companies, self-employed people and freelancers can ask the tax office to adjust their pre-payments. The same is possible for the measurement amount for business tax prepayments. These pre-payments are usually based on the taxpayers' income from the last year(s). With the new rules, applicants can ask for lower pre-payments as soon as they can show that their income is likely to be lower in 2020. This is part of a broader package that also includes other changes in tax law, all of them directed at easing tax burdens for companies in times of crisis; and also includes easier access to loans, start-up support or financial help for solo- or micro entrepreneurs.
Initially, the Federal Ministry of Finance estimated that the new tax rules would lead to a decline in tax revenues by 10% at the federal level as well as at the level of the federal states in 2020. Such a decline would equal around €64 billion. Not included in these figures are further tax losses at the municipal level.
At the end of February 2021, the Federal Statistical Office indicated a drop in tax revenue of 11.6% from February 2020 to January 2021. After a significant decline of 14.3% in September 2020, tax revenue rose until the end of the year. The September decline has been attributed to the introduction of tax aid packages related to COVID-19. In another press release from 7 April 2021, the Federal Statistical Office stated that tax revenues declined by 3.8% in 2020 (over the previous year). This decline is also attributed to the loss in revenues due to the impact of the lockdowns. In addition, the Federal Statistical Office reported at the beginning of October 2021 that business taxes declined in 2020 by 18.2% over 2019.
As announced on 3 April 2023 by the Federal Statistical office, in 2022, municipalities in Germany generated approximately generated a financing surplus of just under €2.6 billion. The surplus has decreased in comparison to 2021 when it still amounted to €4.6 billion. The energy crisis and housing refugees led to greater expenditures
|Does not apply to workers||
One person or microenterprises
||Does not apply to citizens|
Company / Companies
Local / regional government
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Direct consultation outside a formal body||Direct consultation outside a formal body|
Social partners' role in the implementation, monitoring and assessment phase:
German social partners are usually consulted by the Federal Government on broader measures, though no formal tripartite social dialogue structure exists in Germany at the federal level. Social partners were also consulted on COVID-19 measures. However time given for commenting on proposals was very short.
German social partners are usually consulted by the Federal Government on broader measures, though no formal tripartite social dialogue structure exists in Germany at the federal level.
Eurofound (2020), Adjusting tax prepayments, measure DE-2020-13/408 (measures in Germany), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/DE-2020-13_408.html
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.