Assistance in connection with the Corona crisis
Measures against the spread of the corona virus have a major impact on our daily life - also in Germany. At present, everyone is experiencing the consequences of government policies to contain the virus. Uncertain times, especially for entrepreneurs. Almost all of our clients are more or less affected by the corona virus.
By now the government has launched a broad package of emergency financial measures for companies. All of these developments are also following each other at a rapid pace: what was topical yesterday may already be outdated today.
So we can imagine that in these turbulent times, entrepreneurs are not able to see the forest for the trees and are confronted with many questions. This is why we have set up a corona information team at the MNT GRUPPE. A multidisciplinary team of professionals, each specialist in his own field, but with a common goal: to help our clients through this corona crisis. On this overview you will find information on each topic that will help you. Our team attempts to be up to date and to update this page on a regular basis.
Please refrain from direct contact with the specialists, as this would lead to an immediate overload of people. Kindly send your inquiries via the prepared links or contact your "normal" known consultants - together we will navigate you through the crisis.
Short-time compensation (KUG) – Status as of 11/05/2020
The corona crisis has brought many industries to a standstill. As a result, German companies are sending their employees on short-time work.
Short-time work can be introduced on very short notice in the event of loss of customer orders by means of appropriate agreements to reduce working hours in the company and notified to the local employment agency. Short-time work does not have to be introduced and notified for the entire company. Short-time working can also be restricted to individual company departments.
KUG is calculated on the basis of the net loss of remuneration. Short-time workers receive 60% of the lost flat-rate net remuneration. If there is at least one child living in the household, the short-time compensation is 67% of the lost net remuneration.
In this context, the Federal Cabinet adopted a draft law on 29/04/2020 to further cushion the social and economic consequences of the Corona pandemic (Social Protection Package II).
The Social Protection Package II includes, among other things, improved conditions for short-time compensation. These are:
- KUG will be increased to 70% (or 77% for households with children) of the flat-rate net remuneration for those who receive KUG for their working time reduced by at least 50%, from the fourth month of receipt to 70% (or 77% for households with children) and from the seventh month of receipt to 80% (or 87% for households with children) of the flat-rate net remuneration, at the latest until 31/12/2020.
- From 01/03 to 31/12/2020, employees on short-time working will be able to take advantage of the existing additional income opportunities with an additional income limit up to the full amount of their previous monthly income for all occupations.
Hereinafter you will find a summary of the most important information on reduced hours compensation.
I. New regulations for KUG in times of the coronavirus pandemic
- a claim to KUG exists if at least 10% of the employees have a loss of earnings of more than 10%.
- accruing social insurance contributions for lost working hours are reimbursed at 100%.
- payment of KUG is possible for up to 12 months.
- Temporary employees can also go into short-time work and are entitled to KUG.
- in companies in which agreements on working time fluctuations are used, no negative working time accounts are set up.
- the other requirements for the use of KUG remains valid
II. Basic requirements
The legal basis is § 95 SGB III, according to which the following basic requirements must be met:
- Considerable loss of working hours with loss of pay
- It must be an "unavoidable event" (e.g. measures taken by the authorities, Exceptional weather conditions, accident) or
- economic causes (e.g. lack of orders, order cancellation, missing material).
- the loss of work must be temporary and unavoidable.
The minimum requirements are:
retroactively from 01/03/2020 to the end of 2020, at least 10% of the employees must have a loss of earnings of more than 10%.
- on the holding or in the relevant division of the holding
- in the respective calendar month
- Work stoppage must be unavoidable
- the failure may not be due to reasons customary in the industry, customary in the business or seasonal.
- at first, overtime and working time accounts must be reduced - but: no negative working time balances will be built up retroactively from 01/03/2020 until the end of 2020.
- the transfer of employees to another division/department must be examined (temporary transfer if necessary)
- economically reasonable countermeasures must have been taken beforehand (e.g. work in storage, clean-up or repair work).
- Operational requirements
The legal basis is § 97 SGB III.
At least one employee must be employed in the company or the company department
- Personal requirements (of the employees)
The legal basis is § 98 SGB III.
- Continuation of employment is subject to compulsory insurance (without notice of termination).
- Continuation of employment is subject to compulsory insurance for compelling reasons or following training.
