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Germany

Paul Hastings in collaboration with[Insert Name Here]
Liquidity Measures
Other

Liquidity Measures

Taxation

Government Measure

Deferred payment of (corporate) income taxes and VAT due within 2020 upon request, with no interest in respect of delay

Reduction of advance payments due in 2020 for (corporate) income taxes, trade taxes and VAT upon request

No enforcement measures within 2020 for unpaid (corporate) income taxes and VAT upon request; no late payment fines

 
Eligibility

Taxpayers affected directly more than insignificantly by COVID-19. Taxpayers that are affected only indirectly by COVID-19 are not eligible. No further guidance is currently available from the fiscal authorities as to how to distinguish between those categories.

 
Supervising Authority

Tax office overseeing relevant taxpayer; application should be made in written form, no special form requirements

 
Availability

From 19 March 2020

 
 
Government Measure

Reduction of (corporate) income tax payments in 2019 due to expected tax losses in 2020 up to €1m (€2m for couples)

 
Eligibility

Taxpayers that anticipate a loss in FY2020 due to COVID-19

 
Supervising Authority

Tax office overseeing relevant taxpayer

 
Availability

Reduction of (corporate) income tax payments in 2019 due to expected tax losses in 2020 up to €1m (€2m for couples)

 
 
Government Measure

VAT reduction for meals in the catering trade from 19 to 7 percent until 30 June 2021 (although no law has been formally passed as yet).

 
Eligibility

Catering trade taxpayers

 
Supervising Authority

Tax office overseeing relevant taxpayer

 
Availability

From 1 July 2020.

 
 
Government Measure

Facilitation of certain corporate reorganizations (e.g. transformation of a company into a partnership) in a way that the closing balance sheet of the disappearing entity must not be older than 12 months (currently 8 months) prior to the date when the reorganization is filed at the commercial register

 

All entities that fall within the scope of the German Tax Reorganization Act

Eligibility

Commercial register, tax office overseeing the relevant taxpayer

 
Availability

Not yet finalized; potentially for all relevant reorganizations made in 2020 (already now with the possibility to extent such period by the Ministry of Finance)

Subsidies

Government Measure

Maximum amount determined by federal states (e.g. up to €30k in Bavaria and Hesse; up to €25k in Saxony)

The one-time subsidies for small businesses are not subject to refund, but are presumably subject to tax (as yet unconfirmed)

 
Eligibility

Generally, self-employed persons and small enterprises affected more than insignificantly by COVID-19

Scope of eligible enterprises is determined by federal states (e.g. Bavaria: companies with not more than 250 employees; Hesse: not more than 50 employees)

 
Supervising Authority

Application organised individually by federal states

 
Availability

From 30 March 2020

Loans

Government Measure

Federal level: depending on size of the enterprise German state bank KfW takes over up to 90% of the risk of a new loan to be issued by a relationship bank up to €1bn;

 
Eligibility

Large corporates, SMEs and founders; liquidity needs are COVID-19 based, i.e. the company has not been in financial difficulties prior to 31 December 2019;

 
Supervising Authority

Relationship bank.

 
Availability

Available

 
 
Government Measure

Federal level: German state bank KfW takes over 100% of the risk

 
Eligibility

Enterprises with more than 10 employees that have been active on the market at latest since 1 January 2019 and have made profits in the sum for the period 2017-2019 or in 2019;

 
Supervising Authority

Relationship bank.

 
Availability

Available

 
 
Government Measure

Federal level: economic stabilisation fund provides additional funding for large corporates;

 
Eligibility

Large corporates only that act in line with good corporate governance, have an impact on the German economy, job market and competition; Federal Ministry of Economics may ask for influence on the borrower, including by way of receiving shares or other means of rights for participation;

 
Supervising Authority

Federal Ministry of Economics

 
 
Government Measure

State level: state banks provide direct funding/guarantees to SMEs depending on state with maximum amounts of up to €10m to €20m.

