Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 2 December, 2020

General Information

Overall, responses have focused on:

  1. Tax-related liquidity assistance
  2. Protective shield
  3. More flexible compensation benefits

Employment-related measures

(e.g. state compensation schemes, training…)

Act to Improve the Regulation on Short-Time Working

  • The law passed on the temporary crisis-related improvement of the regulations for short-time working compensation on March 13, 2020 and the following statutory-decrees of the Federal Government, which are limited in time until the end of 2021, facilitate access to short-time working compensation, relieve companies from social security contributions and also enable temporary workers to access short-time working compensation. 
  • Before the change in law, at least one third of the employees had to be affected by the loss of working hours in order to qualify for the relief of short-time work compensation.  Now it is sufficient that only ten percent of a company's employees are affected by a loss of 10% of their working hours.
  • Short-time working compensation can be paid up to 12 months.
  • Negative working time balances do not need to be offset to avoid short-time working.
  • For the first time, short-time working compensation can also be paid to temporary workers.
  • It is not necessary anymore to first use up paid holidays.

Refund of Social Security Contributions

  • Employers are to receive full reimbursement of social security contributions until 30.6.2021. However, this only applies to companies that fall within the scope of the Act of short-time working
  • 01.07.2021 – 31.12.2021 refund of 50% if Short-Time Working was implemented until 30.6.2021.

Reduced hours (Kurzarbeitergeld)

  • Companies may receive reduced hour compensation when at least 10% of their are affected by a working hour-shortage (i.e.: don’t have any more work to do) of at least 10%. Previously, 1/3 of the employees had to be affected by shorter working hours in order for the company to get reduced hour compensation.
  • Waiver of negative working hours: Employees mustn’t offset negative working hour balances anymore. Previously, negative working hour balances had to be compensated in order to be eligible for reduced hours compensation
  • It is not necessary anymore to first use up paid holidays.
  • For the fist time  reduced hours compensation benefit will also be available to temporary/agency workers.
  • Complete reimbursement of social security contributions until 30.6.2021 (see above) by the Federal Labor Office.
  • According to estimates by the ifo Institute, the number of short-time workers in Germany was 5.6 million in July 2020, 6.7 million in June 2020 and 7.3 million in May 2020 (as of 06.08.2020)

Retrospective Effectiveness

  • These facilitations will take effect ex post facto from 01 March 2020 and will be paid retroactively
  • Companies that have already registered for reduced hours compensation before 31.12.2019 can receive compensation for a maximum of 24 months instead of the usual maximum of 12 months (withdrawal at the most until 31.12.2021)

Processing time & acceleration measures of the Federal Labor Office

  • 2-staged process:
    • Payment by the employer, up to now, usually possible 6 days after application (as of 16.07.20)
    • Afterwards, the reimbursement should happen „asap“
  • Staff training and -increase to accelerate the processes:
    • Staff increase in the reduced hours department from 800 to 8,000
    • Phone-operating staff increase from 4,000 to 18,000

Draft bill of the German Government as of 24th March 2020 (19/18110)

Regulations to protect domestic and commercial tenants

  • Tenant
    • A lease contract cannot be terminated by the landlord if the tenant is in default with its monthly rent payments in the period from 1 April 2020 until 30 June 2020 due to the effects of the COVID-19-Pandemic.
    • The tenant shall compensate the rent arrears until 30 June 2022 at the latest. In the event of a dispute, the tenant must substantiate that the non-payment was based on the effects of the COVID-19-Pandemic.
    • The modifications are applicable for domestic and commercial tenants.
  • Landlord
    • The termination rights of the landlords are restricted. A lease may not be terminated on the grounds that the tenant is in default with its monthly rent payments in the period from 1 April 2020 until 30 June 2020 if the non-payment was due to the effects of the COVID-19-Pandemic (the said period may be prolonged in the future till 30 September 2020 or even further).
    • A deviation of this regulation to the disadvantage of the tenant is excluded. Landlords must accept non-payments of the rent for up to 24 months, which can be interpreted as a legally enforced deferral of the rent. The obligation of the tenant to pay rent is not suspended. Interest on the arrears and damages caused by delay are to be compensated. The termination right revives, if the tenant does not compensate the rent arrears until 30 June 2022. Terminations of the lease because of other breaches of the lease agreement are still possible. Further, the landlord can utilize the rent security during the lease term if and to the extent the landlord’s payment claim against the tenant is undisputed.

