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 All of these developments are also following each other at a rapid pace: what was topical yesterday may already be outdated today.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.

Kindly send your inquiries via the prepared links or contact your known consultants - together we will navigate you through the crisis.

Short-time compensation (KUG) – Status as of 17/01/2022

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.

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

Until March 31, 2022, the following applies:

  • Entitlement to short-time allowance exists if at least 10% of employees have a loss of pay of more than 10 %.
  • Social security contributions incurred for lost working hours are reimbursed at a flat rate of 100%. As of January 01, 2022, a flat rate of 50% will be reimbursed.
  • KUG can be drawn for up to 12 months. Until the end of March 2022, the maximum period of entitlement is 24 months, subject to certain conditions.
  • Temporary workers can also go on short-time work and are entitled to KUG.
  • In companies where agreements on fluctuating working hours are used, negative working time accounts are not built up.
  • Notification of short-time working and applications for reimbursement of short-time allowance can be submitted online or in writing.
  • Employees receive 60% of the net pay lost during short-time working.
  • Employees who have at least one child receive 67% of the lost net pay.
  • Increase through March 31, 2022:

    Important: The increase in short-time benefits described below through March 31, 2022, applies only if your employees receive short-time benefits for the first time no later than March 2021. In addition, the entitlement to the increased benefit rates for the period from January 2022 to March 2022 will be extended to employees who have been on short-time working for the first time since April 2021.

    The short-time allowance increases to 70% from the 4th month of receipt (employees with at least one child: 77%). From the 7th month of receipt, it increases again to 80% (employees with at least one child: 87%).

    The reference months of the individual employee do not have to be related. This means that interruptions in short-time work for the individual employee (even for more than 3 months) do not trigger a new start of the individual reference period. A reference month also includes the receipt of seasonal short-time allowance. However, if only sick pay equivalent to short-time allowance is paid in a month, this month will not be taken into account.

    The prerequisite for this increase in short-time allowance is that there was a loss of pay of at least 50% in the respective reference month as a result of the loss of work.

    If sick pay is received in the amount of short-time allowance and short-time allowance in the same month, only the short-time allowance is taken into account for the loss of pay of at least 50%.

    Note: The reference month for calculating the individual duration of receipt of short-time allowance is March 2020.

  • 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:

  1. 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:

    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
  2. Work stoppage must be unavoidable.

    This means:

    • the failure may not be due to reasons customary in the industry, customary in the business or seasonal.

    The release of a working time credit is not required insofar as it is

    • is contractually intended exclusively to bridge work absences outside the bad weather period and does not exceed 50 hours,
    • has been saved up to avoid seasonal short-time work and does not exceed 150 hours,
    • is intended exclusively for a legally possible release from work or reduction of working hours,
    • exceeds 10% of the annual working time owed without overtime, or
    • has remained unchanged for more than one year.
    • Insofar as protected working time credits are concerned, there is an entitlement to short-time allowance from the first hour of absence.

    Important: Since January 1, 2021, vacation leave must be taken to avoid short-time work if the employees' vacation wishes do not conflict with this (Section 96 (4) sentence 2 no. 2 SGB III). The following regulations also apply for the turn of the year 2021/2022.

    Submission of vacation planning to the Employment Agency:
    In the case of provisional approval at the beginning of a new vacation year, you as the employer do not have to submit the vacation planning or vacation list at a specific time. You may schedule leave as is customary in your business.

    If you do not request vacation planning from your employees until March, you also do not have to submit it to the employment agency until March if this is required. An informal vacation plan, vacation list or agreement on company vacations is sufficient. Your employees' vacation request is not required.

    Residual Leave:
    Residual leave must be brought in to avoid short-time work before it expires. If this is not done, there is no unavoidable loss of working time. On November 30, 2021, the Federal Labor Court ruled that completely lost work days due to short-time work (100% work loss) can be taken into account when calculating annual leave.

    Vacation of the current vacation year:
    If there is a vacation plan for the current vacation year, for example by means of a vacation list, a vacation plan or company vacations (§ 87 I No. 5 BetrVG), this does not have to be brought in beforehand to avoid short-time work. The vacation is then taken at the planned times. If this planning is only deviated from due to short-time work, there is no unavoidable loss of working hours.

