Man and woman with face mask. Man and woman with face mask. | © GettyImages/martin-dm

Coronavirus and Germany

Germany's generous financial aid measures, falling infection rates and vaccination rollout are showing a way out of the coronavirus crisis.

Business confidence  is returning to Germany's economy as Covid-19 infection rates fall, with generous aid measures helping enterprises recover from the worst effects of the crisis.

Germany Trade & Invest is working for you - with regular information updates and answers to your questions about your business project in Germany. All of our industry teams are available to provide ongoing support – in Germany and around the world.  

National Corona Regulations

Federal states across Germany have relaxed coronavirus restrictions due to steadily falling infection rates over the last weeks.

General Corona Guidelines and Restrictions - Reopening

The nationwide lockdown and restriction measures during the last months have shown results. With infections rates steadily falling, all federal states have relaxed their coronavirus restrictions. These include, for instance, the reopening of cafes and restaurants for outdoor service. Additionally, shops, indoor gastronomy and tourist accommodation services are being resumed. The requirement of a negative Covid-19 test for those guests who are not fully vaccinated or recovered from the virus is set at the federal state level.

Social distancing and the wearing of a medical mask in shops and public transport remain the most important measures in place to control the number of infections. 

Eased Restrictions for Vaccinated or Recovered Persons

The German parliament has introduced eased restrictions for fully vaccinated or recovered persons. Contact restrictions and curfews will no longer apply to this group. Furthermore, these persons will not be required to comply with quarantine obligations for instance after travel - unless they are returning from a designated area of variant of concern.

Vaccinated and recovered persons will also be treated on the same basis as individuals who have provided a negative test for certain exceptions to the current protection measures. The obligation to wear a medical mask and maintain distance remains in place for everyone.

Covid-19 testing

Employers are required to offer employees who cannot work from home Covid-19 testing at least twice a week. To reduce contact at work places and on public transportation, employers must - wherever possible - enable their employees to be able to work from home.

All federal states have introduced mandatory coronavirus testing tvice a week in schools. Also every asymptomatic citizen has the opportunity to take a rapid antigen test free of charge.

Useful further information

For details of the extended restrictions, please refer to the dedicated website of the German federal government.

Additionally, the special information website for the Corona virus provided by the Federal Ministry of Health offers useful information.

Entry Regulations, Border Controls, Travel Restrictions

Germany eases entry restrictions for fully vaccinated travelers from June 25, 2021. 

Who can enter Germany?

From June 25,  2021, entries of fully vaccinated travelers from countries outside of the EU will be allowed. This group may enter Germany for any valid purpose, e.g. business trips, tourism or for family visits provided that they meet the general requirements of residence law. Entering Germany from virus variant areas of concern is still not permitted. For detailed information please refer to the dedicated website of the German Federal Ministry of Interior.

For travelers not falling under this category, unrestricted entry to Germany is allowed from specific third countries with low infection rates. For up-to-date information and a list of all relevant countries, please refer to the dedicated website of the German Federal Ministry of Interior.

All persons traveling to Germany by air must provide proof of a negative test result before departure. The test can be a maximum of 48 hours old. Existing regulations remain in place for all other travelers, depending on the classification of the area as a risk, high risk or virus-variant area.

Travel to Germany from other third countries is also permitted in specific cases including for example:

  • nationals from EU countries and associated Schengen countries
  • third country nationals with a valid residence permit for Germany
  • foreign experts and highly qualified personnel whose work is necessary from an economic point of view and which cannot be postponed or carried out abroad

The ability to enter Germany is subject to the place of departure and not the individual's nationality.

Entering Germany from international risk areas

Germany has a quarantine requirement in place for those returning to and entering Germany from regions designated by the Robert Koch Institute as being  international risk areas within the last 10 days prior to entry. All travelers to Germany from international risk areas must register online prior to their arrival. Travelers must present proof of registration when entering Germany. 

Travelers from international risk areas must additionally be tested within 48 hours and provide negative evidence to the relevant authority on request. 

Furthermore, travelers from high-risk areas  (areas of variant of concern or high incidence areas) must provide evidence of a negative test result before leaving on their journey to Germany and upon entry into Germany. 

Who may not enter?

travel ban has been imposed on countries with coronavirus variations (areas of variant of concern). Exempted from this travel ban are for instance:

  • German citizens
  • Persons, who are resident in Germany with a current right to reside in the country
  • Persons on connecting flights who do not leave the transit zone of an international airport

For detailed information please refer to the dedicated website of the Federal Ministry of Interior.