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

Suspension of the obligation to file for insolvency

  • The obligation to file for insolvency is suspended retroactively from 1 March 2020 until 30 September 2020 for companies which are suffering economic difficulties or have become illiquid because of the COVID-19-Pandemic (the suspension will not apply in cases in which the insolvency is not due to the Pandemic) provided that there are viable prospects for a future recovery from the illiquidity. Incentives are also to be put in place to help affected companies to operate economically again and to uphold their business relations. For a three-month transition period, the rights of creditors to request the opening of insolvency procedures are to be restricted.
  • If necessary, the Federal Ministry of Justice is entitled to extend the suspension of the obligation to file for insolvency until 31 March 2021 at the latest
  • The obligation to file for insolvency will be suspended until the 31.12.2020 but only in the case of over-indebtness (Überschuldung. In case of illiquidity companies are again required to file for insolvency from 01.10.2020
  • If companies take advantage of the suspension of the obligation to file for insolvency, there are strict requirements regarding those companies’ documentation:
    • A liquidity status that demonstrates solvency as of 31.12.2019 or later must be prepared.
    • Maturity statistics for vendors, debtors, other liabilities etc. as of the above reporting date to support the liquidity status must be prepared (Caution: this can usually not be created afterwards).
    • There must be justifiable prospect for rehabilitation if financial support will be granted
    • A company’s insolvency must be caused by the Corona-pandemic, prior to the suspension of the obligation to file for insolvency, there was no ground for insolvency
  • The management bears the burden of proof that these conditions are met, but proof is facilitated by a legal presumption that applies if the company was not insolvent as of 31 December 2019.

Restriction of the admissibility of third-party applications to open insolvency proceedings

  • For creditor insolvency applications filed between 28 March 2020 and 28 June 2020, the insolvency must already have existed on 1 March 2020.

Economic Stabilisation Fund by the Federation (“Bund”)

  • €100 billion for direct recapitalization measures to ensure the solvency of companies (in particular the acquisition of shares or dormant holdings, subscription to profit-sharing rights or subordinated bonds)
    • Precondition: At least two of the following criteria must have been fulfilled as of 1 January 2020:
      • Balance sheet total > €43 million
      • Turnover > €50 million
      • More than 249 employees (yearly average)
  • €400 billion for guarantees that help companies to counteract liquidity bottlenecks refinance themselves on the capital market
  • €100 billion to refinance the KfW (Kreditanstalt für Wiederaufbau) in the implementation of the special programs assigned to it

Protective shield for supplier credits

  • Joint protective shield amounting to € 30 billion from the Federal Government and credit insurers to secure supplier credits of German companies
  • Assumption of guarantees for indemnification payments by the credit insurers of up to € 30 billion by the Federal Government in 2020
  • Substantial participation of credit insurers; federal government receives 65% of premium income in 2020.
  • Credit insurers bear losses of up to € 500 million and assume the default risks that exceed the Federal Government guarantee

Approval by the EU-Commission on 8 July 2020

  • Recapitalization measures up to a volume of € 250 million and guarantees under the Economic Stabilization Fund must no longer be notified individually to the EU Commission since the approval is in place
  • Direct application to the Federal Ministry of Economic Affairs is possible
  • The necessary ordinances for the processing of applications and decisions will be published shortly (status 09.07.2020)

Requirements for eligibility:

  • Companies must have met at least two of the following conditions in the last two completed financial years before 01.01.2020 :

Economic Stabilisation Fund by the Federation (“Bund”) (cont.)