- Indication about work loss
The legal basis is § 99 SGB III, according to which
The notification of the loss of work must be received in the month in which the short-time work begins:
- at the employment agency at the company headquarters.
A justification of the substantial loss of work is required.
The following internal company regulations or deadlines must be observed where applicable:
- agreements with the works council and, if applicable, notice periods, if applicable
- short-time work clause within employment contracts
- tariff regulations for the introduction of short-time work compensation
- potentially: individual agreements with the workers.
Insolvency advice - Status as of 11/05/2020
With a comprehensive package of measures, the German government has implemented meaningful relief for companies that could potentially find themselves in an insolvency situation as a result of the Corona crisis. The new COVID 19 Insolvency Suspension Act - COVInsAG - was passed by the Bundestag and Bundesrat. In view of the corona crisis, the law makes the following changes to the Insolvency Code and to commercial and company law:
- The statutory obligation to file for insolvency is suspended until 30/09/2020. This does not apply, if the insolvency maturity is not due to the consequences of the corona epidemic or if there is no prospect of eliminating an existing insolvency.
- There is an apparent presumption that the insolvency maturity of companies that were not insolvent on 31/12/2019 is based on the effects of the corona epidemic and that there are prospects of avoiding an existing insolvency.
- This prima facie assumption makes it easier for economically sound companies, their business partners and lenders to document that the statutory relief and limitations of liability can be claimed. However, it does not protect a company that was already ready for insolvency on 31/12/2019 or 01/03/2020.
If the suspension of the obligation to file for insolvency can be claimed with the aforementioned restrictions, further helpful facilitations result:
- The possible personal liability of the managers for payments during the crisis according to § 64 GmbHG or § 92 (2) AktG is limited.
- The rules on rescission for the repayment of newly granted shareholder loans or securities are severely restricted in favour of the shareholders. Thus, repayments of financial assistance newly granted in the crisis until 30/09/2023 shall not be considered disadvantageous to creditors. This is intended to make short-term shareholder assistance possible without the risk of a subsequent insolvency challenge being subject to repayment by 30/09/2023. In addition, the subordination of these shareholder loans to other creditors' claims as provided for in § 39 (1) No. 5 does not apply.
- Further rules on rescission have been relaxed in order to provide business partners and banks with unbureaucratic assistance without exposing themselves to undue risk of rescission during the crisis.
- Insolvency applications by insolvency creditors are made more difficult, but are still possible, provided that the reason for opening insolvency proceedings already existed on 01/03/2020.
- There should be a regulation authorization to extend the law with all effects until 31/03/2021 at the latest.
In summary, it can be said that a very pragmatic framework has been created by the accompanying interventions in the liability norms of the GmbHG and AktG as well as the facilitations for the repayment of shareholder loans granted during the crisis and the defusing of the right of rescission. In particular, the planned apparent presumption makes it easier for many fundamentally healthy companies to document (possibly subsequently required) that they fall within the scope of protection of the law. Companies that were already insolvent before Corona are not protected by this law.
Financial assistance to generate liquidity – Status as of 11/05/2020
Subsidies from the federal and state governments:
Corona emergency aid for small businesses and self-employed persons - Federal Government:
- Subsidies amount to up to EUR 9,000 as a one-off payment for three months for up to five employees (full-time equivalents) or up to EUR 15,000 as a one-off payment for three months for up to 10 employees (full-time equivalents)
- Approval (processing of applications, payment and, if necessary, recovery of funds) it is the responsibility of the federal state or local authorities
- Cumulation with other subsidies is possible in principle; any overcompensation must be repaid
The subsidies from the BMWi are to be topped up by the state of Hessen.
- So the following maximum amounts for companies based in Hessen result from both pots:
- EUR 10,000 for three months - for up to five employees
- EUR 20,000 for three months - for up to 10 employees
- EUR 30,000 for three months - for up to 50 employees
- applications can be submitted from Monday, 30/03/2020, to the Regional Council Kassel online, only!