Quarantine period

Persons entering Germany following a stay in a risk area, high incidence area or area of variant of concern in the last ten days must self-isolate at home for 10 days after arrival at their destination in Germany. Travelers from variant of concern areas  must self-isolate at home for 14 days.

  • Proof of vaccination or of recovery from Covid-19 can replace a negative test certificate and exempt you from quarantine on entry (not applicable for persons who have spent time in an area of virus variants of concern prior to entry).
  • Persons entering Germany from a risk area will not be required to quarantine if they can provide evidence of a negative test.
  • Individuals coming from a high incidence area can end their quarantine earlier by taking a test five days after entering Germany, provided the result is negative. 
  • Following a stay in an area of virus variants of concern, the duration of quarantine may not be shortened

For details about the quarantine and testing requirements please refer to the dedicated website of the Federal Ministry of Health.

Current Economic Developments

Current economic forecasts expect Germany’s economy to return to pre-crisis levels in 2022. This is due to Covid-19 containment measures, increased private spending and exports.

Effects on the German Economy

Although the German economy has been affected by the coronavirus pandemic, Germany’s economic downturn will be less severe than previously expected. The Federal Government's comprehensive and rapid support since the beginning of the crisis has been effective to date.

Falling Covid-19 incidence rates, vaccination rollout and a resurgent economy contribute to the current optimistic outlook. The German economy assesses its current business situation more positively, with orders in the industrial sector rising and  job levels similarly on the increase.

According to new data from the Federal Ministry for Economic Affairs and Energy, Germany’s GDP fell by 4.9 percent in 2020. Earlier forecasts predicted a GDP slump of at least 6.3 percent. Despite the economy still remaining in semi-lockdown at the beginning of 2021, the ministry forecasts GDP growth of 3.5 percent for the year.

European Commission – country back on economic track by 2022

According to the European Commission, large catch-up and carry-over effects in 2021 and 2022 should buoy the German economy, with projected GDP increases of 3.4 percent and 4.1 percent respectively - allowing Germany to reach its pre-crisis level in 2022. 

Record package of financial support measures

Germany’s government moved swiftly to counteract the worst effects of the crisis, introducing a far-reaching package of financial measures to safeguard health, jobs and the economy. The record aid package includes a supplementary government budget of EUR 156 billion to absorb the immediate consequences of the crisis. The complete program of help measures – including guarantees and subsidized KfW bank loans – planned represents EUR 1.2 trillion in total. By moving quickly and decisively to mitigate the worst outcomes of the crisis, Germany’s government has created the conditions to ensure that businesses – of all sizes – emerge from the crisis intact. 

Germany was one of the safest investment locations worldwide before the global coronavirus pandemic. The country’s strong and stable economy now puts it on a strong footing to deal with the ongoing Covid-19 crisis. The record financial aid package– with further measures foreseen as and when required – is a sign of the German government’s commitment to ensuring that the country maintains its proud position.

Global FDI Perspectives

Looking back at 2020, Germany’s reputation as a FDI safe haven helped to stay stable in an unstable environment. Despite the severe global economic downturn caused by Covid-19 in 2020, FDIs in Germany dropped by 9 percent compared to the previous year. The number of greenfield projects in Europe, for example, saw a decrease of 15 percent in 2020. In its new FDI Report for 2020, Germany Trade & Invest recorded 1,684 FDI projects in Germany. Germany’s reputation as Europe’s most attractive business location helped to keep the slump within limits and generate a better result than expected.

The future outlook for FDI is positive. According to a new survey among 550 decision-makers conducted in this year’s EY European Attractiveness Survey 2021, Western Europe is seen as the most attractive region in the world once the pandemic is over. When asked specifically about the prospects for Europe 15 percent of the respondents said that Europe’s attractiveness will improve significantly while 47 percent said Europe’s attractiveness will improve slightly. Furthermore Germany was ranked the highest country of all European Union member states with “the most credible and investment-friendly COVID-19 recovery plans”.

Financial Instruments to Support Your Business

Germany’s government has moved swiftly and decisively to confront the potentially devastating effects of the coronavirus pandemic on the economy.

The country’s economy is in a strong position to introduce measures supporting the economy over a prolonged period. By providing businesses with sufficient liquidity, the government measures will help ensure that enterprises emerge from the crisis intact.