  • Balance sheet total > € 43 million
  • Total sales > € 50 million
  • > 249 employees (yearly average)

Further requirements:

  • No undertaking in difficulty as of 31.12.2019
  • No other financing possibilities
  • Clear independent continuation perspective after overcoming the pandemic

In case of special relevance for the economy / safety, smaller companies may receive access to the economic stabilization fund, too (individual decision by the ESF-committee)

Start-ups may be eligible too, under certain conditions

Companies from the financial sector and credit institutes are generally not eligible


  • As long as a company receives support from the ESF, the company underlies specific restrictions regarding the compensation of management
  • No bonuses / other variable or comparable remuneration components (e.g. special payments in the form of share packages, gratuities or other separate remuneration in addition to the fixed salary) may be granted to members of executive bodies and managers. Corresponding regulations also apply to the subordinate management level
  • During the duration of the stabilisation measure, no dividend payments or other profit distributions may be made to shareholders other than the ESF
  • Additional limitations/restrictions may be introduced to prevent distortions of competition

Measures to support the German export industry:

  • 720-day bullet financing for short-term contracts with advance payment of 5% before risk exposure (limited until 30.06.2021)
  • Subsequent financing of transactions on supplier credit basis (limited until 30.06.2021)
  • Introduction of a shopping line coverage whereby the credit lines of foreign customers from various exporters are combined into credit tranches with a uniform repayment profile and counted towards the Hermes-covered credit line (also possible retroactively, unlimited)
  • Relief in the fees for export credit guarantees
    • In individual cases, waiver of a premium on extended risk periods in the case of corona-related credit extensions (also possible in cases with covered interest on extensions, limited until 30.06.2021)
    • In exceptional cases, the policyholder has the option of paying the premium at the start of production instead of at the start of coverage, or in the case of large transactions 100% at the start of the risk exposure (limited until 30.06.2021)
    • For flat-rate export guarantees (“Ausfuhr-Pauschal-Gewährleistungen”), the standard malus penalty for corona-related losses for transactions with due dates between 01.03.2020 and 31.12.2020 will automatically be halved from 10% to 5% (limited until 31.12.2020)
  • Non-pawn banks (“Nicht-Pfandbriefbanken”) will again be able to obtain refinancing from pawn banks (“Pfandbriefbanken”) with federal cover under certain conditions
  • The payment conditions are also valid for buyer credit for current business (unlimited)
  • Option of one-off compensation for non-performing loans (unlimited)

Consumer loan agreements

  • For consumer loan agreements entered into before 15 March 2020, claims for repayment, amortization and interest which are due between 1 April and 30 June 2020 are postponed by 3 months from their due date if and to the extent the consumer suffers a decline of income due to the COVID-19 pandemic, making fulfilment of the relevant obligation unbearable for the debtor, specifically in cases where the debtor’s means for living are endangered.
  • Creditors’ termination rights on the basis of non-payment or deterioration of credit or a deterioration of the realizable value of any collateral granted for such loan are excluded until 30 June 2020. The creditor has to offer to the consumer to negotiate a potential agreement and conceivable measures of support. If the parties don’t agree for the time period after 30 June the term of the agreement will be extended by 3 months.
  • Please note: in exceptional cases if the postponement of the payment or the exclusion of the termination right are unbearable for the creditor, the relief for the debtor shall not apply.

Other regulations

  • In the fields of cooperative law, company law, the law governing associations, foundations and the private ownership of apartments, as well as transformation law, provisions are to be eased. The aim is to enable the respective bodies to take necessary decisions and act in spite of ongoing restrictions on assembly. It is to be made easier to hold meetings using telecommunications. For a limited period, for instance, the annual general meetings of Aktiengesellschaften (public limited companies) may be held as virtual events without shareholders being present. For GmbH (private companies) it is to be easier to make decisions using written procedures. The proposed changes to the law governing the private ownership of apartments is to make it possible to dispense with annual meetings of owners for the meantime.

Kreditanstalt für Wiederaufbau (KfW)

  • The German Federal Government has adopted a package of measures to help companies cope with the coronavirus crisis. The role of the state-owned development bank KfW in this crisis is to facilitate the short-term supply of liquidity to companies.
  • Since 30 June 2020, the financing is explicitly limited to activities that take place in Germany

KfW Entrepreneur Loan

  • Companies on the market for longer than 5 years
  • Assumption of risk (liability waivers) of up to 80% for the on-lending financing partners (usually the regular banks) for large enterprises and up to 90% for the on-lending financing partners for SMEs up to a turnover of €50 million a balance sheet sum of up to €43 million or 250 employees.
  • Restricted to working capital loans with a volume of lending of up to EUR 1 billion. (volume > € 25 million: max. the higher of 50 % of the total debt or 30 % of the balance sheet total of the group)
  • Max. term of 10 years (credit volume > T€ 800) / 6 years (credit volume < T€ 800)
  • Grace period of up to 2 years
  • Granting of liability waiver to large companies, regardless of the volume of their annual turnover (previously: EUR 500 million).