- It will be necessary to submit only one application in Hessen in order to receive both federal and state funding
- Link to the application and completion help:
Corona emergency aid for associations – Land Hessen:
- Subsidies amount to up to EUR 10,000 as a one-off payment depending on the situation oft he association
- Approval (processing of applications, payment and, if necessary, recovery of funds) is the responsibility of the relevant ministry
- Application- and information documents are now available via download
- Applications are addressed to the competent ministries and need to be submitted by e-mail
- Link to the application and the directive:
Corona emergency aid for small enterprises and sole traders - Land Rheinland-Pfalz:
In Rheinland-Pfalz, the subsidies provided by the federal government are supplemented and topped up with immediate loans.
Thus the following maximum amounts result from both pots:
- EUR 19,000 - for up to five employees (EUR 9,000 subsidy from the federal program+ EUR 10,000 immediate loans)
- EUR 25,000 - for six to ten employees (EUR 15,000 subsidy from the federal program + EUR 10,000 immediate loan)
- EUR 39,000 - for eleven to thirty employees (EUR 30,000 immediate loan + state subsidy of 30% of the loan amount)
- The Investitions- und Strukturbank Rheinland-Pfalz (ISB) is the application and payment office
- Link to the grant application form:
- Link to the application for emergency aid credit RLP:
Loans:KfW Corona help
In order to improve your liquidity and cover running costs, entrepreneurs and freelancers can apply for a KfW loan with a risk assumption by the KfW with up to 100%. The application can only be made through your house bank.
You can use the following link to prepare the application for a KfW loan in accordance to your specific application- and capital requirements for the bank meeting:
Various loan-based development programmes for corporate financing are offered through the Landesbanken. Some of the development programs can also be used to bridge liquidity bottlenecks caused by companies' loss of sales due to the corona virus. For small and medium-sized enterprises, for example, the development programmes "KfK - Kapital für Kleinunternehmen" for Hessen or "Betriebsmittelkredit RLP" for Rheinland-Pfalz are available here.
WI-Bank will also be offering so-called microloans for a limited group of recipients from 03/04/2020.
Applications are made exclusively through the house bank procedure or in conjunction with the cooperation and regional partners (chambers of trade and industry).
Here you can find detailed information on application requirements and conditions:
Wirtschafts- und Infrastrukturbank Hessen:
Investment and Structural Bank Rheinland-Pfalz:
Please note that the level of information is constantly developing dynamically. You can find the detailed and up-to-date application requirements and conditions in the links above.
Tax aid measures by the tax authorities in the context of the Corona crisis - Status as of 11/05/2020
In order to combat the economic consequences of the corona pandemic, the tax authorities have adopted the following measures to alleviate the additional burden of tax payments:
Deferral of tax payments:
If your company is unable to make tax payments due to the economic consequences of the corona pandemic, it is possible to defer these payments until 31/12/2020 without interest. Income tax, corporation tax, real estate transfer tax, inheritance tax and and sales tax amounts can be deferred. The deferral of trade tax amounts must be applied for separately at the responsible municipality.
You have to explain to the tax office how the Corona pandemic is affecting your economic situation. However, the value of the damage incurred does not have to be substantiated in detail.
Adjustment of advance payments:
Companies, self-employed and freelancers can have the amount of their advance payments adjusted for income tax, corporate income tax and trade tax if their income from the corona pandemic in the current year is expected to be lower than expected before the corona pandemic.
Suspension of enforcement measures:
Enforcement of overdue tax debts is to be waived until the end of the year. Late payment surcharges, which are legally due during this period, are to be waived. This concerns income tax, corporate tax and value added tax.
Deferral of enforcement is also possible for tax amounts that are already in an ongoing enforcement procedure upon application to the tax authorities.
Repayment of special advance payments of turnover tax:
If you have made a special advance payment for tax on sales/purchases to the tax office in order to obtain a permanent extension of the deadline for submitting advance returns for tax on sales/purchases, this special advance payment can be refunded on request without losing the extended deadline in the advance return procedure.
Extended deadline for advance return for tax on sales/purchases:
In principle, you are still obliged to submit and pay the advance return for tax on sales/purchases on time. If you are so affected by the consequences of the Corona pandemic that you are unable to fulfil your obligations in this connection, the tax authorities may grant an extension of the deadline on request.
Tax-free special payments:
In order to recognise the increased benefits of employees in times of the Corona pandemic, the special benefits granted by employers, which are paid between 01/03/2020 and 31/12/2020, will be tax and social security free up to an amount of EUR 1,500. The special payments can be in cash or in material performance.