 
Eligibility

Founders’ and SME’s liquidity needs are COVID-19 based; i.e. the company has not been in financial difficulties prior to 31 December 2019.

 
Supervising Authority

State banks.

Other

Suspension to file for insolvency

Government Measure

Obligation to file for insolvency is suspended with retroactive effect from 1 March 2020 until 30 September 2020 unless

  • the reason to file for insolvency is not caused by the impact of COVID-19; or
  • there is no prospect of overcoming the insolvency

The right of creditors to file for the initiation of insolvency proceedings is also suspended for a transitional period of three months from 1 March 2020.

 
Eligibility

Corporate entities being subject to the obligation to file for insolvency (especially stock corporations and companies with limited liability)

 
Supervising Authority

German courts

 
Availability

1 March 2020 (retroactive)

 
 
Government Measure

Directors’ tortious liability to a company’s creditors for damages resulting from a delay in filing for insolvency has been excluded for the suspension period.

In addition, payment restrictions are lifted if such payment is necessary in the ordinary course of business (i.e. if such payment is necessary to uphold the business or to implement a restructuring concept).

 
Eligibility

Directors.

 
Supervising Authority

German courts

 
Availability

For the duration of COVID-19 emergency measures.

Improvement in the new lender’s treatment

Government Measure

Lender’s tortious liability for granting of loans to a borrower which is potentially insolvent is excluded for the suspension period.

Furthermore, repayments to be made until 30 September 2023 under new loans granted to affected companies and securities provided by affected companies in respect of such financing within the insolvency suspension period are exempted from insolvency claw-back claims.

 
Eligibility

Lenders of new loans

 
Supervising Authority

German courts

 
Availability

For the duration ofCOVID-19 emergency measures.

 
 
Government Measure

New shareholder loans are privileged in comparison to the existing law with respect to ranking and claw back risk until 30 September 2023 (i.e. they rank pari passu with third party debt and cannot be rescinded in the normally applicable one year period in case of a repayment)

 
Eligibility

Shareholders and quasi shareholders

 
Supervising Authority

German courts

 
Availability

For the duration of COVID-19 emergency measures.

Certain Tax Reliefs

Government Measure

No harmful tax consequences for stabilization measures implemented by the Stabilization Fund (“Wirtschaftsstabilisierungsfonds”) e.g. no forfeiture of tax losses carried forwards if the Stabilization Fund becomes owner in an enterprise; participation of Stabilization Fund in real estate owning partnership is ignored for German real estate transfer tax purposes

 
Eligibility

Enterprises in the real economy (i.e. not in the financial sector) upon request which have fulfilled at least two of the following three criteria in each of the last two financial years: a) net assets of more than €43m, b) more than €50m in sales revenues and c) more than 249 employees on an annual average and which are deemed worthy of support (see “Supervising authority”)

 
Supervising Authority

Federal Ministry of Finance, in agreement with the Federal Ministry of Economics and Energy, considering – amongst other matter - of the importance of the enterprise for the German economy and the effects on the labour market and competition

 
Availability

Starting from the beginning of fiscal year 2020

Protection from termination due to non-payment of rent

Government Measure

Landlord’s right of termination of leases due to non-payment of rent for the period between 1 April 2020 until 30 June 2020 is excluded (can be extended until 30 September 2020 and longer), provided that non-payment is caused by COVID-19

Termination due to rent arrears from 1 April to 30 June 2020 (or the extended period) remains excluded until 30 June 2022, i.e. tenant has 2 years to repay outstanding rent from that period

 
Eligibility
  • Tenants of both residential as well as commercial leases in Germany
  • The connection between COVID-19 and non-payment of rent must be substantiated (e.g. by way of reference to business closures imposed by authorities)
 
Supervising Authority

Enacted as a bill (Gesetz) in accordance with German legislative process

 
Availability

1 April 2020 until 30 June 2020 (or the respective extended period)