ERP Start-Up Loan – Universal

  • Young companies on the market for less than 5 years
  • Assumption of risk of up to 80% for the on-lending financing partners (usually the regular banks) for large enterprises and up to 90% for the on-lending financing partners for SMEs up to a turnover of €50 million or 250 employees.
  • Restricted to working capital loans up to EUR 1 billion (volume > € 25 million: max. the higher of 50 % of the total debt or 30 % of the balance sheet total of the group)
  • Max. term of 10 years (credit volume > T€ 800) / 6 years (credit volume < T€ 800)
  • Grace period of up to 2 years
  • Granting of liability waiver to large companies, regardless of the volume of their annual turnover (previously: EUR 500 million).

“VR Smart” flexible promotional loan

  • KfW-eligible entrepreneur loan, volume from T€ 5 to max. T€ 100 (max. 25% of the firms 2019 revenue)
  • Interest rate: dependent on creditworthiness, min. 1.00% p.a., term: up to 10 years (redemption-free for up to 2 years), 100% unscheduled repayment possible
  • No provision of collateral necessary
  • Requirements: Company based in Germany and at least 3 years on the market

KfW Special Programme 2020

  • Syndicated financing with a minimum of €25 million and a maximum of the greater of 50% of the company’s total debt or 30% of the company’s balance sheet total.
  • KfW participates in syndicated financing for investments and working capital of medium-sized and large enterprises. KfW assumes up to 80% of the total risk.
  • No profit and dividend distributions during the credit term (except normal market remuneration)
  • Planned adaptions by the Federal Government’s “Corona-cabinet”:
    • Credit term extension from up to 5 to up to 6 years, possibly up to 10 years
    • Deletion of the requirement of a positive prognosis for continuation in the KfW information sheet; instead, companies must have demonstrated orderly economic conditions as of 31.12.2019 (positive continuation is presumed)

Interest rates range from 1.0% to 1.46% with a 90% guarantee, 2.0% to 2.12% with an 80% guarantee. Dividends and profit distributions are not permitted during the term of the loan

KfW fast track loan for the mid-sized companies

  • The KfW (Kreditanstalt für Wiederaufbau) offers a fast track loan for the companies with more than 10 employees.
  • Mid-sized companies can apply for the new KfW fast track loan for investments and running costs as of 15 April 2020
  • This loan is 100% secured by the German Federal Government guarantee. That is the reason why the chances of getting an approval for this loan is rather high.


  • Development loan for acquisitions and running costs
  • For mid-sized companies with 11-249 employees, that exist on the market at least since January 2019
  • From November on also available for companies with fewer than 11 employees
  • Cumulation with other KfW loans or instruments of the Economic Stabilization Fund is not permitted (exception: grants awarded under the emergency aid programs of the Federal Government and the Federal States, with a cumulative ceiling of €800.000)
  • Max. loan amount is set at up to 25% of the firm’s revenue in 2019:
  • For companies up to 10 employees – max. €300.000 per business group
    • For companies with up to 50 employees – max. €500.000 per business group
    • For companies with more than 50 employees – max. €800.000 per business group
  • Interest rate is oriented to the capital market development and is to be set by the house bank
  • 10 years term
  • 100% risk assumption by the KfW
  • No risk assessment by your bank
  • No provision of collateral necessary


  • The applicant generated a profit: on average over the past 3 years (or over a shorter period in the case of younger companies)
  • No profit and dividend distributions during the credit term (except normal market remuneration)
  • No repayment and interest payment on shareholder loans

BMZ funding program

  • The Federal Ministry of Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, BMZ) offers funding for the projects that significantly mitigate the negative effects of the COVID-19 in developing and emerging countries.


  • German and European companies or companies in emerging and developing countries with a long-term commitment in these countries
  • Min. turnover €400.000
  • Two operating business years
  • Registered in the EU or in the country from the OECD DAC list


  • Up to €200.000 (in exceptional cases a higher funding amount is possible).