    If there is no vacation planning, the taking of vacation entitlements to avoid short-time work must be determined towards the end of the vacation year. However, this only applies if the vacation cannot be carried over into the following vacation year. If this leave is not taken, there is no unavoidable loss of working time.

    If there is a reduction in the vacation entitlement due to working days lost in full as a result of short-time working after the decision of the Federal Labor Court (BAG) of November 30, 2021, this will be taken into account.

    • 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).
  3. Operational requirements

    The legal basis is § 97 SGB III.

    At least one employee must be employed in the company or the company department

  4. 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.
  5. 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:

    • written
    • 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.
Dr. Carsten Schikowski-Häuser
Dr. Carsten Schikowski-Häuser
Lawyer
Specialist lawyer for tax law
Stephanie Lamp
Stephanie Lamp
Lawyer
LL.M. (Corporate & Business Law)

Or get in touch with your regular contact person.

Insolvency advice - Status as of 14/01/2022

After the German government had already implemented the suspension of insolvency filing obligations for companies that may have been placed in an insolvency situation as a result of the Corona crisis in spring 2020, these relief measures were (at least partially) extended several times as the pandemic continued. On 30/04/2021, the last exceptions that still allowed a suspension of the insolvency filing obligations under very special circumstances will expire.

Therefore, from 01/05/2021, the statutory insolvency filing obligations will once again apply without exception in the event of insolvency and overindebtedness. The statutory insolvency filing obligations are associated with extensive civil and criminal liability standards for e.g. managing directors and board members, which should not be neglected.

Michael Becker
Lawyer
Specialist lawyer for tax law
Christoph Dietz
Business economist
Certified International Turnaround-Professional (FH Kufstein)

Or get in touch with your regular contact person.

Financing support for liquidity procurement, as of 14/01/2022

Federal and state grants:

Financial Aid “Überbrückungshilfe IV” (first quarter 2022):

  • The BMWi has announced an extension of the Financial Aid for the first quarter of 2022.
  • The previous Financial Aid III Plus will essentially continue as Financial Aid IV until the end of March 2022.
  • As of now, the application deadline is March 31, 2022.
  • The equity grant will continue as known.
  • Companies that are particularly hard hit and affected by closures (e.g. showmen) receive an additional equity grant. Provided that these affected businesses experienced a drop in sales of at least 50% in December 2021 compared to 2019, the equity grant in such cases will be 50% instead of a maximum of 30%.
  • However, in a departure from Financial Aid III and III Plus, the maximum subsidy will no longer be 100% of fixed costs, but 90% (subject to a 70% drop in sales).
  • The cost item modernization and renovation expenses is to be eliminated.
  • Voluntary closures are not harmful insofar as it is demonstrated that opening the business would have been uneconomical.
  • In addition, the ceiling for fixed costs was increased to € 12 million (previously € 10 million).
  • The FAQ on the aid for the first quarter of 2022 are still in progress.
  • All existing information on eligibility and funding levels for Financial Aid IV can be read in detail here:
    Federal Ministry of Finance - Conditions for Bridging Aid IV are in place - Corona economic aid will be extended until the end of March 2022.
  • The ceiling for small grants was increased to € 2.3 million (previously € 1.8 million).

Financial Aid ”Neustarthilfe“ (first quarter 2022)

Financial Aid “Überbrückungshilfe III Plus“:

Financial Aid “Neustarthilfe Plus“:

  • The New Start Plus program extends the New Start program for an additional six months until December 31, 2021. However, these are two separate application programs. The period of the programs runs from July to September and from October to December.
  • Even though New Start Assistance Plus technically consists of two applications, it is only possible to apply for New Start Assistance or Financial Aid III Plus uniformly for the second half of 2021.
  • Direct applications for natural persons (with or without a partnership) can be submitted without an examining third party. These can be submitted from June 17, 2021 until December 31, 2021.
  • Applications have been accepted since July 16, 2021 and will be accepted until March 31, 2022.
  • All information on eligibility, application and funding levels for New Start Plus can be read in detail here:
    https://www.ueberbrueckungshilfe-unternehmen.de/UBH/Navigation/DE/Neustarthilfen/Neustarthilfe-Plus/neustarthilfe-plus.html

