Coronavirus: State aid in Germany and changes in the German law
Compensation according to § 56 of the Protection against Infection Act, aid program and protective shield
Companies, freelancers and professionals who are officially quarantined due to the Coronavirus, who are subject to a ban on activities and who suffer loss of earnings as a result, can apply for compensation via the respective provincial directorates. In the case of salaried employees, the employer usually continues to pay the salary initially. The employer can subsequently apply to the provincial directorate for a refund of the money. The basis for compensation is § 56 of the Protection against Infection Act. According to this law, compensation for the first six weeks of a quarantine is calculated based on the loss of earnings, i.e. net pay. From the beginning of the seventh week, compensation is based on the amount of sick pay.
However, the compulsory plant closures decided by the federal states due to the Corona pandemic are not bans on work within the meaning of this Protection Against Infection Act. Affected companies can make use of other economic aid offers in connection with the Corona pandemic, in particular KfW emergency loans, grants (in Bavaria it is already possible to apply for emergency aid of between € 5,000 and € 30,000) and tax relief, including deferral of tax debts, suspension of enforcement measures by the tax authorities; for further details click here.
Germany already has a dense social safety net. Access to ALG II / Hartz IV benefits will be simplified. Currently a family of four (parents and two children) is entitled to monthly benefits of 2.033 €; single persons can claim 776 €. The additional child allowance is increased to 185 € per child.
As one of the first measures to deal with the Corona crisis, access to short-time work was simplified. Employees who receive only 50% of their wages from their employer can receive the remaining 30% from the employment agency. Social security contributions remain unabridged.
Aid to companies will be granted on condition that the crisis was caused by COVID-19 and that the companies were still healthy before it. The benefits listed below are those of the federal government. The federal states may round up the amounts with their own benefits.
- Small companies: For companies with up to 5 employees, a one-off aid of 9,000 €, and for companies with up to 10 employees, up to 15,000 €, is planned to cover current liabilities such as electricity, rent and leasing.
- Medium-sized companies: Companies with up to 249 employees and an annual turnover of 50 million can apply for loans, which are secured up to 90 % by the state-owned bank KfW. The maximum limit for each group of companies is 1 billion €. No more than 25% of the annual turnover and liquidity requirements for 18 months may be applied for. In order to accelerate the granting of loans, the bank waives a special credit assessment for loans below 3 million €. Access to loans of up to 10 million € will also be simplified.
- Large companies: A stability fund with a budget of over 100 billion € will be set up for large companies (more than 50 million annual turnover and over 249 employees). Direct state participation in the company is also possible.
In addition, until 30/06/2020, companies with up to 9 employees and 2 million annual turnover will have the right to refuse performance under permanent contracts (rent, leasing, etc.) if they are in difficulty because of COVID-19 (see Art. 240 EGBGB: https://dejure.org/gesetze/EGBGB/240.html).
The landlord can't terminate a tenancy because of late payment - here too initially until 30/06/2020 - if the insolvency is due to the Corona crisis. The rents are then only due on 30/06/2022.
All taxpayers affected by the Corona crisis, both companies and individuals, can apply for an extension of the due dates of any type of tax until 31/12/2020. The tax authorities will also waive the enforcement of taxes already due until the end of the year.
The new regulations have been in force since 01/04/2020.
It is also pointed out that the obligation to file for insolvency has been lifted for the legal representatives of companies that are stationed in Germany under criminal and civil law (the managing director or board member who fails to file for insolvency in time is liable with his personal assets). Here too, however, the crisis must be attributed to COVID-19.
If you have any further questions, we will be happy to advise and support you.