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Corona Tax Aid Act 

On May 6, 2020 the Federal government adopted a draft law on the implementation of tax aid measures to overcome the corona crisis (so-called "Corona Tax Aid Act").

The Federal Cabinet has introduced tax relief for short-time work and for the catering industry, among other things:

• Top-up payments to short-time working allowance made between 1 March 2020 and 31 December 2020 will remain tax-free. This is subject to the condition that the top-up amount and short-time working compensation together do not exceed 80 percent of the lost pay. If more is paid, only the portion exceeding this amount is taxable.
• The VAT rate for food in restaurants is to be reduced from 19 to 7 percent. This is intended to alleviate the economic effects of the previous restrictions in the restaurant industry. The regulation is to apply from July 1, 2020 and is limited until June 30, 2021.
• The existing transitional regulation in § 27 UStG for the taxation of turnover of legal entities under public law (§ 2b UStG) will be extended until 31 December 2022.
• In the Merger Act, deadlines were temporarily extended due to the Corona Pandemic. These extensions are now reflected in the Reorganisation Tax Act for the tax retrospective periods regulated in § 9 and § 20 Reorganisation Tax Act in order to ensure that the deadlines are synchronised.

The above fiscal aid measures to overcome the Corona crisis are already resolved by the Bundestag and approved by the Bundesrat on June 5, 2020.

Please contact us in case of any questions.

Björn Christian Gerow

Steuerberater

Fachberater IStR

b.c.gerow@egsz.de

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