Overview of measures to support companies in the Corona crisis in the field of VAT
General information
The Federal Ministry of Finance and the supreme tax authorities of the federal states have decided on various tax relief measures to ease the burden on taxpayers directly and not inconsiderably affected by the Corona crisis. The aim is to improve the liquidity of companies that have got into financial difficulties due to the Corona crisis. The tax authorities are satisfied with plausible information from the taxpayer that the corona crisis has serious negative effects on his or her economic situation. Contact persons for applications for income tax, corporate income tax, solidarity surcharge, church tax or VAT are the employees at the tax offices. For questions regarding the so-called VAT on e-Services procedure (special VAT procedure), the Federal Central Tax Office (BZSt) is the competent contact. The contact details for the competent tax offices can be found at www.finanzamt.de, those of the BZSt at www.bzst.de.
For example, those affected are given the option of deferring tax payments, usually without interest. This provides taxpayers with a pause in payment to the tax office. In the same way, the tax offices can reduce and refund the special advance payment for the permanent extension of the VAT period for companies affected by the crisis. In addition to these measures, those affected can refrain from enforcing overdue tax debts until the end of 2020. The decision on the period of deferral is at the discretion of the responsible tax office in each individual case. The individual needs and the respective situation of the taxpayer are taken into account. In principle, deferrals are initially granted for a period of three months without specifying the duration of the deferment applied for. It is advisable to provide information on possible payment modalities (e.g. payment by instalments) in the deferral application.
You are also welcome to contact us if you wish to take advantage of the tax relief described.
Deferral of VAT payments due (see letter from the Federal Ministry of Finance dated March 19, 2020, IV A 3 -S 0336/19/10007:002)
If companies are unable to make tax payments due this year due to the economic consequences of the Corona pandemic, these payments should be deferred on request for a limited period and free of interest in principle. Companies can submit the application to their tax office until December 31, 2020. There are no strict requirements for the approval of the deferral. Companies must demonstrate that they are directly affected. However, they do not have to prove the value of the damage incurred in detail. This supports the liquidity of taxpayers by postponing the date of tax payment. This measure also affects VAT.
The taxpayers who can be shown to be directly and not inconsiderably affected can submit applications for deferral of the taxes already due or becoming due by this date, which are administered by the state tax authorities on behalf of the federal government, as well as applications for adjustment of the advance payments on income and corporation tax until December 31, 2020 by presenting their circumstances. These applications are not to be rejected because the taxpayers are not able to prove the value of the losses incurred in detail. There are no strict requirements to be met when reviewing the conditions for deferrals. As a rule, the charging of interest on deferral can be waived. Sec. 222 sentences 3 and 4 AO remains unaffected.
This means that applications for a deferral of taxes that are already due or will be due by December 31, 2020 can be submitted until December 31, 2020 at the latest - normally interest-free. The application for deferral of due taxes can only be made after these taxes have been determined. No strict requirements are placed on the presentation of the conditions for granting a deferral if a link to the Corona crisis is discernible.
Applications for deferral of taxes due after December 31, 2020 as well as applications for adjustment of advance payments which only concern periods after December 31, 2020 must be specially justified. As a rule, the provision of security for the deferral of income tax, corporate income tax and VAT can be waived.
Upon application, entrepreneurs can have the tax offices reduce the special advance payment of VAT for the permanent extension of VAT for the year 2020 in whole or in part. The permanent extension remains in force even in the event of a refund. This means that the tax offices can also reduce the special advance payment for the permanent extension of VAT for 2020 for entrepreneurs in crisis and refund amounts already paid. For a quick processing, a corrected registration of the special advance payment with justification in the free text field via ELSTER is recommended. The permanent extension of the deadline remains in force. Anyone who is directly and not inconsiderably affected by the Corona crisis and has not yet received a permanent extension can apply for it again.
Suspension of enforcement measures (see letter from the Federal Ministry of Finance dated March 19, 2020, IV A 3 -S 0336/19/10007 :002)
The enforcement of overdue tax debts is to be waived until the end of 2020. Surcharges for late payment, which are legally due during this period, are to be waived. This also applies to VAT and also insofar as it is administered by the BZSt.
If the tax office becomes aware, on the basis of notification of the debtor or in some other way, that the debtor is directly and not inconsiderably affected, enforcement measures should be waived until December 31, 2020 for all taxes in arrears or due by this date (as mentioned above). In the cases concerned, the default surcharges for these taxes as of December 31, 2020 forfeited in the period from the date of publication of the letter from the Federal Ministry of Finance dated March 19, 2020 until December 31, 2020 are to be waived. The tax offices can regulate the remission by general ruling (sec. 118 sentence 2 AO).
This means that relief under enforcement law can also be claimed. For the taxpayers concerned, the enforcement of taxes that are in arrears or due by this date (income tax, corporation tax, solidarity surcharge, church tax, wage tax and VAT) is to be waived until December 31, 2020 at the latest. In these cases, the late payment surcharges forfeited by law between March 19, 2020 and December 31, 2020 at the latest may be waived.
