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Corona: Economic stimulus and crisis management package with a volume of 130 billion euros

The leaders of the governing parties CDU, CSU and SPD agreed in the coalition committee on June 3, 2020 on a comprehensive economic stimulus and crisis management package with a volume of 130 billion euros.

The following fiscal measures are planned:

·         From 1 July to the end of the year, the general VAT rate is to be reduced from 19 % to 16 % and the reduced tax rate from 7 % to 5 %.

·         The due date for import turnover tax is to be postponed to the 26th of the following month.

·         The tax loss carryback is to be increased to a maximum of EUR 5 million for the years 2020 and 2021 and to EUR 10 million in the case of joint assessment. In addition, a mechanism is to be introduced to enable this carryback to be used with immediate financial effect in the 2019 tax return, e.g. by creating a tax corona reserve.

·         Introduction of declining balance depreciation for movable fixed assets with a factor of 2.5 in the tax years 2020 and 2021.

·         Introduction of an option model for corporate income tax for partnerships.

·         Increase of the reduction factor for income from commercial operations to 4 times the trade tax base.

·         Increase of the allowance for existing additions to trade tax from EUR 100,000 to EUR 200,000.

·         Granting of a one-time child bonus of EUR 300 per child for each child entitled to child benefit. This bonus is to be offset against the tax-free child allowance comparable to child benefit. Furthermore, it will not be credited against the basic provision.

·         Increase of the relief amount for single parents from currently EUR 1,908 to EUR 4,000 for the years 2020 and 2021

·         Increase in the rate of the tax research allowance retroactively as of 01.01.2020 and limited until 31.12.2025 to an assessment basis of up to EUR 4 million per company.

·         New regulation of the motor vehicle tax

The government released on June 12, 2020 the enclosed proposal (German language) for decision in the Bundestag.

However, the time frame in companies for preparing and implementing the planned VAT reduction from July to December 2020 is very short. For this reason, we urgently recommend that the adaptation of the accounting and booking systems be prepared immediately, even if the legislative process is still open. We will keep you informed about further developments.

Kind regards,

Björn Christian gerow

Steuerberater

Fachberater IStR

b.c.gerow@egsz.de

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