Direct recapitalisation

  • For guarantee banks (Bürgschaftsbanken), the guarantee limit for small enterprises will be doubled to €2.5 million. The Federation will increase its risk share in guarantee banks by 10% to make it easier to shoulder risks, which are difficult to assess in times of crisis. The upper limit of 35% of operating resources in guarantee banks’ total exposure will be  increased to 50%. To accelerate liquidity provision, the Federation is giving guarantee banks the freedom to make guarantee decisions up to €250,000 independently and within a period of three days.

Program “Restart Culture”

  • € 250 million for pandemic-related investments of cultural institutions (e.g. hygiene concepts)
  • € 480 million emergency aid for the preservation of small and medium-sized cultural institutions and projects, thereof:
    • € 150 million for music sites, festivals, organizers etc.
    • € 150 million theatre and dancing festivals, organizers and agents
    • € 120 million for the cinematic resort (e.g. cinemas)
    • € 30 million for further branches such as galleries, socio-cultural centres and the book- and publishing industry
  • € 150 million for the support of alternative, digital offers (e.g. “museum 4.0”)
  • € 100 million to support cultural institutions and projects backed by the Federal Government
  • € 20 million for private radio

Emergency aid for cultural centres in rural areas

  • Federal Government provides up to €1.5 million for cultural centers in cities / communities with up to 20,000 inhabitants
  • Sociocultural centers etc. can apply for aids worth up to T€ 25 for modernization and construction
  • The funds are part of the Federal program “Rural development of the Federal Ministry for Food and Agriculture

Federal program “securing training places”

  • Total volume  = € 500 million
  • Support for small and medium-sized companies offering vocational training
  • € 2,000 for each vocational training contract completed in 2020/2021
  • € 3,000 for each vocational training contract concluded above the regular number
  • € 3,000 for each hired employee in vocational training from companies that became insolvent due to Covid-19
  • Governmental refund of 75% of the gross compensation for companies offering vocational training that don’t apply for reduced hours compensation for their employees in vocational training and their supervisors (valid for each month in which the company has a loss of working time of at least 50%)
  • Limited to 31.12.2020

Processing time KfW for loans up to € 10 million

  • Processing time is "immediate" for loans up to € 3 million and for loans up to € 10 million in Fast Track proceedings
  • Since the house banks enter all the necessary information for the above loans into the KfW portal, the approval is fully automated when all the necessary data is entered completely
  • The house banks then receive KfW's refinancing commitment immediately
  • Well over 95% of the loans applied for are thus approved immediately due to the automation of the decision at the time of application

KfW Fast Track loan

  • If a fast loan is applied for, the maximum loan amount for all affiliated companies (participation from the Group's point of view > 50%) is limited to T€ 800
  • If the quick loan is not sufficient, it can be repaid early without paying early repayment penalties and a KfW Entrepreneur Loan can be applied for instead

Corona recovery package (2nd complementary budget adopted as of 02 July 2020)

Bridging aid for small and medium-sized enterprises

  • Bridging aid for June to August 2020, total volume = € 25 billion extended until December 2020
  • Requirements for second phase (September to December):
    • Private companies that aren’t eligible for the large protective shield
    • Revenue decline of at least 30% (average) in April to August 2020 compared to 2019 or
    • Revenue decline of at least 50% in two consecutive months between April and August 2020
    • No undertaking in difficulty as of 31.12.2019
  • Maximum reimbursement = T€ 200 for a period of four months (max. T€ 50 per month); each month is reimbursed individually
    • Reimbursement of 40% of fixed operating costs if revenues decline by more than 30%
    • Reimbursement of 60% of fixed operating costs if revenues decline between 50% and 70%
    • Reimbursement of 90% of fixed operating costs if revenues decline by more than 70%
    • Labor costs flat rate (Personalkostenpauschale) of 20%
  • Application is possible from 10 July 2020 to 31. August 2020 via a specific platform provided by the Federal Government and must be performed by a tax consultant, a chartered accountant or a sworn auditor
  • Application process for second phase started 16.10.2020
  • Applications must be filed until end of December 2020
  • Implementation and payment by Federal States (payment deadline: 30.11.2020).
  • Extended until 30. June 2021
  • Raise of the maximum reimbursement to T€ 200 per month
  • All enterprises up to a revenue of € 500 million are eligible

