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Germany - Economic stimulus package

Joerg Gulden

Germany will introduce an extensive package of measures to support the economy according to a plan published by the Ministry of Finance on Wednesday, June 3rd, 2020.

The package contains 57 individual measures to stimulate the economy immediately and in the medium term. The following aspects are particularly important for companies from a tax and legal perspective:

  • VAT reduction: Standard VAT rate from 19% to 16% and the reduced tax rate from 7% to 5% for the period from 1st of July until end of December 2020

  • Limitation of social security contributions to a maximum of 40%

  • Surcharge on electric energy will be reduced to to 6.5 ct / kwh in 2021 and 6.0 ct / kwh in 2022 from currently 6.756 ct / kwh

  • Due date for import VAT will be postponed to the 26th of the following month

  • For the years 2020 and 2021, the maximum permissible tax loss carry-back will be increased to a maximum of EUR 5 million and EUR 10 million (in the case of a joint assessment of individuals). The utilisation of losses shall already be usable in FY 2019 with details to follow

  • (Re-)introduction of degressive depreciation method for fiscal purposes with a factor of 2.5 and a maximum of 25% per year for movable assets, limted to FY 2020 and 2021

  • Changes in corporate tax law: especially an model to opt for corporation tax instead of personal income tax for partnerships and reductions for commercial tax

  • Changes in bankruptcy law, in particular introduction of a pre-bankruptcy restructuring process

  • Additional promotion of employee participation models

  • Financial aid or SMEs depending on the drop in sales caused by Covid-19 - up to 50% or 80% of the fixed operating costs

  • Raising the maximum assessment base for the research allowance to EUR 4 million

Further industry-specific measures and all other planned regulations and investment programs can be found on the website of the Ministry of Finance (German languange).


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