Overview of expired programs:

Below are the links to the expired assistance programs:

Final account:

  • The final statement is mandatory in all cases where applications for grant programs were made through an auditing third party.
  • Final accounting may result in refunds or reimbursements.
  • The current schedule calls for submission of the final financial statement for the bridge grants by December 31, 2022. If such a statement is not submitted, the entire Financial Aid must be repaid. However, it remains to be seen whether this date will be brought forward or pushed back.
  • For restart grants, a final statement must be submitted by March 31, 2022, although a final statement may have been submitted since November 1, 2021.
  • Final accounting may result in refunds or reimbursements.

Hardship assistance provided by the federal states:

  • Hardship assistance is an additional offer from the government to the federal states. They supplement the previous extensive Corona economic aid (such as Financial Aid III).
  • On a case-by-case basis, the states may provide assistance to companies that have not previously received assistance and need it at the discretion of the federal states.
  • Applications for and approval of hardship assistance are submitted to the respective approval offices of the federal states:
  • You can read all the details about the application options and requirements of the respective federal states in detail here:
    https://www.haertefallhilfen.de/HSF/Navigation/DE/Home/home.html
  • If you are interested in economic aid, please contact your regular contact person or send us an e-mail to corona-finanzierungshilfen@mnt.de.

Special fund for trade fairs:

  • Another aid program is the Special Fund for Trade Fairs and Exhibitions. The fund runs parallel to the Corona aid and is intended to support the restart of trade fairs and commercial exhibitions.
  • It is intended to cover the preparation costs of trade fairs and exhibitions against the risk of a Corona-related event cancellation.
  • The program can cover event-related costs totaling up to €600 million.
  • For this purpose, affected industry companies can register on the special portal www.sonderfonds-messe.de.
  • Directly affected businesses working in the fields of exhibitions and trade fairs have to register on the central portal in advance.
  • Events that are scheduled to take place until September 30, 2022 will be considered.
  • Companies must provide evidence of their actual costs incurred, prepared or audited by a professional.
  • Detailed information is available in a special FAQ catalog (https://sonderfonds-messe.de/faq).

Financing:

KfW Corona aid

  • In order to improve their liquidity and cover running costs, entrepreneurs, self-employed persons and freelancers can apply for a KfW loan with risk assumption by KfW of 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 tailored to your application requirements and your capital needs for the bank interview:
    https://corona.kfw.de/

Landesbanken WI Bank (Hesse) and ISB Bank (Rheinland-Pfalz):

  • The state banks offer various loan-based subsidy programs for corporate financing. Some subsidies can also be used to bridge liquidity bottlenecks that arise as a result of companies losing sales due to the Corona virus. For small and medium-sized enterprises, for example, the funding programs "KfK - Capital for Small Businesses" for Hesse or "Betriebsmittelkredit RLP" for Rhineland-Palatinate are available here.
  • The Hesse micro-liquidity program can be applied for.
  • The application is made exclusively in the house bank procedure or in connection with the cooperation and regional partners (chambers of crafts and chambers of industry and commerce).
  • Here you can find detailed information about application requirements and conditions:

Please note that the level of information is constantly evolving. Please refer to the above links for detailed and up-to-date application requirements and conditions.

Jürgen Stock
Jürgen Stock
Savings Bank Business Economist
Certified Executor of Wills
Carsten Christ
Carsten Christ
Dipl.-Finanzwirt (FH) (Graduate in business finance)
Tax consultant
Fachberater für Unternehmensnachfolge (DStV e.V.) (Specialist advisor for company succession (DStV e.V.))

Or get in touch with your regular contact person.

Tax aid measures by the tax authorities in the context of the Corona crisis - Status as of 17/01/2022

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 31/03/2022 without interest. Income tax, corporation tax, real estate transfer tax, inheritance tax and VAT amounts can be deferred, if the taxes have become due by 31/01/2022 and the application has been submitted to the tax office by 31/01/2022. The deferral of trade tax amounts must be applied for separately at the responsible municipality. If an appropriate installment payment has been agreed, a deferral can take place until 30/06/2022.