Expansion of existing KfW programmes

  • Non-profit organizations:
    • KfW Special Credit Programme for 2021 and 2022, total volume = € 1 billion
    • Planned indemnification of up to 80% by federal funds and up to 100% by the federal states
  • Municipal enterprises:
    • The previous cap of € 50 million on the loan amount of the KfW promotional loan "IKU - Investitionskredit Kommunale und Soziale Unternehmen" is lifted

Tax measures

  • Reduction of the VAT rate from 19% to 16% and from 7% to 5% (from 01.07.2020 to 31.12.2020)
  • Statutory extension of the tax loss carryback for 2020 and 2021 to a maximum of € 5 million (€ 10 million for joint assessment). The carry-back can be used with immediate financial effect in the 2019 tax return
  • Renewed introduction of degressive depreciation with a factor of 2.5 on current depreciation, max. 25% p.a. The investment must be made by the end of 2021
  • Postponement of the due date of the import VAT to the 26th of the following month

Social security contributions

  • Stabilisation of employers' social security contributions at a maximum of 40% by the federal government.

Financing of public transport

  • Planned extension of aid granted to public transport companies (notification by EU Commission required)
  • One-time increase of regionalisation funds in the amount of € 2.5 billion in 2020

Corona aid package of the Federal State Baden-Wuerttemberg

  • Total volume = €1.5 billion
  • € 775 million for the continuation of emergency aid and liquidity programs for SME
  • € 200 million for the public transport network
  • € 50 million for clubs
  • € 40 million for culture
  • € 330 million for the hotel industry and catering trade (application possible since 1 July 2020)
  • One time aid of € 3,000 per restaurant
  • One-time aid of € 2,000 per full time employee
  • Main sources of information
  • KfW (Kreditanstalt für Wiederaufbau)
  • BMZ (Federal Ministry of Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung)

November aid (€ 14 billion)

  • For companies that are directly affected and have to close because of the November lockdown
  • And companies that regularly generate 80% or more of their revenue through directly affected companies
  • Reimbursement of 75% of  the average daily revenue generated in November 2019
  • Up to € 1 million
  • Additional program with aid up to € 3 million is approved and will be rolled out at a later point
  • The German government is currently in negotiations with the EU commission about a second additional program for aid above € 4 million
  • Other measures (i.e. bridging aid) will be taken into account and subtracted
  • Application process started on 25th of November 2020 and is possible until 31st of January 2021
  • Because of the ongoing partial Lockdown the November aid has been extended into December 2020 (December Aid)

Loan application in the Group

  • In principle, each individual company in a group can apply for KfW Entrepreneur Loans / ERP Start-up Loans / Consortium Financing or Fast Loans from the Special Program 2020
  • In the case of applications by individual companies in a group, the size of the group, i.e. SME or large company, is always relevant for the amount of the indemnity (SME = 90%, large company = 80%)
  • In the case of SABs within a group of companies, due to the prohibition of profit transfer, the parent company must always assume liability for the company applying for the loan
  • If a parent company applies for a loan for a group of companies, subsidiaries that were in distress as at 31 December 2019 must have capital resources that would not allow them to be classified as UiS as at 31 December 2019

Financing of foreign subsidiaries of German parent companies

  • Only German parent companies and all domestic subsidiaries can be financed with the KfW Entrepreneur Loan/ERP Start-up Loan
  • In context of the KfW special program 2020, both domestic and foreign subsidiaries, branches and permanent establishments of German parent companies can be financed

Financing of domestic subsidiaries of foreign parent companies

  • German subsidiaries of foreign parent companies can be financed with the KfW special program 2020
  • The application can be made by both the foreign parent company and the German subsidiary
  • When assessing company size/SME, the entire group and not only the German subsidiary must be considered