Further assistance in coping with the Corona crisis (see letter from the Federal Ministry of Finance dated April 9, 2020, IV C 4 -S 2223/19/10003 :003) – paid/unpaid surrender, donations
If tax-privileged corporations within the meaning of sec. 5 (1) no. 9 KStG make personnel, premises, material resources or other services available for consideration in areas that are necessary for coping with the effects of the Corona crisis (e.g. to hospitals, old people's and nursing homes), then no objections are raised if these activities are allocated to the special-purpose enterprise within the meaning of sec. 65 AO for both income tax and sales tax purposes. This applies irrespective of the tax-privileged purpose of the respective corporation, which provides personnel, premises, material resources or other services, in accordance with the articles of association.
Under the further conditions of sec. 4 no. 14, 16, 18, 23 and 25 UStG, the turnover taxable transfers of material resources and premises as well as of employees can be turnover tax-free as closely related transactions between the tax-privileged institutions, if the transferred services serve the support and care of persons affected by the Corona crisis, particularly in the areas of social welfare or social security. The tax exemption does not apply to services provided by or to other entrepreneurs.
In the case of the provision of medical supplies and personnel for medical purposes free of charge by companies to facilities which provide an indispensable service for overcoming the Corona crisis, such as hospitals, clinics, doctors' practices, rescue services, nursing and social services, old people's and nursing homes and other public institutions such as the police and fire brigade, the taxation of a free transfer of value on an equitable basis is waived.
If material or personnel from a company are made available free of charge, this so-called gratuitous transfer of value could be subject to VAT. However, if companies make medical supplies (e.g. protective clothing, protective masks, medicines, disinfectants, respirators, etc.) or personnel available free of charge for medical purposes to facilities that provide an indispensable service in coping with the corona crisis (these include in particular hospitals, clinics, medical practices, emergency services, nursing and social services, old people's and nursing homes as well as other public institutions such as the police and fire brigade), then the taxation of a free value surrender in an equitable manner is waived for a limited period until December 31, 2020.
If entrepreneurs already intend to pass on the medical supplies or - in the case of the manufacture - their components free of charge when they purchase them, a corresponding input tax deduction by way of equity is also granted under the above-mentioned conditions and the further conditions of sec. 15 UStG, also limited until 31.12.2020. This also applies in cases in which companies have been provided with personnel against payment and they make this personnel available to the above-mentioned facilities free of charge for use for medical purposes.
External audits
External audits continue to be carried out in an adapted manner. If the taxpayer or a member of the tax consulting profession files a request for postponement of the external audit with reference to the concrete effects of the Corona crisis, the current situation will be taken into account appropriately when examining this request. This is a decision in each individual case.
Reduced tax rate for restaurant services
According to the government draft for a law on the implementation of fiscal aid measures to overcome the Corona crisis (Corona Tax Aid Act), which is currently in parliamentary deliberations, the reduced tax rate of 7% is to be applied to "restaurant and catering services provided after June 30, 2020 and before July 1st 2021, with the exception of the distribution of beverages" according to sec. 12 (2) no. 15 UStG (new).
This measure is therefore limited to one year and applies to restaurant and catering services in the period from July 1st, 2020 to June 30, 2021.
The supply of alcoholic and/or non-alcoholic beverages is excluded from this reduction.
The amendment is intended to mitigate the economic impact of the Corona pandemic on the restaurant and catering industry. Not only restaurants in the classical sense benefit from the tax rate reduction, but also other sectors such as catering companies, food retailers, bakeries and butchers, provided that they have so far generated turnover at the standard tax rate by dispensing ready-to-eat meals.
This means that these entrepreneurs have to pay 12% less VAT to the tax office from their revenues compared to the previous. There is no obligation to pass on the tax reduction to the customers (e.g. through price reductions). Price increases from July 1st, 2020 onwards are also harmless for the tax rate reduction.
The tax rate of 7 % is to be applied to restaurant and catering services that are effected from July 1st, 2020 and until June 30, 2021. The date of receipt of the payment is irrelevant, as is the date of invoicing. In the cases of actual taxation (sec. 20 UStG) and actual taxation of advance payments (sec. 13 (1) no. 1 letter a sentence 4 UStG), the time at which the turnover is effected is also decisive. This applies regardless of when the tax arises in accordance with sec. 13 (1) no. 1 UStG.
The tax reduction applies to restaurant and catering services, which are currently subject to the standard rate of taxation. There is no change for the previously tax-reduced supply of food in accordance with sec. 12 (2) no. 1 UStG in conjunction with annex 2 to the UStG. Deliveries of foodstuffs are subject to tax pursuant to sec. 12 (2) no. 1 in conjunction with annex 2 to the UStG the supplies of food are subject to the reduced VAT rate of 7 %.