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 2021 and 2022 is likely to be lower than before the corona pandemic, and the application has been submitted to the tax office by 30/06/2022.

Suspension of enforcement measures:

The Enforcement of overdue tax debts is to be waived until 31/03/2022 if a suspension of enforcement is requested if the request is made by 31/01/2022. Late payment surcharges, which are legally due during this period, are to be waived. This concerns income tax, corporate tax and VAT. If an appropriate installment payment is agreed, a stay of execution is possible under the same conditions until 30/06/2022 at the latest.

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 to the tax office when submitting advance VAT returns in order to obtain a permanent extension in 2020, this special advance payment can be reimbursed on request without losing the extended deadline in the advance VAT return procedure.

For the year 2021, you can also apply for a permanent extension of the deadline for submitting advance VAT returns without having to make a special advance VAT payment.

In 2022, the tax authorities do not yet provide for such relief.

Tax-free special payments:

In order to recognize the increased work of employees in times of the Corona pandemic, the special benefits granted by employers, which are paid between 01/03/2020 and 31/03/2022, 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 VAT rates:

Because of the Corona Tax Aid Act, a VAT reduction for the restaurant and catering services provided, with the exception of the distribution of beverages, from 19% to 7% for the period from 07/01/2020 to 31/12/2022.

The general reduction in VAT expired on December 31, 2020, so that the reduced tax rates of 16% and 5% no longer apply.

Lump-sum preliminary loss carry-back for 2020 and 2021:

As part of the tax assessment for the year 2019 and 2020, a lump-sum loss carry-back amounting to 30% of the total amount of income (excluding income from employment) for 2019 and 2020 can be made for a loss that is likely to arise in 2020 and 2021. The prerequisite for this is that the advance payments for 2020 respectively 2021 have already been reduced to EUR 0. A higher deduction is possible if it is demonstrated on the basis of evidence. As soon as the actual loss incurred through the tax assessment of 2020 respectively 2021 is determined, the tax assessment for 2019 respectively 2020 will be changed according to the actual loss carried back.

Extended investment period in connection with § 7g EStG:

If you formed an investment deduction amount within the meaning of Section 7g EStG for future investments in 2017 or 2018, the investment period will be extended from 3 to 4 or 5 years due to the corona pandemic, so that an investment is possible until 31.12.2022 is without the profit-increasing compulsory dissolution having to be made.

Degressive depreciation on movable assets:

As a fiscal investment incentive, a declining balance depreciation of 2.5 times the normal depreciation, up to a maximum of 25%, per year was introduced for movable fixed assets for the years 2020 and 2021.

Trade tax relief:

The reduction factor in the tax reduction for income from business operations was increased from 3.8 times to four times the trade tax base. In addition, the allowance for trade tax additions, such as for interest on debts, was increased from EUR 100,000 to EUR 200,000.

Home office flat rate:

As part of the Annual Tax Act 2020, the grand coalition decided to take into account the expenses incurred by employees due to increased home office work by means of a flat rate for income-related expenses. The flat rate is € 5 per day and is granted for a maximum of 120 days. The lump sum is only granted for the days on which the work is carried out exclusively in the home. The flat rate is granted for the assessment periods 2020, 2021 and 2022. In these cases, the prerequisite for the tax deduction of a home-workspace must not be present.


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
Steffen Breuer
Steffen Breuer
Tax Consultant
graduated in tax administration

Or get in touch with your regular contact person.

Accountancy – Status as of 14/01/2022

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, the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer, IDW) last issued a statement on April 6, 2021, on questions of doubt regarding the above-mentioned topic.

https://www.idw.de/blob/122498/31bce74e5b1413b91f74c9de1ea64383/down-corona-fachlicher-hinweis-idw-dok1-data.pdf

https://www.idw.de/blob/122878/ac5e8bd6bfd88081cfdd9398ceb04032/down-corona-fachlicher-hinweis-dok2-data.pdf

https://www.idw.de/blob/124230/4d0cde868d61cb6ab0bead999861372e/down-corona-idw-fachlhinw-relepruefung-teil3-update5-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.

Thomas Semler
Thomas Semler
Certified Public Accountant
Tax consultant
business graduated

Or get in touch with your regular contact person.