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Coronavirus - Tax Developments - Germany

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German Finance Ministry Offers Protective Shield and Other Special Tax Measures
March 13, 2020

The German Finance Ministry announced an unlimited protective shield for all companies in Germany. Progress has been made to make sure that mid-sized companies (“Mittelstand”) can apply for loans and other financial aid quickly. Certain large German companies are already applying for large loans due to the closing of their factories.

Under this guidance, business-related taxes already due or becoming due by December 31, 2020, will be deferred interest-free on request if a company is significantly affected by the coronavirus crisis.

The primary tax focus of the coronavirus measures is on a reduction of tax pre-payments, which are due quarterly, and on deferred payment of taxes with a reduced interest rate. With respect to VAT, a deferral because of the COVID-19 crisis is, in principle, limited to (subsequent) payments based on annual VAT returns.

Two decrees (a general one on deferral of income and corporate tax payments and one specific to trade tax payments) were published by the Federal Ministry of Finance on March 19, 2020, implementing these relief measures and providing further guidance.

For a more comprehensive discussion of the efforts in Germany, please see the Eversheds Sutherland legal alert here.

For more information about the most recent tax developments in other countries, please visit our global Coronavirus Hub.