Factsheet for measure
DE-2020-13/409
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Updated
– measures in Germany
Waiving overdue tax debts
Verzicht auf Eintreibung von Steuerschulden
Background information
The German Federal Government modified the tax law, in order to help businesses with their tax debts and improve their liquidity.
It 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.
Content of measure
The German Federal Government temporarily changed taxation rules for companies. Overdue tax debts (and default charges) can be waived until the end of 2020. Companies need to apply for postponing their tax debt payments until the end of 2020 at their local tax authority office. This measure includes any debts regarding the income, corporate tax and sales tax. It 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.
Updates
The following updates to this measure have been made after it came into effect.
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31 January 2022
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On 31 January 2022, the Federal Ministry of Finance announced to prolong eased rules for waiving overdue tax debts until 30 June 2022.
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18 March 2021
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With the introduction of the Social Protection Act 3 in March the Federal Government added the possibility to apply for an extension of tax deferral until 30 September 2021. A further extension until 31 December 2021 is only possible in combination with an instalment contract.
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16 December 2020
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In November and December 2020, the Federal Government prolonged its aid packages and added new elements. Rules to waive overdue taxes in companies negatively impacted by the COVID-19 pandemic were prolonged, too. Companies who apply for tax deferral by the end of March 2021 will not have to reimburse their overdue taxes until 30 June 2021.
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09 October 2020
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There is no detailed information or estimate on how many companies have asked to waiver their overdue tax debts. However, in the latest tax estimate from September 2020, Federal Minister of Finance Olaf Scholz expects tax revenue for 2020 to decrease by €81.6 billion. In 2021, tax revenue is expected to be €19.6 billion lower than estimated in May 2020. A pre-COVID tax revenue level is expected for 2022 at the earliest.
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Use of measure
The Federal Ministry of Finance estimated that the new tax rules will 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.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Applies to all businesses
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Does not apply to citizens
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Actors and funding
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Actors
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Funding
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National government
Company / Companies
Local / regional government
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Direct consultation outside a formal body
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Direct consultation outside a formal body
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Social partners' role in the
implementation, monitoring and assessment phase:
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Unknown
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Main level of involvement: Peak or cross-sectoral level
Involvement
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 involved and asked to provide input regards the new COVID-19 measures. However, time for commenting on proposals was very short.
Views and reactions
Social partners were involved and asked to provide input regards the new COVID-19 measures. However, time for commenting on proposals was very short.
Sources