The economic stimulus and crisis management package

The German federal government has agreed on an economic stimulus package worth EUR 130 billion. The program ("Future Package") includes a number of measures to foster economic growth and investment in Germany.

Foreign investors wishing to invest in Germany can benefit in particular from funding in the areas of mobility, medical devices, CO2 reduction, digitalization, and artificial intelligence. 

All measures will improve the general environment for companies, ensuring Germany remains highly attractive to foreign investors.

Support for small and medium-sized companies

Since September 1, 2020, small and medium-sized companies and freelance workers from all areas of business are entitled to non-repayable liquidity aid grants - called a "bridging allowance" -  from the German government. The bridging allowance has been extended until September 30,  2021. 

Companies must apply using a registered accountant or tax advisor. The aid is designed to cover fixed costs of businesses which remain locked down or remain significantly affected despite the partial reopening of some economic sectors.

The bridging allowance reimburses a share of:

  • 90 percent of fixed costs for companies with more than 70 percent drop in revenue;
  • 60 percent of fixed costs for companies with a drop in sales between 50 percent and 70 percent;
  • 40 percent of fixed costs for companies with​ a drop in sales between 30 percent and less than 50 percent;

in the month of aid distribution compared to the revenues of the corresponding month of the previous year up to a maximum of EUR 50,000.

Companies directly affected by the second lockdown in November and December who were forced to stop operating, or whose suppliers lost more than 80 percent of revenue from the stop in operations, may claim up to 75 percent of year-on-year revenue.

The bridging allowance has been revised (Bridging Allowance III): Applications can be made by all companies with up to EUR 750 million turnover in Germany. The company must have had a fall in sales of at least 30 percent in one month compared to the same month of 2019.

In cases of a fall in turnover of between 30 and 50 percent, the company will receive a subsidy of 40 percent of its eligible fixed costs of the respective month. A loss in turnover of 50 to 70 percent will lead to a subsidy of 60 percent of the eligible fixed costs, and a loss in turnover of more then 70 percent will be aided with 90 percent of the fixed costs.

Special rules apply to certain industries that are severely impacted such as the clothing retail sector.

In April 2021, a new equity grant has been introduced. Application can be made together with the application for the bridging allowance. Companies with a drop in sales of at least 50 percent in at least three months in the period from November 2020 to June 2021 are eligible.

The grant is based on the amount that a company receives for fixed costs from the bridging allowance. These include rents and leases, interest expenses for loans, expenses for electricity and insurance. The grant is up to 40 percent of the amount that a company receives for the eligible fixed costs.

​Further information, including exclusion criteria, is provided here (in German only).

Liquidity aid loan programs

The federal development bank KfW has expanded and eased access and terms on two existing loan programs:

  • ERP-Universal Start-up Loan
  • KfW-Entrepreneur Loan

KfW has introduced a variety of special programs to suit companies of different sizes and ages. These programmes include generous terms and conditions on consortial financing for larger projects, as well as emergency liquidity aid for SMEs, micro-enterprises and freelancers/self-employed persons experiencing financial difficulties as a result of the coronavirus crisis.

Please refer to the KfW website for details on loan program conditions. Applications for all these can be made through high-street banks.

At the same time, both federal and state governments are setting up a variety of aid programs to support companies in Germany. The range of services is continuously being updated and expanded. The Federal Ministry for Economic Affairs and Energy provides an overview of all state programs (so far in German only). If you have any questions, please do not hesitate to contact us.

More flexible rules for short-time allowance schemes

The Federal Employment Agency pays the short-time allowance as partial compensation for a loss of earnings caused by a temporary cut in working hours. This reduces the costs faced by employers in the context of employing workers, and enables companies to continue to employ their workforce even in the event of a loss of orders. In other words, short-time allowances help to prevent dismissals.

Short-time allowances schemes can currently be granted on a more flexible basis for a limited period until December 31, 2021. For instance, companies are eligible to apply, if 10 percent of the employees are effected by shorter working hours. Moreover, social security contributions which have to be paid solely by employers for employees working short-time are reimbursed in full until the end of September 2021.

Tax policy measures

Tax measures improving companies’ liquidity situations have been decided. For instance, options for deferring tax payments and reducing prepayments will be enhanced. Enforcement rules will also be adapted - there will be no foreclosures or late payment fines, if the debtor of a pending tax payment is directly affected by the coronavirus.

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