  • A €2 billion support plan for start-ups and SMEs was launched on 1 April. The federal government is thus supplementing existing support programmes with a package of measures that is specifically tailored to the needs of start-ups. .
  • 3 key points which will be gradually implemented: i) Institutional venture capital investors (e.g. KfW Capital) will obtain additional short-term public funds that can be used for financing rounds in co-investments with private investors.(ii) Fund of funds investors and the European Investment Fund (EIF) should in future be able to take over shares of failing fund investors with additional public funds. (iii) Venture capital and other forms of financing as a substitute for equity should be facilitated for young start-ups without venture capital investors among the shareholders and for small SMEs. Parallel to the implementation of this package of measures, the federal government has also adopted the creation of the Future Fund for Start-ups, which should help them to emerge from the crisis in the medium term.
  • KfW Entrepreneur Loan Assumption of risk (liability waivers) of up to 90% for the on-lending financing partners (usually the regular banks) for working capital loans with a volume of lending of up to EUR 200 million
  • Economic security fund with 600bn volume (100bn equity, 400bn loans, 100bn hybrid-tools) for all companies and startups with an post mones valuation above 50m in a financing round since January 2017
  • Direct subsidies
  • SMEs get small subsidies up to EUR 15k for operating expenses
  • Equity/VC tools": 2bn matching fund, matching VC-investments with a 70:30 key (70 state, 30 private) as equity or convertible loans
  • 600bn security fund (contains an equity component) 

Measures to ease the lockdown

  • APRIL 20 Deconfinement begins. Smaller shops, bookstores and car dealerships reopen, with social distancing measures in place. Outdoor exercise allowed, only permitted in groups of two maximum. Private visits and personal travel remain banned. Face masks will be mandatory in public in most states. As of the end of the last week of April, Germany had carried out 467,00 tests and the government says it has capacity to carry out up to 900,000 tests per week. Those who test positive self-isolate for 14 days, or if seriously ill are taken straight to hospital under stringent protective measures. MAY 3 All restaurants and bars to remain closed until at least this date. MAY 4 Schools start reopening with exam year students. Pupils attend classes in groups on alternating days or weeks. Hairdressers reopen. Places of worship in Brandenburg and Bavaria open, but remain closed elsewhere.
  • 14 June: strict global travel warning to limit the spread of the coronavirus and prevent German tourists once again becoming stranded oversea "until further notice," but at least until June 14.
  • END AUGUST Festivals and fairs may be allowed from this date.

Customs Measures

Duty relief

  • Free deliveries (donations) to institutions responsible for the medical care of the Covid-19 risk groups (e.g. hospitals and old people's homes) are exempt from import duties. EU-Code C26 to be stated on customs declaration.
  • Regarding the importation of items for disaster victims of the COVID-19 pandemic crisis, e.g. medical, surgical and laboratory equipment for emergency treatments, Customs has implemented a fast track to accelerate the importation. The importers should use a special code in the customs declaration called 9DFA “Einfuhr von medizinischen Hilfsgütern aufgrund der Corona-Situation“

Customs clearance

  • Customs declarations can be submitted in advance (before the goods are presented to the customs authorities) through ATLAS IT-Service in order to ensure a faster clearance.
  • Possibility to apply for a suspension of enforcement measures.

Payment facilities

  • Possibility to defer the payment of taxes collected by the customs authorities (e.g. import VAT, energy tax and air traffic tax). (Effective - until 31. December 2020)
  • Possibility to adjust the prepayment of taxes. (Effective - until 31. December 2020)
  • Postponed deadline for the submission of annual quota notification on greenhouse gas until 15th of June 2020

Recovery Plan Overview

  • Recovery plan : German recovery plan
  • Budget : 130 billion €
  • Announcement : June 4th ,2020
  • Main orientations : economy, demand, investment, sustainable mobility. 

Main measures

Reduced VAT rates (€20 billion)

  • The VAT standard rate is to be decreased to 16% (from 19%) and the VAT “reduced rate” to 5% (from 7%) until 31.12.2020

Social guarantee (€5,3 billion in 2020)

  • Social security contributions are being capped at 40% in 2020 and 2021

Short time working (Kurzarbeitergeld)

  • Simplified access, longer duration and without cost for employer until end of 2021
  • Renewable energies levy (EEG-Umlage) (€11 billion)
  • Reduction to 6,5ct/kWh in 2021 and 6ct/kWh in 2022 to keep energy prices competitive

Investments (€10 billion)

  • Planned government investments that can happen in 2020 or 2021 are being executed as early as possible, in particular in digitalization, security and defense spending

Support of states and municipalities (selection) (€19 billion)

