This content is relevant for:Coronavirus / Incentives
Business Location Germany
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 Ministry of Finance and Federal Ministry for Economic Affairs and Energy have unveiled a joint assistance program and tax policy measures totaling billions of euros. The package of measures and instruments has been put in place to protect the employment market and enterprises of all sizes in all sectors. To date, almost EUR 70 billion has been made available to commercial, freelance and self-employed enterprises in order to to help them stay afloat during the ongoing Covid-19 pandemic.
In June 2020, this was supplemented by an economic stimulus package worth EUR 130 billion. The program (Future Package) includes a number of measures to foster economic growth and investment in different areas of the German economy.
As of July 8 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 - of up to EUR 150,000 from the German government.
Companies must apply using a registered accountant or tax advisor and must have revenues down 60 percent relative to April and May revenues in 2019. The aid is designed to cover fixed costs of businesses which remain locked down, or remain significantly impacted despite the lockdown easing.
The bridging allowance reimburses a share of:
in the month of aid distribution compared to the corresponding month of the previous year.
Further information, including exclusion criteria, is provided by the Federal Ministry for Economic Affairs and Energy (in German only).
The federal development bank KfW has expanded and eased access and terms on two existing loan programs:
KfW has introduced a variety of special programmes 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 corona 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.
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.
Currently short-time allowances schemes can 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 June 2021.
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.You can find this fragment in the following contexts: