Corona crisis – First aid from PKF

The current situation demands huge effort on the part of companies to ensure that business can survive at all possible levels. That’s why we will present some very important topics here in a down-to-earth and understandable manner and we will explain how you can approach these topics and implement them immediately.

Our German language website provides information on short-time allowance, tax relief, government liquidity assistance, labour law issues, the planned suspension regulation on the current obligation to file for insolvency. Another very important question in this phase of the year is how this crisis and its economic effects, which are already noticeable in many areas, will affect the annual financial statements (balance sheet, notes) and management reports of your companies and how we as auditors will have to address this.

We have launched the English language website with information on short-time working and short-time allowance, which form the core part of the German government's initiative to support the survival of companies by protecting jobs in a crisis like this. We have added a first overview on tax relief. In the coming days, we will provide more and more information on current issues in English.

In order to improve liquidity for companies, options for deferring tax payments and reducing advance payments will be massively improved and enforcement measures will also be dispensed with for a limited period.

Two letters from the Federal Ministry of Finance dated 19 March 2020 outline in detail the German government’s tax relief package of 13 March 2020 in an effort to avoid undue hardship for companies ‘directly and not insignificantly’ hurt by the coronavirus.

The following aspects should be mentioned in particular: 

• Deferral of tax payments without a strict examination of the conditions can be applied for at the tax office in charge until 31 December 2020 for taxes due until the end of 2020.
• Applications for deferral of trade tax must be submitted directly to the municipality.
• The tax office also decides on applications for adjustment of advance payments for income tax, corporate income tax and the trade tax assessment amount for 2020 without a strict examination.
• The applications must specify how the company is impacted by the coronavirus.
• Specific justifications are required for periods after 2020.
• Deferral interest will generally not be charged.
• No deferral is possible (as provided by law) for
  • Income tax
  • Liability debts (such as withholding tax for construction projects)
• Please note: Value-added tax can also be deferred.
• No enforcement measures for deferred taxes due until 31 December 2020 will be carried out if the company demonstrates to the tax office that it is directly and significantly affected.
• It is to be expected that the authorities will subsequently examine the conditions for the direct and not insignificant impact on companies.

Last update: 19 June 2020