Reduction of the VAT rate in the restaurant and catering sector:
As catering businesses are particularly affected by the Corona pandemic, the VAT rate for restaurant and catering services provided after 30/06/2020 and before 01/07/2021, with the exception of the distribution of beverages, will be reduced from 19% to 7%. The corresponding legal regulation is part of the Corona Tax Assistance Act, which was passed by the Federal Cabinet on 06/05/2020.
Flat-rate reduction of advance payments already made for 2019:
Companies that generate profit income or income from renting and leasing and are expected to report a loss as a result of the Corona pandemic in 2020 can have the advance payments made in 2019 reimbursed via an anticipated loss carryback from 2020. The loss for 2020 is assumed to be a flat rate of 15% of the income from 2019. The loss actually incurred in 2020 will be taken into account in the annual tax assessment for 2020.
By clicking on the following link, you can access an FAQ catalogue on the website of the Federal Ministry of Finance, which provides information on the most frequently asked questions in connection with the tax relief measures.https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/2020-04-01-FAQ_Corona_Steuern.html?cms_pk_kwd=06.04.2020_FAQ+Corona+Steuern+&cms_pk_campaign=Newsletter-06.04.2020
Accountancy – Status as of 11/05/2020
Effects of the spread of the coronavirus on the financial statements as of 31/12/2019
The economic effects of coronavirus also have consequences for the commercial accounting of the financial statements and management reports of the companies or groups concerned.
In professional notes dated 04/03 and 25/03/2020, the German Institute of Auditors (IDW) issued a statement on the "Effects of the spread of the coronavirus on the financial statements as of 31/12/2019 and their audit". Accordingly, there are already far-reaching effects on the annual financial statements under commercial law and as at the reporting date of 31/12/2019 and the management report for the 2019 financial year, such as:
- The effects of the coronavirus are to be taken into account as a value-determining development from January 2020 for the first time in financial statements with a cut-off date after 31/12/2019.
- The nature and financial effects of the coronavirus on the company are to be reported - if material - in the supplementary report in the notes. There is no general reporting obligation. The need to report depends on the individual company's exposure to the effects of the corona pandemic on its future development. A "nothing to report" is not required.
- The effects of developments relating to coronavirus on the company are to be dealt with in the risk report in the management report in 2019. For companies whose activities are significantly affected by the spread of the coronavirus, purely comparative forecasts are exceptionally permissible.
- A break in the consistency of recognition and measurement can be justified by the effects of the corona crisis, provided that this provides a better insight into the net assets, financial position and results of operations.
- Continuing operations must be valued independently of the balance sheet date. In this respect, an exception to the reporting date principle applies to the assessment of the appropriateness of the going concern assumption.
- Under certain conditions, it is considered permissible to consider the accounting consequences of a restructuring measure implemented after the balance sheet date of 31/12/2019 already as of the balance sheet date.
- Small corporations are not required to prepare a management report. They are also not required to include a supplementary report in the notes to the financial statements. For micro-corporations, neither an appendix nor a management report is required. However, if there are material uncertainties in connection with events and circumstances that could cast significant doubt on the company's ability to continue as a going concern (so-called going concern risks), the preparer of the financial statements must report on them. Small corporations must include such reporting in the notes to the financial statements. For micro-corporations, the reporting must be included below the balance sheet.
The above notes are intended to provide initial guidance on how to deal with the effects of the coronavirus in external accounting and do not claim to be complete. They are based on the technical notes of the Institute of Auditors (IDW) dated 04/03 and 25/03/2020 on "Effects of the spread of the coronavirus on the financial statements as of the reporting date 31/12/2019 and their audit". In addition, on 08/04/2020, the Institut der Wirtschaftsprüfer (IDW) (Institute of Public Auditors in Germany) commented on questions of doubt regarding the above-mentioned subject area.https://www.idw.de/blob/122498/31bce74e5b1413b91f74c9de1ea64383/down-corona-fachlicher-hinweis-idw-dok1-data.pdf
We will be happy to assist you at any time with questions regarding the handling of the effects of coronavirus in the context of external commercial accounting.