To ensure that all companies and every self-employed person comes through the crisis well and does not suffer from a great economic crisis, the German government has decided to provide stopgap assistance in the form of financial grants. The application period for this has now been extended once again from 31.08.2020 to 30.09.2020 and lawyers are now also entitled to apply for the aid themselves as well as for third parties.
However, the liquidity support must be taken into account for tax purposes when calculating profits.
Nevertheless, not every group is entitled to apply for such assistance, this is only who
- does NOT meet the conditions for the economic stabilization funds;
- had to close its operations during the Corona crisis;
- is single autonom and had to pause his activity.
In this respect, a slump in sales of at least 60 percent must have been calculated compared with the months of the previous year.
However, companies affected by seasonal fluctuations in turnover can be released from the above conditions and in the case of non-profit organizations, the previous year’s income is taken as a reference.
Nonetheless, companies that are not successful in applying for the tide-over allowance include those that
- are not registered with the German tax office;
- do not have a domestic registered office;
- are entitled to payments from the Economic Stabilization Fund;
- have an annual turnover of more than 750 million euros.
Eligible costs include all fixed costs that are contractually justified or stipulated by the authorities. Industry-specific features are also taken into account in the following list.
- Rental and leasing costs for buildings, land, premises and machinery used for operational purposes;
- Interest expenses for loans and credits;
- Expenses for electricity, water, heating and necessary maintenance;
- costs for trainees and personnel expenses not covered by short-time working allowances.
For travel agencies, reimbursed commissions are also considered fixed costs.
The fixed costs of items 1 to 3 must have been substantiated before 01.03.2020. In addition, no payments will be made for fixed costs that go to companies that are owned or controlled directly or indirectly by the same person.
The calculation of the costs paid are month-dependent and the reimbursements depend on the drop in sales.
In case of a sales slump between 40 and 50 percent, reimbursements of 40 percent are made. In case of a slump in sales between 50 and 70 percent, 50 percent of the fixed costs are reimbursed, and from a slump in sales of more than 70 percent, the state assumes 80 percent of the fixed costs.
However, interim aids are not provided for the respective month of support if the slump in sales is less than 40 percent.
The maximum subsidy per month is 50,000 euros.
The maximum reimbursement amount is lower for companies that employ ten or fewer people.
Proof of eligibility is provided by the commissioned tax consultant, lawyer or auditor and is done via an online platform. Sales estimates and forecasts for April and May 2020 must be submitted, as well as an estimate of the expected fixed costs.
If it turns out that a 60 percent drop in sales has not been achieved, subsidies that have already been paid must be repaid. The same applies in case of deviations in the sales and cost forecasts.
Tax consultants and auditors are excluded from any liability towards the responsible country, but of course have to observe their professional obligations.
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