  • Compensation for reduced tax income of municipalities in 2020
  • Support in financing of public transport in 2020

Support of young people and families (selection) (€9 billion)

  • One time child bonus of €300
  • Expansion of cribs, kindergardens and schools in 2020 and 2021

Investments in the future and climate (selection) (€50 billion) (long-term, up to 2040)

  • Strengthening of  transportation infrastructure and mobilit
  • Build up and expansion of 5G and fibre-optic internet
  • Hydrogen strategy to advance the use of hydrogen as energy source
  • Strengthening of the healthcare system

Federal Emergency aid -  ended 31.05.2020 (€50 billion)

Bridging aid for small and medium-sized enterprises (€25 billion)

  • Bridging aid from June to December 2020
  • Support plan for start-ups

Economic Stabilization Fund by the Federation (“Bund”)  (€600 billion)

  • Direct recapitalization measures to ensure the solvency of companies until 30.06.2021
  • Guarantees that help companies to counteract liquidity bottlenecks refinance themselves on the capital market until 31.12.2020
  • Refinance the KfW (Kreditanstalt für Wiederaufbau) in the implementation of the special programs assigned to it

KfW (Kreditanstalt für Wiederaufbau) programs (2020)

  • Entrepeneur Loan
  • ERP Strat-up Loan
  • Fast track Loan

“Restart Culture’’ Program (€1 billion)

Support Training Places Program (€500 million) (2020)

EU Programs (€43 billion)

  • Support for small and mid-sized companies through the European investment bank
  • Program to support short-time working SURE

Other measures and sources

Law on the Prevention and Control of Infectious Disease

  • In the event of illness or a justified suspicion of illness, whereby the employee is quarantined, the employer is obliged under the Continued Remuneration Act to continue to pay the employee his regular salary for up to six weeks. At the beginning of the seventh week, sickness benefit at the regular rate of approximately70% of the net salary wage is paid by the health insurance company – up to.
  • Even in the case of an illness or the justified suspicion of an illness which falls within the scope of application of the Law on Prevention and Control of Infectious Disease, this general regulation remains in force. However, the employer will be reimbursed the wages paid in the first six weeks by the competent authority on application. In the seventh week, the sickness insurance fund pays the wage, which may in turn request reimbursement from the competent authority.
  • In contrast to the continued remuneration, self-employed workers and freelancers are also entitled to compensation. According to the Law on Prevention and Control of Infectious Disease they can apply to the competent authority for financial reimbursement in the amount of their loss of earnings

Temporary Border Controls

  • Controls at the internal borders with Austria, Switzerland, France, Luxembourg and Denmark have again been carried out temporarily by the Federal Police since 16 March 2020. This is done on the basis of the Schengen Border Code.
  • However, the cross-border movement of goods and the entry of commuters remains possible. German citizens and people with residence permits in Germany may also continue to enter the country.

Year-end audits during the Corona pandemic

  • The German Institute of Auditors (IDW) comments on questions regarding the year-end audit in times of the Corona crisis with technical advice
  • The Corona crisis must only be mentioned in the annual financial statements if the company is affected
  • In the assessment of the going concern, an audit opinion is generally possible if the assumptions regarding the effects of the Corona crisis on the company can be reconciled with available forecasts of the Federal Government, the German Council of Economic Experts etc. In addition, any necessary applications for loans/further liquidity assistance in the context of the corona crisis must be submitted with the liquidity planning.

Financial support from the federal government for consultancy services

  • SMEs based in Germany can apply for financial support from the federal government for consultancy services. This also applies if the SME is a distressed company
  • Maximum consultancy value = € 4,000, maximum grant = € 3,200 (several applications may be submitted until the maximum amount is exhausted)
  • Consulting companies that generate more than 50% of their turnover with consulting services are eligible
  • The promotion of entrepreneurial know-how can be particularly relevant for mandates with numerous chain stores
  • Early cessation of funding: The provided funds have been exhausted and no additional funds can be made available. For the time being, the funding can thus only be paid to consultants who already have it in view. Further conditions: Submission of a proof of eligibility and sufficient budget funds.

Main sources of information

Main sources of information

Contact us

Tax: Claus Jochimsen –
Restructuring: Florian Rieser –
Legal: Mathias Oberndörfer –