Stimulus package 2020 – Temporary reduction of the German VAT rate

To cover the effects of the corona pandemic crisis the German government has already decreed several aid measures. We have already informed you about these aid measures in our TLI Steuerberater TV channel and via our website.

On June 3rd, 2020 the German government decreed a stimulus package for Germany. This stimulus package shall cover the economic consequences from the conrona pandemic.
This stimulus package contains several changes in the German Corporate Tax Code, with regard to depreciation and in the German VAT Code. We will inform you with a separate news posting about the changes in the Income and Corporate Tax Code.

The stimulus package contains a temporary reduction of the German VAT rate. This change has an effect for all companies doing business in or with Germany.

For the period July 1 until December 31, 2020 the regular VAT rate from currently 19 % shall be reduced to 16 % and the already reduces rate for special deliveries (e. g. food) shall be reduced from 7 % to 5 %.

Due to the close effect (July 1st) this means for all companies a very fast action.

TLI Steuerberater recommends already now to prepare the IT system for the new VAT rates. Invoices issued for supplies or services rendered within the period July 1st until December 31st 2020 have to show an other VAT rate than today. If you are working with an accounting or ERP-system we advise to contact your IT provider as soon as possbile to discuss this changes. In case of an automatic tax finding the new tax labels and the temporary conditions have to be implemented.

With regard to the changes of the VAT rates please note the following:

  • We assume that the invoice date will not be relevant for the applicable VAT rate. Relevant for the applicable VAT rate will be the day of delivery / service.
  • You are obliged by the German VAT Code to revise invoices issued with a wrong VAT rate. In case of a wrong issued VAT rate the issuer owes this wrong amount. A revision is an unnecessary and cost-intensive administrative effort.
  • Incoming invoices should be monitored with respect to the correct VAT rate.
  • For prepayments, later changes of the net amount, for vouchers, etc. there are several special rules.
  • In case of continuing obligations (e. g. leasing) the contract has to be revised if this contract contains information to the VAT rate or VAT amount.

Please consider that this information comes very early. This decree of the German government is still not German law.

But the implementation of this decree into German law is expected within the next days / weeks. Please consider that the aforementioned information can change until the dicision is fully implemented into German tax law.

We assume that the German financial administration will clarify within the next weeks some details within an official letter.

Please find futher information to VAT here on our website.

Christian Dobner | TLI Steuerberater

German tax law – publication of financial statements

No fine in case of failure to publish the financial statements within deadline

In principle, annual financial statements must be submitted no later than one year after the balance sheet date of the financial year. For capital market-oriented companies, short publication periods apply.

As announced by the Federal Office of Justice in a press release on 8 April 2020, changes in the publication obligation due to the Corona crisis have been decided. This makes some companies breathe a sigh of relief.

Until now, the statutory deadline for disclosure of the 2019 financial statements in accordance with Section 325 of the German Commercial Code (HGB) for capital market-oriented companies expires on 30 April 2020. In this respect, the period for publication was “extended” until 30 June 2020.

The statutory period for the publication of the 2018 financial statements expired on 31 December 2019 for fiscal years equal to calendar years. Anyone who has already received a threat order from the Federal Office of Justice after 5 February 2020 can make up for the publication until 12 June 2020 before the threatened fine is fixed. Even if the six-week period expires during that period or has even expired. The Federal Office of Justice is thus following the recommendations of the European Securities and Markets Authority (ESMA), which were resolved on 27 March 2020.

In addition, existing claims arising from the EHUG fine proceedings are currently being put on hold. No enforcement measures, attachment and transfer orders are handed over to bailiffs or banks to collect their claims.

Companies that have been badly affected by the Corona crisis can also apply for deferrals. It is sufficient to show that the company is affected by the Corona crisis and that the crisis is having an impact on the profitability of the company. Attachment and transfer orders already initiated are withdrawn in connection with the deferral.

If you have any questions about accounting, national or international tax issues, especially with regard to the Corona crisis, please contact us directly at any time.

Christian Dobner | TLI Steuerberater

Follow us